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Make economics ethical

By the end of winter quarter, I will have completed the economics core. Completing this six-course sequence has taught me a great deal about concepts such as optimization, efficiency and cost analysis. What I have not been taught, however, is how to analyze the moral questions that economics raises. To what extent is inequality acceptable in an economy? Is it necessary to interfere in an economy to aid individuals who are deprived of sufficient resources? To fill this vital gap in economic students’ education, the economics department should not only design ethics electives but also make an ethics of economics course mandatory for all undergraduate economics majors.

Ethics is an undervalued concept in economics. Economic teaching is calibrated to focus on issues related to growth, productivity and optimization. Professors and lecturers responsible for teaching the economics core claim that public policy and ethics questions are outside the scope of their course, emphasizing that the role of the economics core is to provide students with an understanding of basic economic theory. The fact is, however, that students who complete this course sequence will take the economic theories they are taught and apply them to the real world regardless of whether or not they are explicitly told to do so.

When economics is taught in a vacuum, its students will enter the workforce believing that efficient economic outcomes, those minimizing costs and maximizing overall satisfaction, are inherently successful, even if they leave certain groups woefully behind. If they are not taught any differently, they will learn to view market failures from the perspective of deadweight economic losses, not from the perspective of the single parent struggling to afford bus fare to travel to and from work or the young adult attempting to pay rent and the interest on their student loans.

In recent years, inequality and underemployment have become increasingly pressing economic concerns, and ethical questions are central to solving these issues. Is an efficient economy inherently equitable, regardless of the given resource distribution? Is there a baseline of economic well-being everyone deserves? To what extent is wealth redistribution fair?

There is some precedent for a course like this at other universities. Yale University has an ethics, politics, and economics major (EPE). The introductory courses for EPE teach “a basic familiarity with contemporary economic analysis” as well as “central issues in ethics and political philosophy.”

Several academic departments at Stanford already have ethics teachings as a major requirement.  Bioengineering majors have The Ethics of Bioengineering, computer science have the option of taking Computers, Ethics, and Public Policy as their Writing in the Major requirement, communications majors have Media Ethics and Responsibility and public policy majors have Justice and Ethics and Politics of Public Service. Economics majors should simply have a similar required course.

A wealth of potential teaching material regarding the ethics of economics exists. Debra Satz, the Vernon R. and Lysbeth Warren Anderson Dean of the School of Humanities & Sciences at Stanford, has several writings on the topics including the moral limits of markets and the connection between privatization and corruption. There are also several papers and books related to the ethics of economics such as “Altruism, Nonprofits, and Economic Theory” by Susan Rose-Ackerman and Development as Freedom by Amartya Sen.

This is not just an issue that affects economics majors. Walk into an ECON 52 lecture five minutes early and you will hear talk of two topics: p-sets and job offers. During the fall recruiting season, discussion of second and third-round interviews for companies including McKinsey, Boston Consulting Group, Goldman Sachs, JP Morgan, Sequoia Capital and Andreessen Horowitz become as common in the Landau classrooms as discussion of supply and demand. Many economics majors will ultimately land a position at one of these prestigious firms or its competitors. People who successfully climb the corporate ladder at JP Morgan or Goldman will be responsible for controlling major resources and transactions. The 2008 Financial Crash proved that a few bankers and investors have a lot more power in society than perhaps our lawmakers originally intended and although that may eventually change, the power of the financial sector remains a feature of the modern economy.

Providing people who will eventually assume these powerful financial roles with moral training would make our financial system at least marginally more conscious of the individuals it impacts, improving economic justice and equity in society. The absence of ethical training for economics students at Stanford must be addressed.

Contact Claire Dinshaw at cdinshaw ‘at’ stanford.edu.

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