The Moral Effect of Studying Economics

Since writing Excellence Without a Soul, I have been arguing that undergraduate education should try to make students better people. That is, I think moral education is part of college education. I don't mean recitation of the Ten Commandments or a return to parietal rules in dormitories. For starters, I mean that when there the university itself is caught up in an ethical dilemma, it should be discussed as though there just might be a right and a wrong of it.

A variety of arguments have been used in response. A standard one, which is particularly resonant today, is that it is the job of the university to provide a forum for everyone to state their arguments, but not to pick sides--and indeed that for the university to stand for one thing would chill the speech of those who have a different point of view. 

But I hear something else too–that there is no point in trying to affect the morals of college students, because it's too late. They are who they are by the time they are in college, and our job is to enrich them intellectually, not to shape them morally.

A few years ago I ran across a nice refutation of this argument, out of the economics literature of all places. Cornell Economics professor Robert Frank and colleagues studied the effect on undergraduates of taking a standard rational-choice introductory economics course, and showed that students tend to become less altruistic and more selfish. So apparently we can have an effect on students' character after all–in the wrong direction.

I understand that other studies have confirmed and elaborated these results. The New York Times has another contribution to the literature today--The Dismal Education, Yoram Bauman of the University of Washington. His studies seem to show that studying economics doesn't degrade the generosity of the people who were going to be economists anyway. But it does have that effect on the "innocents" who did not enter introductory economics understanding the benefits of rational self-interest. Bauman writes,

… taking economics classes did have a significant negative effect on later giving by students who did not become economics majors. One interpretation of these results is that students who were not economics majors suffered a “loss of innocence” after taking an economics class, presumably because of exposure to certain ideas (like the invisible hand) or certain people (like economics teachers). 

In contrast, students who became economics majors did not suffer a loss of innocence. This may be because they lost their innocence in high school — other research suggests that pre-university exposure to economics reduces giving — or perhaps even because economics majors were “born guilty.”

At Harvard, more students take the introductory economics course than any other (though introductory computer science is catching up!). Don't studies like this have some relevance to the way we think all those future businesspeople, lawyers, doctors, engineers, and legislators should be educated?

The Fate of Civic Education in a Connected World

The Berkman Center-sponsored seminar on December 5 was a great success. I met new allies and we got good questions from the audience. One of them in particular, from Jonathan Zittrain, stimulated a lot of followup discussion offline.

If you would like to watch the video, it has now been posted here.

As if to prove my point ...

A student writing in the Crimson suggests that the standard FAS applied to Professor Swamy should be applied to Professor Mansfield as well.

A dangerous precedent

The Harvard Faculty of Arts and Sciences voted yesterday to approve the Summer School catalog. Ordinarily this vote, and the comparable vote on the annual catalog, are pro forma. I don't ever remember a discussion of such a motion, much less a challenge.

But yesterday the motion to approve the catalog was amended to exclude the courses of one Subramanian Swamy, an economist. Swamy taught in the Summer School this past summer, and had caused a controversy, not for anything he did in his classes, but for an opinion piece published in India, entitled "How to wipe out Islamic terror."

At this point it would be fair to point you to the article. Alas, it seems to have been removed from the Web by the original publisher. You can find a version posted on a different site, but I can't vouch for its accuracy. In brief, the article argues for Hindu nationalism as a response to Muslim terrorism--nationalism enforced by removing mosques, banning conversion from Hinduism, annexing Bangladeshi territory, and so on. The article caused a furor when it was originally published, and the furor spread to the US because Swamy was teaching in Summer School at Harvard. Now the Economics Department proposed to have him teach here again next summer. He is a PhD from the department, and hence known to some of its members. There were no complaints about his teaching last summer (though there were complaints about his being at Harvard at all, given the article).

The amendment carried and the catalog was approved. Swamy will not be professing at Harvard next summer.

I think this is not a simple matter. I participated in the discussion in the Faculty Council, which approved the catalog, unamended, unanimously. A prior commitment kept me from the FAS meeting so I am blogging without the benefit of hearing the arguments of the amenders, which apparently swayed some of the Council members who had originally voted in favor of the unamended catalog.

