What have we done?! The impact of economics on the beliefs and values of business students

Most teachers and professors likely consider, or hope, that they foster the way their students understand how the world works by providing them with new information. Accordingly, most disciplines officially take a positive, as opposed to normative, perspective. This is also the case for many subjects taught in business, see for example the classic works from Keynes (1891), Robbins (1932) and Friedman (1953). Studying a certain discipline should therefore affect the beliefs of students, and in many instances, it is also found that it does (see Hastie (2007; Mayhew et al. 2016); ; for comprehensive reviews of the literature).

However, some disciplines have ethical implications and may, as such, also affect the values of students. The discussion in the introduction emphasized the ethical implications of economics (Pitelis 2002; Ghoshal 2005; Huehn 2008, 2014; Wang et al. 2011; Fotaki and Prasad 2015). Additionally, some subjects taught in business schools are value-laden, and either explicitly or implicitly contain value judgments. The reference to ethical values is, by definition, explicit in the teaching of business ethics and corporate social responsibility, in which teaching has expanded worldwide (Matten and Moon 2004; Koehn 2005; Christensen et al. 2007; Neubaum et al. 2009; van Liedekerke and Demuijnck 2011). Other disciplines taught in business schools are also ultimately prescriptive, because they are meant to train decision-makers, see e.g. Hunt (1976). Etzioni (1991) even goes as far as claiming that moral messages, whether implicit or not, are contained not only in many of the subjects taught at business schools, but also in matters such as admission criteria, grading rules and prescribed literature.

At first pass, one may argue that values are stable, as Rokeach (1968, 1973) and Schwartz (1992) point out, and should not change over the course of studying. Nevertheless, there are three channels through which studying a discipline may affect students’ values: teaching, social interaction with peers and staff, and congruence through differential attrition.

Teaching is the most direct way whereby studying business may affect values. As Neubaum et al. (2009) recall, ethics can be taught and the effects of it have been observed (Krawczyk 1997; Menzel 1997). More generally, many disciplines carry implicit values. Ghoshal (2005), for instance, emphasizes that no social theory can be value-free. Racko (2019) argues that students tend to align their values with the normative priorities of their field of study. As such, business students will align their values with those that the teaching of business carries. Desplaces et al. (2007) and Cantoni et al. (2017) find evidence in line with this contention.

Social interaction is the second channel through which students may change their values. During higher education students interact with faculty members and peers. This will prompt them to internalize the values of their field (Weidman 1989; Hastie 2007; Racko et al. 2017). Mayhew et al. (2016) even conclude that the effect of peers is larger than exposure to curriculum or faculty members, while Dey (1996) finds the two effects to be of similar magnitudes. Algan et al. (2015) illustrate the role of interaction with peers using the random allocation of first-year students to tutorial groups as a quasi-experiment. These authors observe that the political preferences of peers tend to converge as soon as 6 months after the beginning of the academic year.

The third channel affecting the values of students is differential attrition. Institutions can evaluate individuals more positively when there is a stronger correspondence in ideologies, which in turn can result in the resigning or dropping out of those individuals with diverging views. To substantiate this claim, it has been found that a higher level of congruence between university students and their educational institution is associated with better academic performance and more satisfaction (Nafziger et al. 1975; van Laar et al. 1999; Kemmelmeier et al. 2005). This would imply that students, who do not adhere to the values of business studies, might be more likely to drop out or fail. As a result, the ideologies of the students who graduate or complete an extra year of study will be more aligned with those of their discipline. While differential attrition does not prompt the values of individual students to change, it selects the pool of students that continue with their studies. This, in turn, increases the congruence between the values of the pool of students that remain with those of their field.

Throughout the paper, we use the term ‘socialization’ to refer to the total effect of the three channels that can affect values and beliefs at the group level over the course of studying a certain discipline. As such, we refer to socialization as what makes a typical business student different from a typical student who studies another discipline.

The empirical evidence on the effect of socialization on values is mixed. McCabe et al. (1994) show that management students’ values remain relatively stable over the course of 2 years, while the law school program increases the importance of intrinsic values and decreases the importance of accomplishments. Gandal et al. (2005) could observe little change over the course of the first year in the importance that students give to values of self-enhancement. Likewise, Hummel et al. (2018) observe no change over time of cognitive moral development in business students, and Delis et al. (2019) report no evidence of a causal effect of majors in business or economics on students’ political ideology. Yet, other studies do observe changes over time. Racko et al. (2017) find that studying economics leads to larger value changes and report a significant role for interaction with peers, and Racko (2019) finds that studying economics results in increases in the values of power, hedonism, and decreases in the values of self-direction. Furthermore, Allgood et al. (2012) find that graduating from business and economics majors influences civic behaviours, such as donating to a political party or party membership and O’Roark (2012) finds that members of Congress that have majored in economics are more likely to vote for free trade outcomes. On the other hand, van Laar et al. (1999) find reductions in anti-egalitarian values after studying what they refer to as hierarchy-enhancing disciplines, which include both business and economics. In line with the latter findings, Arieli et al. (2016) observe a decrease in benevolence values of business students over the course of their first year of study.

