Does Business Training Undermine Trust?

09/20/2009

One central element of social institutions is trust -- the sense that, in general, one can count on others engaged with the institutions to follow accepted rules and act with reasonable fairness.  Economic institutions are no different: the self-interested pursuit of profit can undermine the workings of any market if it is not balanced with trust and cooperation.

Economics graduate student Kelli Lanier is looking more closely at trust in several ways.  In one project, she and collaborators assess how social scientists measure trust, contrasting the results obtained from surveys with the results obtained from studies where people are asked to play trust-games, simple games that turn on the players’ willingness to extend and reciprocate trust.  In another, she is testing whether team-building exercises alter the level of trust people express in trust-games.

How does Business Training Affect Competition and Cooperation?

A third project examines the effect of teamwork on trust and also turns the examination of trust towards the disciplines of economics and business themselves.  “I am trying to test,” Kelli explains, “whether training in business and economics makes people act in ways that are less trusting and collaborative and more narrowly self-interested.  In other words, does business training turn people into selfish economic actors?  I also want to contrast how individuals treat their fellow teammates versus people whom they do not know.”

A few years ago this question was posed in a more pointed form in The Economist: An article with the headline “are business schools bad for business?” argued that business education tends to produce graduates steeped in a “greed is good” version of economic science that encourages self-interested motivation.  And more recently, a Harvard scholar has argued that thinking like an economist undermines community.

Researchers have investigated this issue in several ways, but no conclusive answer has emerged.  “One problem for researchers,” says Kelli, “is to untangle the effect of business training from the fact that those who decide to go business school may already differ from the general population in their attitudes.  We need opportunities to study the effect of business training over time, with the right kind of control groups.”

Kelli has found such an opportunity: Georgia Institute of Technology’s TI:GER program – Technological Innovation: Generating Economic Results.  This two-year program, which also involves law school faculty and students from Emory, brings together science and engineering PhD students, MBA students, and law students to form teams and work on moving science and engineering inventions from the laboratory to the market.  In the process, it teaches the non-business students about business principles and practices and gives all students the opportunity to work closely within a cross-disciplinary team, strengthened by team-building exercises (picture above). 

Kelli worked with the program as a teaching and research assistant and realized that these students could be an excellent test case for her questions.  “I have set up a study where I test the students before and after their first year in the program to measure their levels of trust and cooperation.”  The study uses several survey instruments and different types of trust games to try to control for differences in personal attitudes – like tendency towards altruistic behavior – and differences among the students by discipline of training as well as the effects of the business training provided during their TI:GER training.

“We’re getting towards the end of data collection, and I’m excited to see the results,” says Kelli.  “The study should help us better understand the effect of economic training on trust and cooperative attitudes and behaviors and how intensive participation in a team environment impacts those behaviors.  My hunch is that such training does not turn people into narrow profit-maximizers, but rather makes them into more informed economic decision-makers.  But I’m very curious to collect the final set of data and go through the analysis to form a more considered and evidence-based view.”

Finding Experimental Economics

Kelli’s dissertation research grew out of a long-standing interest in economics.  She was an economics major in college and then worked for a while in the corporate world, but was aiming at graduate school in economics all along.  However, her area of focus has changed: “Originally, I was interested in development and international economics, but a seminar in experimental economics really got me interested in this field.  It’s still quite new, and it is exciting to work out ways of testing established theories and assumptions through experimental work.  It’s also closely related to other disciplines, especially psychology but also anthropology, and that adds breadth and connections to the work.”

In other ways too graduate school was a change.  “The first few years were very hard.  I quickly realized that I should have taken more math courses as an undergraduate to prepare me for the rigor of this program, but small classes and working together with other students helped me.  More recently, I have found the research environment really supportive and very interactive with a lot of collaboration with faculty.”  She co-authored a paper with her advisor, Monica Capra, which will appear in a forthcoming issue of a popular economics journal and has presented their work at various conferences.

Kelli also discovered that she enjoyed working as a teaching assistant, both in the Business School and the Economics Department, and looks forward to teaching more.  She won the Economic Department’s first ever Graduate Student Teaching Award for her work during the 2008-2009 academic year.