1. I set an extremely high value on free speech in the university, perhaps higher than any other value. The article is not an immediate incitement to violence. It has been dubbed "hate speech" but I find that a discomfiting term. Even if it is hate speech, it is Constitutionally protected speech. So in any controversy like this, my starting position is that the way to fight words you don't like is with more words, not with actions.
2. On the other hand, Swamy is not a member of the community. He was last summer, and the Department of Economics was proposing that he become a visiting professor again next summer. Harvard does not owe him a job, on free speech grounds or any other. Depriving him of the opportunity to speak by not hiring him is not an offense to his right to free speech.
3. I believe that professors are more than lecturers. We want them to be advisors, and whether it is in the job description or not, they are role models. So I think character is a rational hiring criterion for someone being brought into an instructional role. And I think it is fair to weigh people's non-academic words when judging their character. (I am well aware that this point, in particular, is arguable.)
4. On the other hand, there is little evidence that Harvard actually cares about the character of its professors. We have had scoundrels on the Faculty and never raised our voices against them. So to use that argument against Swamy seems entirely inconsistent with past practice and ad hominem. In any case a Summer School professor is unlikely to be a personal mentor to his students. The argument against Swamy is not his character but his words.
5. I was surprised at first that the motion to amend was in order, though thinking about it there is no reason why it shouldn't have been. But think of the precedent it sets. If you want to silence a colleague--even a tenured member of some department other than your own--just get 51% of the Faculty on your side and show up on the day the catalog is due for its sleepy annual vote of approval. And not 51% of the Faculty--51% of the small minority (perhaps a quarter to a third) that shows up. The opportunities for mischief are thrilling to consider. Impatient with the institutional response to the offenses of Marc Hauser? Don't hope for some administrative settlement--just vote him out of the catalog!
6. A professor I chatted with today asked me if our colleagues had forgotten what happened in the 1950s. This fellow was not himself old enough to remember--but he knew, as my colleagues seemed not to, that once you embrace advance screening of speech as a valid tool for safeguarding community norms, you instead impoverish the community, and you equip your opponents with a tool that will eventually be used against you. Find some other way to express your outrage at the speaker, other than shutting him up.

So had I been there, I would have voted against the amendment. Swamy's being on campus could have a teachable moment for discussion of religious pluralism, better than any pieties pronounced in the absence of primary data. The occasion could have taught our students an important lesson about how to deal with words they don't like. Swamy, as far as I can see, has never been caught with a Molotov cocktail in hand, or ripping stones from the foundation of any mosque. His words should have been fought with words. There is no evidence that he would have been a danger to anyone--and he surely is not the danger that the Harvard Faculty showed it to be to itself. We weakened ourselves through our ill-conceived effort to brandish our values.

Bob Rubin, please just go

Harvard has changed a lot since Larry Summers became president barely a decade ago. But some things never change. Unfortunately, one of those things is that Bob Rubin is still a Fellow--that is, a member of the small governing board that is the legal Harvard Corporation, the President and Fellows of Harvard College.

In early 2010, I wrote about Rubin and Summers in the Huffington Post. The article was called Robert Rubin, Larry Summers: Will the Harvard Shadow Elite Bankrupt the University and the Country? I noted there,

Rubin is now gone from his leadership role and his board membership at Citigroup, hauling away $126M from a firm that was $65B poorer than when he joined it, with 75,000 fewer jobs. But he remains on the Harvard board, in spite of the financial meltdowns at both Citigroup and Harvard and his poor oversight of the problematic president he persuaded Harvard to hire.

That article was published a few weeks after Fred Abernathy and I wrote an op-ed in the Globe, Shrouded in Secrecy, decision makers gambled and Harvard lost. Our piece ends:

The Harvard Corporation is a dangerous anachronism. It failed its most basic fiduciary and moral responsibilities. Some of its members should resign. But the Corporation's problems are also structural. It is too small, too closed, and too secretive to be intensely self-critical, as any responsible board must be. Until the board can be restructured, the fellows should voluntarily share their power with the overseers. And Harvard should reveal the risks of its business plans, as would be required if it were a publicly held corporation. That exercise in transparency would surely serve Harvard well.

Jamie Houghton happened to resign a few days later, but it was Rubin I was thinking of. The former U.S. Treasury Secretary has been a Fellow since April of 2002--and throughout the financial meltdown from which the university still has not recovered. (See my previous post on Harvard's financial condition.)

The Board has in fact expanded, and the four fellows most recently appointed (one to replace Houghton, and three to expand the board) are terrific. But Rubin hangs around. A low profile guy these days, he cannot be happy about being in the news today. 60 minutes did a piece called Prosecuting Wall Street which is, of course, about how Wall Street has escaped prosecution for what were, in some cases, clear violations of Sarbanes-Oxley and other criminal statutes. Here is a piece of the transcript, in which the CBS correspondent interviews Richard Bowen, a former vice president of Citigroup about what was going on back in 2006-2007.

Until 2008, Richard Bowen was a senior vice president and chief underwriter in the consumer lending division of Citigroup. He was responsible for evaluating the quality of thousands of mortgages that Citigroup was buying from Countrywide and other mortgage lenders, many of which were bundled into mortgage-backed securities and sold to investors around the world. Bowen's job was to make sure that these mortgages met Citigroup's own standards - no missing paperwork, no signs of fraud, no unqualified borrowers. But in 2006, he discovered that 60 percent of the mortgages he evaluated were defective.