If business students are different from students of other disciplines when they start their studies, any differences observed at the end of their studies may simply reflect initial differences. In other words, the impact of studying business must be weighed against the self-selection bias of students, a point initially made by Yezer et al. (1996) and substantiated by later studies. Sidanius et al. (2003), for example, find a lower propensity among students from disciplines other than business to support the belief that group-based inequality in society should be maintained or promoted and show that this is due to self-selection. Frey and Meier (2005) find that students of economics and business tend to donate less than students of other disciplines in the real-world to funds supporting needy and foreign students. They argue that this finding is driven by self-selection.

Whereas the above cited studies focus on self-selection, others report both socialization and self-selection effects. When both are considered, the latter is typically stronger and more systematic. Looking at the political attitudes of students, Elchardus and Spruyt (2009) report evidence of strong self-selection of students across fields, but also find small discipline-specific effects of socialization on attitudes relating to ethnocentrism, authoritarianism, and individualism. Additionally, Cipriani et al. (2009) find that students, who prioritize profit maximization, are more likely to enroll in economics. Surprisingly, they find that students who specialize in management prioritize profit-maximization less in their third year than in their first year, while there is no variation observable among students specializing in accounting or economics. Furthermore, comparing business school students with students of social work, Arieli et al. (2016) find substantial selection effects into both fields, and observe some socialization effects for the business school students that arise in the first year of their academic education. Moreover, Fischer et al. (2017) observe both a self-selection and a socialization effect of studying business and economics. The same holds for Hammock et al. (2016), however, they focus solely on economics students. Contrasting these findings, Frey et al. (1993) only find a selection-effect for economics students when studying fairness beliefs, but do not find any evidence for socialization. Finally, Haucap and Just (2010) find that students of business and economics have a higher propensity to prefer market mechanisms than students of other disciplines. Moreover, this propensity increases during the course of their studies.

Whereas the findings of Haucap and Just (2010) suggest that self-selection and socialization influence beliefs, the results of the other studies cited above apply to values or the implication of certain values. And to be fair, while self-selection has been repeatedly observed, it is not systematic. Hummel et al. (2018), for instance, observe no selection effects when studying cognitive moral development. Whether beliefs and values are subject to either self-selection or socialization is, therefore, an empirical matter.

Following from our review of the literature, we test a series of four hypotheses related to self-selection into a discipline and subsequent socialization effects of studying that discipline. To uncover the existence of self-selection into studying business, we test the following hypothesis:

Basically, we test whether business students initially differ from students in other fields when they start their studies. Not rejecting this hypothesis implies that there is a self-selection effect.

To test socialization, we compare the beliefs and values of students of the same discipline at the end of their first year with their beliefs and values at the beginning of the year. We therefore test:

Not rejecting this hypothesis implies a socialization effect of studying business. Furthermore, changes in the beliefs and values of students of other disciplines may contribute to business students being different from other students. Thus, we also test this hypothesis on students from other disciplines.

Doing so additionally allows us to test the influence of exposure to economics. If economics is the driver of business students being different, then the changes observed for business students should also be observed for economics students. We therefore test the following hypothesis:

Not rejecting this hypothesis would lend credence to the contention that the teaching of economics drives the changes in the beliefs and values of business students. Conversely, not finding such evidence would make it hard to reconcile our results with that contention.

To address our research questions, we need to prompt students to report their beliefs and values.¹ As we want to measure the impact of studying business and economics, we focus on beliefs that are likely affected by those studies. To measure these beliefs, we rely on a survey that asks both standard questions from large cross-national surveys such as the World Values Survey and the General Social Survey, and questions specifically designed for the survey.²

Related is the belief that exchange is mutually beneficial. This notion lies at the heart of standard economics courses (Blaug 1997; Goossens and Méon 2015). To measure this belief, we rely on the following question: ‘Generally speaking, do you think that when two individuals exchange a good or a service for money, it is that it makes them both better off?’ This question was designed by Goossens and Méon (2015) for their paper on differences between economics versus other students regarding views on market transactions.³ For this and the previous question, the answer options ranged from 1 (disagree) to 5 (agree).

