Does education in economics make politicians corrupt?

Maybe so, I haven’t yet had a chance to look at the paper, so I can’t lay out for you how the measurements work, or how many data points they have, but the abstract sounds interesting, albeit in a possibly speculative way:

The present article analyzes the differences between economists and non-economists with respect to observed corruption behavior used as a proxy for selfishness. For this purpose, I analyzed real world data of relating to the 109th–111th US Congress between 2005 and 2009, including 695 representatives and senators. I show that those who hold a degree in economics are significantly more prone to corruption than ‘non-economists’. These findings hence support the widespread, but controversial hypothesis in the ‘economist vs. non-economist literature’ that economists lack what Frey and Meier (2004) call ‘social behavior’. Moreover, by using real world data, these findings overcome the lack of external validity, which impact on the (low cost) experiments and surveys to date.

That is from René Ruske in Kyklos.  Hat tip goes to Kevin Lewis.

Can any of you find an ungated version?


so.... psicologists are more totalitarian?


"Does education in economics make politicians corrupt?" Why would politicians be an exception?

I wonder how many of those econ educated politicians also had law and/or MBA degrees?

It was found that having a knife dramatically increases the chance of stabbing.

Strangely, the opposite is true of guns.

No reason to stab the guy if you have a gun too.

Please post your actual opinion on gun policy so I can evaluate your character.

"No reason to stab the guy if you have a gun too."

And your odds of getting stabbed drop also. ;)

It depends on the meaning on is. Wouldn't a rational person maximize her income, even if it meant violating a social or legal norm? A rational person would if the risk were sufficiently low, or low in relation to the reward. Besides, what is corruption? Is it corrupt to vote for tax cuts for wealthy people if the reward for doing so are large campaign contributions from wealthy people? Is it corrupt to vote for repeal of environmental laws and regulations if the reward for doing so are large campaign contributions from those in the fossil fuels industry?

No economic rationality does not imply selfishness. Its pretty easy to put other regarding preferences in a utility function.

"Wouldn’t a rational person maximize her income, even if it meant violating a social or legal norm? "

Not necessarily, probably no. People with Puritan values would for sure and then rationalize their behavior later. Fortunately, not everyone buys into the post-modern Puritan ethic.

Let's say you are setting policy to maximize your income, because as a representative of the people who elected you, you believe they elected you to maximize their income.

Do you then argue that the best policy is to advocate higher production by increasing profits, and profit increases are best achieved by mono[poly power over every factor of production, and thus act to make monopoly power easy based on supply side - voodoo - free lunch economic theory that the greater the production, the greater the consumption because the sole determinant of income is consumption which is determined solely by production?

To that end, you will seek to destroy labor unions so employers can cut cost of labor to boost profits to increase the incentive to produce more, cut taxes on profits because you want to increase production, grant expanded patent, copyright, trademark protection to increase monopoly profits to increase production, act to limit investment in new capital assets built by labor for that will reduce or eliminate monopoly profits.

And then when production is not being consumed, blame the regulations that prohibit lending to people who can't repay the debt because growth is maximized when consumers can spend other people's wealth, and to that end, bankers need incentives like high fees with no liability eg capital requirements, so bank regulations need to go giving bankers the freedom to make money from enabling consumers spending other people's money and thus driving GDP growth.

The alternative economics is the labor centric economics that were current in the 60s that deemed labor income growth to be the total determinant of GDP growth. That would argue for doing everything to increase wages and eliminate economic profits by regulation and promoting excess labor investment in new capital especially excess productive capital assets to the price of assets falls rapidly as they are built.

In this labor centric model, CEOs are worth no more than the president and should be paid no more than the president. But if you want to be president, OR CEO, then you will find it in your self interest to have every janitor earn a million per year and have a boat and vacation home. At 5 times the income of the janitor you have a few homes around the world and a yacht and plane to get to them.

Of all the things to read, who could possibly bother themselves with this swill? Thank god for the academy, otherwise we wouldn't have gem's like this piece.

Can't access the full paper, but are we talking actual convictions for corruption or some similar, unbiased outcome measure? If so, I'd have to expect the number of "cases" in the sample is exceedingly low, making it hard to draw valid conclusions.

I wonder what the sample size on this is. I haven't heard of too many economists that actually became elected politicians.


" analyzed real world data of relating to the 109th–111th US Congress between 2005 and 2009, including 695 representatives and senators."

How many degrees in economics are you going to get in Congress out of 695 members?

8.4 percent as of 2011, so likely right around there. The subset for which there is some evidence of corruption is going to be tiny.

Considering it is a sample size of 695 Representatives in 2005 to 2009 seems really slim to draw any conclusions. So how many of the Representatives were guilty of corruption in the dataset? My guess if the guilty Representatives would not be very high (10 - 20 is my guess).

This is WAY to slim to analyze and most corruption charges tend to be on the State level versus the Federal level. So this analysis is good for a laugh but little else.

It also finds the following:

Secondly, in this sample, being of protestant faith has a positive and significant influence on one’s probability to be corrupt. The marginal effect and thus the probability of being corrupt is about the same as that associated with having an economics degree and about as twice as high as that of catholic members of congress.

Thirdly, being a member of the Republican Party, compared to being a member of the Democratic Party, increases the probability of being corrupt (negative and highly significant coefficient on the binary PARTY variable, Republican Party = 0).