Kroft: Were you surprised at the 60 percent figure? 

Bowen: Yes. I was absolutely blown away. This-- this cannot be happening. But it was. 

Kroft: And you thought that it was important that the people above you in management knew this? 

Bowen: Yes. I did. 

Kroft: You told people. 

Bowen: I did everything I could, from the way-- in the way of e-mail, weekly reports, meetings, presentations, individual conversations, yes. 

In early November of 2007, with Citi's mortgage losses mounting, Bowen decided to notify top corporate officers directly. He emailed an urgent letter to the bank's chief financial officer, chief risk officer, and chief auditor as well as Robert Rubin, the chairman of Citigroup's executive committee and a former U.S. treasury secretary. The letter informed them of "breakdowns of internal controls" in his division and possibly "unrecognized financial losses existing within our organization." 

Kroft: Why did you send that letter? 

Bowen: I knew that there existed in my area extreme risks. And one, I had to warn executive management. And two, I felt like I had to warn the Board of Directors. 

Kroft: You're saying there's a serious problem here, you've got a big breakdown in internal controls. You need to pay attention. This could cost you a lot of money. 

Bowen: Yes. Somebody needed to pay attention. Somebody needed to take some action. 

The next day Citigroup's CEO Charles Prince, in his last official act before stepping down, signed the Sarbanes Oxley certification endorsing a financial statement that later proved to be unrealistic and swore that the bank's internal controls over its financial reporting were effective. 

Bowen: I know that there were internal controls that were broken. I served notice in that e-mail that they were broken. And the certification indicates that they are not broken. 

Kroft: It would seem the chief financial officer and the people that signed the Sarbanes Oxley certification disregarded those warnings. 

Bowen: It would appear.  

We received a letter from Citigroup saying the bank had acted promptly to address Richard Bowen's concerns and that the issues he raised were limited to his division and had little bearing on the bank's overall financial health. Citigroup also told us that it did not retaliate against Bowen for sending the email. But not long after he sent it, Bowen's duties were radically changed. 

Bowen: I was relieved of most of my responsibility and I no longer was physically with the organization.

…

Three months after Bowen's email Citigroup's new CEO Vikrim Pandit received a blistering letter from the office of the comptroller of the currency, its chief regulator. It questioned the valuations that Citi had placed on its mortgage securities and found internal controls deeply flawed. The letter stated, among other things, that risk management had insufficient authority and risk was insufficiently evaluated and that the Citibank board had no effective oversight. 

Yet eight days later, CEO Vikrim Pandit and Chief Financial Officer Gary Crittenden personally signed the Sarbanes Oxley certification. They attested to the bank's financial viability and the effectiveness of its internal controls. The deficiencies cited by the comptroller of the currency were never mentioned. Citi said it didn't consider the problems serious enough that they had to be disclosed to investors and says the certifications were entirely appropriate. But nine months later, Citigroup would need a $45 billion bailout and $300 billion more in federal guarantees just to stay in business.

I recommend this piece; the video shows the actual email Bowen sent to Rubin et al. (at 4:28). (This is the second segment of the show.) The piece suggests that somebody should have been criminally prosecuted for misrepresenting the financial controls that should have been in place.

It took very little to remove Pug Winokur from the Harvard Corporation when Enron got in trouble. To what, except having friends in all the right places, can we attribute the fact that Bob Rubin continues to be one of Harvard's legal fiduciaries? Can this please be the final straw? Fellows of Harvard College, don't you realize that your own reputations, as well as Harvard's, are on the line if you continue to keep this little club together?

Civic Education -- a Discussion at Harvard

How can schools and colleges help create a better citizenry? In 2011, this is a very touchy issue. Questions of civic responsibility are easily politicized. Listening to politicians of different parties interpret the Constitution, you might wonder whether they are reading the same text; no wonder educational institutions, so sensitive to inclusivity and avoiding politics, seem to prefer service programs to civic disputations. Voting rates are abysmally low, and educated people will tell you proudly of the weak excuses they have used to avoid jury duty. The great universities proclaim their new global identities so loudly that their sense of responsibility to the U.S. and its citizens can be hard to observe.

I started writing about these matters in Excellence Without a Soul, in my reflections on the difference between the post-World War II General Education curriculum at Harvard and its 21st century successor. This fall, I have related essays out in two books, Teaching America and What Is College For? (both the latter book and my essay in it are done jointly with Ellen Condliffe Lagemann). 

Thanks to the wonderful support of the Berkman Center for Internet and Society, I have been able to pull together a wonderful group of panelists to discuss "The Fate of Civic Education in a Connected World" at the Harvard Law School on December 5, at 6:00 PM. Please click the link to look at the lineup--Ellen Condliffe Lagemann, Peter Levine, Elizabeth Lynn, Juan Carlos De Martin, myself, and Charles Nesson acting as provocateur (rather than "moderator"!). There is also an RSVP form on that page. Hope to see you there! I expect it will be an exciting discussion.