Economics courses also discuss the relative merits of laissez-faire versus public intervention. As such, it discusses market and government failure. Students of these courses can therefore be expected to update their beliefs about the extent to which they can trust the state to implement efficient policies, as the level of trust is an indication of government performance and support for the state (Easton 1975; Keele 2007). We assess students’ trust in the state by using the following question: ‘Generally speaking, would you say that the state can be trusted to achieve the missions that it has been given?’ The answer options ranged from 1 to 5, where 1 corresponds to disagreeing with the question and 5 with agreeing with it. A version of this question appears, for instance, in the World Values Survey.

Furthermore, we rely on a question that appears in the same form in the World Values Survey and the General Social Survey to measure beliefs about the origin of someone’s lot in life: ‘Generally speaking, do you think that whatever one’s lot in life, it has always been deserved?’ Answer options ranged from 1 (disagree) to 5 (agree). Introductory courses in economics emphasize that in a competitive economy, all factors of production, including labour, are remunerated at their marginal productivity. Accordingly, differences in wages and incomes are presented as resulting from differences in productivity. We therefore expect students exposed to economics to agree more with the statement.⁴

We also capture beliefs regarding students’ intergenerational mobility expectations. Business and economics are perceived as studies that improve students’ prospects on the labour market resulting in upward mobility. We expect students who have chosen those studies to hold different beliefs in that respect, possibly revising them as they learn the workings of the labour market. We measured these beliefs with a question asking whether respondents think their standard of living in twenty years will be better, equivalent or worse than that of their parents. The answer categories for this variable ranged from 1 (worse) to 3 (better).

The previous section recalls that business and economics studies have been accused of fostering selfishness, self-enhancement, and materialistic values. We therefore rely on questions that capture such values.

We use two questions that capture whether students value equality. The first question originates in Schwarz’s (1992) value questionnaire and is posed as a statement: ‘As a guiding principle in my life, equality (equal chances for all) is …’ Answer categories ranged from 1 (against values) to 7 (fundamentally important). We complement this by a hypothetical scenario used to gauge how averse students are to inequality. In the survey, students were asked to choose between an unequal pay rise for themselves and an equally capable colleague and an equal but lower pay rise for them both. A student’s choice for the equal pay rise reveals an aversion to inequality. This question originates in the work of Bazerman et al. (1992).

To capture whether students value wealth, we rely on a question also originating in Schwarz (1992) asking students to react to the following statement: ‘As a guiding principle in my life, wealth (material possessions, money) is …’ Answer categories ranged from 1 (against values) to 7 (fundamentally important).⁵ As stated by Schwarz (1992), wealth is considered a power type value. Those that value wealth likely aim for status, prestige and control. In line with the literature, we expect business and economics studies to foster this value.

Economics is not the only discipline that may affect other students’ beliefs or attract students with specific beliefs. Accordingly, the answers of students of other disciplines may also stand out. For instance, exposure to competition law may make law students more suspicious of large firms. Also, because psychology emphasizes unconscious decisions and various cognitive biases, students of that discipline may be less confident in the notion that voluntary transactions make participants better off. Finally, the emphasis of sociology on social reproduction may make students of social science less skeptical about the statement that one’s lot in life is deserved. Although we cannot discuss the possible effect of each of the disciplines that we consider on the answers of respondents to all the questions of the survey, we test for the effect of each discipline with specific dummies in all regressions.

Finally, the questionnaire included questions on students’ demographics: age, gender, and which faculty they belonged to.

The survey was administered at a leading Belgian business school, either during lectures or exams. Before handing out the questionnaires, a standardized introduction was provided emphasizing that the survey was designed by scientists for scientific purposes only; that answers were completely anonymous; that the survey was not an exam; and that there were no ‘good’ or ‘bad’ answers, to avoid prompting socially (or academically) desirable answers.