"Thirdly" confirms my priors, so I'll believe it. I prefer to do my mood affiliation with good data.

Only getting caught. Not as practiced as their Dem counterparts.

Ha! Are you saying the Dems are smarter? Not Menendez, apparently.

Just better acquainted with the subtleties of corruption.

Mendez just screwed up by opposing Obama and is paying the price.
This will all go away once he gets in line.

Conspiracies abound! Go on...

You see me to know a lot about this. Which Dem politicians are corrupt and which aren't? Are there any R's who are good with the subtleties of corruption? God I'd love to see your dataset. Any chance you could share?

It would seem that the most corrupt members of Congress would be the ones that are able to remain secretive about their being corrupt, beyond the reach of this analysis.

Given how partisan the conclusions are, however, there are probably much bigger methodological problems.

Mandatory xkcd:

The only mechanism that i can think of, is that good knowledge of finance and economics, gives "weapons" to politicians to build more sophisticated curruption schemes. Hence, higher incentive to engage in corruption. But then i would be interested in the rate of corruption for lawyers against economists??? Another would be that economists are more selfish people than average (Huum... could be true ;) ) .... To be rigorous, this paper probably suffers from severe "T-test p-value finding fever"...

Also selection bias (only politicians who were caught appear in the sample!!!) ,then maybe economists are simply not smart enough looool

Microfoundations anyone can intuit versus econometric gobbledygook that produces magic from Krugman's pen and the Fed.

What's the definition of "observed corruption behavior?" A google search on that phrase yields 5 hits: 4 referencing this paper and 1 at which appears to be a free term paper site.

Exhibit A in supporting Haidt's assertion that the extreme liberal bias in social science is bad for science.
Whenever I see a junk science "finding" comparing conservatives to liberals, it is always slagging conservatives. A lot of this junk would get thrown out earlier in a less biased environment.

The former PM of India, Manmohan Singh, an economist , though accused of turning a blind eye to others' corruption is a notable example of a personally honest politician in a cesspool of corruption.
A possibly apocryphal story was that his family was trying to buy him a gift when he was a Finance Minister and couldn't get an inkling of which of 2 choices made sense from the point of view of an increase in Taxes around Budget time.

Do you think this finding confirms or goes against Ms. Ruske's priors?

I think Rene with one e is a man's name. Two ees is a she.

Oops, my mistake.

Definitely a man.

And, of course, her method (which I assume is just taking existing data) can't actually answer the question she poses. People more prone to corruption (okay, getting caught at being corrupt) might be more likely to be economics majors.

Causality: how does it work?

My mother used to say if a lawyer can't make a good living at his trade, he'll try politics. There may be a similar dynamic with economists.

My main problem with the paper is the "economist" vs "non-economist" framing. Having a B.A. in economics does not make one an economist.

No one has mentioned a glaring problem with the analysis: they do not establish cause and effect! In the jargon, there is endogeneity. There is no convincing evidence that having studied economics "makes" them corrupt. They were probably corrupt all along, and the alternative interpretation is that people who are more likely to be corrupt are also more likely to study economics.

You miss the obvious answer that they were corrupt before they ever went into economics.

I found the enthusiasm for political corruption in "Calculus of Consent" a little off-putting.

Homo Economicus does not consider maximizing his income to be corrupt.

Does corruption among politicians with economics degrees correlate with the ranking of their school, athletic conference, geographic region, state or private school etc.? If we are going top overinterpret from sparse data we might as well go for it.

I theorize that those having an education in arithmetic are more likely to commit securities fraud than those not knowing arithmetic.

Have we explored the possibility that ego plays a role here? I would guess that those who go into economics are disproportionately likely to be the sort of people who consider themselves superior to the ordinary run of mankind. I'm thinking here of the likes of Paul Krugman, who says he got into economics because it was the closest thing to Asimov's "psychohistory" - in other words, he sees himself as the wise scientist who will shape the destiny of millions through his intellect.

In my experience, to a greater or lesser extent, this is true of most economists. And when you already consider yourself better than other people, it's a pretty small step to thinking you're "entitled" to a little bit extra.

How do they define "corruption"?

Taking campaign contributions from large (evil) corporations? Enacting policies that favor "big business"?
Not voting in favor of more regulation?

I think it would be differences between economic schools. I am convinced that Keynesian´s economist are much more corrupt than economist of the Austrian school of economics.

I assume once someone engages a political career they will eventually facilitate corruption. An econ degree might just make them better at it.

Hardly surprising. Governments regularly employ economists, or those with the training, for what are basically corrupt purposes. So, I would expect it is exactly those economists who are more likely to actually run for office at some point.

If you widen the study to physicians, psychologists, geologists etc. you are likely to find exactly the same thing.

It would probably be more accurate to say that being a politician makes someone who has studied economics more likely to be corrupt .

I think it's easy enough to explain this phenomenon without indicting the field of Economic generally. I think most people would agree that there are a certain number of people who are particularly drawn to the study of Economics because it can be (and regularly is) used to provide a veneer of intellectual respectability over essentially selfish and anti-social attitudes. I suspect the same could be said of a few other fields as well: law and business come to mind as professional fields where jargon and half-baked ideas are used to justify or obscure unreasonable and anti-social behaviour. This doesn't mean that these disciplines don't have value; just that they have the unfortunate side effect of providing cover for a certain number of sociopaths. Surely no reasonable person would disagree that this is in fact the case.

Comments for this post are closed