This Week's Government Attacks on Freedom of Speech and of Thought

I fear that for a variety of reasons, American governments, and especially the federal government, are increasingly willing to infringe Constitutional guarantees of freedom of thought and of speech. Sometimes the assault is head on, on stages that are brightly lit by politically spotlights. Sometimes the assaults are apparently minor skirmishes, at hard-to-notice spots in remote regions of the bureaucracy.

Here are three I have noticed this week.

The first is the Stolen Valor Law, about which George Will has a smart column. This is the law--passed unanimously in the Senate and on a voice vote in the House--that criminalizes lying about one's military service. Of course nobody could think it was fine for someone to pretend to be a veteran. The question is whether making a false statement about military service is the kind of lying for which the proper remedy is a conviction under federal law, fines, and imprisonment. Why not?

Well, here is why not. Because when a federal law criminalizes lying, it puts the government in the business of determining what the truth is, and deciding whom to go after for shading it. Sometimes that is what we want--we do want the government to protect us against fraud, for example, where real money is at stake. Same for defamation, where truthfulness is, traditionally at least, an absolute defense. But in general, the courts have held that lying is protected by the First Amendment.

And we should not be arming federal prosecutors with weapons they can use for selective harassment. In a Veterans Day service I attended, all veterans were asked to stand at one point. From the context it was clear that the reference was to military veterans, so I remained seated, even though I think I am some kind of veteran, having served as a Junior Assistant Health Services Officer (equivalent to LtJg) in the commissioned corps of the US Public Health Service, on active duty 7/1/68-6/30/70 (sir!). If I had stood, would I have been committing a felony?

Every one of our elected representatives who voted for the Stolen Valor Law (note the misleading use of a material-goods metaphor to describe a speech act) wants us to know it. My other two examples are a lot more subtle.

The second is a proposal--now withdrawn, happily--to amend the rules that implement the Freedom of Information Act. The change, had it gone forward, would have stated that

When a component applies an exclusion to exclude records from the requirements of the FOIA …, the component utilizing the exclusion will respond to the request as if the excluded records did not exist.

In other words, it would have allowed the government to a respond to a request to disclose a document it had a legal right (through specific provisions of the law) to withhold by stating, falsely, that the document does not even exist. Welcome to 1984, 2011 style, as proposed by the government that promised to be the most transparent in history. Thanks to the ruckus caused by Harvey Silverglate and others, this proposal has been withdrawn. I am guessing that it has been put in the bottom drawer against the day when some horrible act is perpetrated against the U.S. It will then be pulled out, ready to go as the PATRIOT Act was a few years ago, and implemented when the nation is in a spirit to sacrifice liberty for security.

Finally, what would you say if the government told you that you could have certain information as long as you did not think about it too hard or try to relate it to anything else you know? Sound like thought control? Then consider this report from the November 9 New York Times (thanks to Latanya Sweeney for bringing it to my attention):

A federal health agency on Wednesday restored to its Web site a database of doctor disciplinary actions two months after removing it from the Internet in response to a doctor’s complaints. 

But the return of the information came with a catch. It has a new requirement that anyone who uses it must first promise not to link information in the database with publicly available information, like court files, that would identify individual doctors. 

And that was exactly the way journalists for many news organizations had used the national data bank, which masked individual doctors’ names, as material for articles about weaknesses in the oversight of doctors with dozens of malpractice cases and gaps in disciplinary actions.

But the return of the information came with a catch. It has a new requirement that anyone who uses it must first promise not to link information in the database with publicly available information, like court files, that would identify individual doctors. 

And that was exactly the way journalists for many news organizations had used the national data bank, which masked individual doctors’ names, as material for articles about weaknesses in the oversight of doctors with dozens of malpractice cases and gaps in disciplinary actions.

I have been thinking for awhile that something like this could happen. In several talks I have given, I have suggested that we could, in the interest of protecting privacy, see government rules limiting how much data on a particular subject individuals could collect--making information sort of like fertilizer, legal in small quantities but requiring government permission to possess in gross. This is a different approach to the same problem--it has the government allowing people to have database A and database B, but prohibiting them from performing the trivial computer operation of "joining" them (seeing which parts of A line up with some parts of B). Since the regulations don't mention computers, just how the data is "use[d]," presumably even remembering something you had seen in one database and connecting it in your mind to the other database would be improper.

I am in favor of privacy, but there is nothing in the Constitution about it that is as absolute as the guarantees of freedom of thought and freedom of speech. As databases grow and we increasingly use our computers to amplify our guaranteed rights to think and to speak, we had better beware of well-intentioned but dangerous precedents like these, whether obscure or not.