The survey was administered in five distinct bachelor’s degrees. In addition to the bachelors in business and in economics, the survey was also set out in the bachelors in psychology, law, and social sciences. An important feature of the curricula of the bachelors in business and in economics is that they are very similar. They share five topics, some of which are taught jointly to the two groups of students (e.g. mathematics, statistics, economic geography, and economic history). In terms of the European Credit Transfer and Accumulation System (ECTS) those common courses are worth 25 out of 60 credits. What matters to our study is that, although both groups take an introductory course in microeconomics and macroeconomics, the courses are 50 percent larger in the bachelor in economics than in the bachelor in business. In terms of the European credit system, these economics courses are worth 15 credits in the bachelor in economics and only 10 in the bachelor in business.⁶

The two waves of the survey were conducted in the academic year 2006–2007. The first took place amongst first year students during the first two weeks of the academic year to ensure they had had as little education and socialization as possible.⁷ The first wave therefore allows the identification of initial differences between business students and students from other faculties. The second wave of the survey was administered in the same cohort but at the end of students’ first academic year.⁸

Due to university regulations, identifying who filled in the questionnaires was not possible. We can therefore not track individual students over time. We, thus, examine if and how the typical business or economics student differs from the typical student of other disciplines at the beginning and at the end of the year using the pseudo-panel structure of our dataset. By virtue of the structure of our data, any identified changes in beliefs and values of the average student of different disciplines can be the result of a combination of social interactions, learning and/or differential attrition.

Firstly, we look at differences across disciplines in beliefs and values at the start of the year, i.e., the self-selection effect. We also estimate if and how beliefs and values still differ at the end of the first year, i.e. whether differences are persistent or not. To do so, we adopt the following specification:

In this specification, \({Attitude}_{ij}\) is the score of individual \(i\) on belief or value \(j.\) Our independent variables of interest, \({Discipline}_{ik}\), are discipline dummies indicating in which faculty \(k\) individual \(i\) is enrolled. Our reference category consists of business students. As controls we include a gender dummy (\({Female}_{i}\)) that is 1 for female students and 0 otherwise, and a continuous variable indicating the age of individual \(i\) (\({Age}_{i}\)) (Rokeach 1973; Haski-Leventhal et al. 2015).

Secondly, when considering changes in beliefs and values over time, we focus on whether and how beliefs and values change over the course of the first year within a discipline. For this purpose, we specify the following model:

We capture changes over time with the dummy variable \({End of the year}_{i}\), which is equal to 1 if individual \(i\) filled in the survey at the end of his/her first year. As such, our reference category consists of students who participated in the survey at the start of their studies. We control for gender with the dummy variable \({Female}_{i}\).⁹ We estimate the above model for each faculty separately.

The majority of our dependent variables are categorical, ranging from 1 to 5 or 7, and one is binary (i.e. inequality aversion). Consequently, we estimate ordered probit models for the former and a probit model for the latter.¹⁰

There are about 2300 observations in our dataset: approximately 1600 at the start of the first year of study and 700 at the end of the first year. If we pool the observations over the first year, 26% study business, 15% economics, 16% psychology, 23% law, and 21% social sciences. Table 1 shows the average age of our respondents, as well as the share of female students and the number of observations split according to discipline and beginning versus the end of the first year.¹¹ This table shows that students of Business and Law are slightly younger when they start their studies compared to the other three disciplines. In terms of gender, Psychology stands out with 80% female students, followed by Law and Social Sciences. In Economics and Business, the opposite holds; there are more male students than female students. We also conduct t-tests (see Table 1) to test whether the students differ significantly in terms of age and gender at the two points in time the survey was administered. Unsurprisingly, in all disciplines students differ significantly in terms of age at the end of their first year, compared to the beginning of the first year, as the second wave of the survey was carried out approximately eight months after the first. Regarding gender, there are no significant differences for all disciplines under consideration. This is reassuring in light of concerns regarding non-random attrition.

Figure 1 shows histograms of business and economics students’ beliefs at the beginning of the first year and at the end of the first year. Figure 2 shows the same for values. Similar figures for the other three disciplines can be found in the appendix (Figs. 3, 4, 5). Figures 1 and 2 allow us to examine how opinions changed over the course of the first year for business students and how this compares to economics students. A few things stand out. Figure 1 and 2 show that some beliefs and values of business students did not seem to change much between the beginning and the end of the first year, specifically the belief that exchange is mutually beneficial and valuing wealth in one’s life. On the other hand, business students seem to agree more that someone’s lot in life is deserved and seem to value equality less at the end than at the start of the first year. These students are also less inclined to believe that firms abuse their size. Moreover, a larger part of business students expect to fare better than their parents at the end of the year than at the start of the year. For economics students, there seem to be similar trends in beliefs and values over time.¹²

Estimating Eqs. 1 and 2 allows us to refine previous results by teasing out the role of demographics. Table 2 shows the results of estimating Eq. 1 for a sample restricted to the beginning of the first year in the upper panel and a sample restricted to the end of the first year in the bottom panel. From the table we see that there are many differences in beliefs and values between business and other students, both at the start and at the end of the year. As we test our hypothesis on a set of eight beliefs and values, we calculated standard p-values as well as q-values based on the false discovery rate and, thus, adjusted for multiple hypothesis testing.¹³

If we compare business and economics students, there is a significant difference at the 10%-level based on the p-value regarding expectations of intergenerational income mobility at the start of the academic year (Table 2, column 5). This seems to suggest that economics students are less likely than business students to believe that they will earn more than their parents in the future. However, this estimate loses significance, when correcting for the false discovery rate. We also find that this difference is not persistent over time. This would suggest that there are changes in the expectations of business students, economics students or both. Moreover, at the end of the year, there is a marginally significant difference between business and economics students with regard to the belief that the state can be trusted (Table 2, column 4). This would imply that economics students are less likely to believe in the trustworthiness of the state at the end of the year than business students. However, also here we find that this estimate is not significant based on the adjusted q-values. Regarding the other beliefs and values under investigation, there are no significant differences between business and economics students at the beginning of the year, nor at the end of the year.

We then compare business students and students from the other three disciplines under consideration. At the start of the year, business students on the one hand and psychology and social sciences students on the other hand differ with regards to all but one belief, whereas law students differ on six (five based on adjusted q-values) out of eight beliefs and values. However, some of these differences are persistent over time while others are not. For example, psychology students are less likely to trust the state than business students (Table 2, column 4), however, this difference for psychology and business students is not persistent (based on the q-value). Psychology, law and social sciences students are also more likely to believe that firms abuse their size compared to business students (Table 2, column 1). However, the difference with business students is only persistent for social sciences students. Furthermore, social sciences students are less likely to believe that exchange is mutually beneficial compared to business students at the beginning of the year, while at the end of the year this difference between social sciences and business students is not statistically significant anymore (Table 2, column 2). It also holds that students from the three other disciplines are more likely to value equality and less likely to value wealth than business students (Table 2, columns 6, 7 and 8). Some of these differences in values are persistent, such as the difference in values between business students and social sciences students. However, the significant differences between business students and law and psychology students on, for example, valuing equality disappear over time.¹⁴

We can therefore not reject hypothesis 1 for many beliefs and values under investigation. Our results show that, from the outset, the beliefs and values of business students are different from students of other disciplines. This shows that business students self-select into the field on the basis of certain beliefs and values. We also find that some differences in beliefs and values between business students and students from other disciplines persist over the course of the first year, while others do not. This tells us that, over the course of the year, changes in beliefs or values occurred for either business students, students of the other discipline, or both. Although we are unable to distinguish between these three scenarios based on the results in Table 2, this finding is indicative of socialization for students of either one or of both disciplines.¹⁵

In this section, we present the results of estimating the model specified in Eq. 2. We examine whether and how beliefs and values change within a discipline over the course of the year. The reference category, thus, consists of students of the relevant discipline at the start of the first year. As we cannot track individual students over time, the changes that we observe are changes in the typical student and can be due to a combination of social interactions, learning and differential attrition effects. The results are reported in Table 3. As with the results in Table 2, we calculated standard p-values as well as q-values based on the False Discovery Rate and, thus, adjusted for multiple hypothesis testing.¹⁶

We find that business students have the most changes in beliefs and values over time. At the end of the first year, business students are more likely than at the beginning of the year to believe that someone’s lot in life is deserved (Table 3, column 3) and that they will earn more than their parents in the future (Table 3, column 5). Moreover, business students are the only students for whom these beliefs significantly change over time. Conversely, they are less likely to value equality after their first academic year (Table 3, column 6). The evidence reported in Table 3 does not allow us to reject hypothesis 4; there are changes in beliefs and values of the typical business student over the course of the first year.¹⁷

By studying marginal effects, which can be found in the appendix, we can comment on the effect sizes we find regarding changes in beliefs and values of business students over time. Taking the belief that someone’s lot in life is deserved as an example, we find that male business students are about 7 percentage points less likely at the end of the year to disagree with the statement that someone’s lot in life is deserved (i.e., to choose answer option 1) than at the beginning of the year. They are also about 5.5 percentage points more likely to believe that someone’s lot in life is deserved (i.e., choose answer option 4 or 5) at the end of the year (see Appendix, Table 19). Regarding valuing equality, male business students are 6 percentage points less likely to view equality as fundamentally important in their life at the end of the year than at the start of the year. These students are 3 percentage points more likely to find equality ‘important’ (i.e., answer option 4, the middle of the scale) and 4 percentage points more likely to find it either not or not at all important (see Appendix, Table 22).

An important finding is that we find no significant changes over the course of the first year for economics students in Table 3, unlike what we observe for business students. We therefore reject hypothesis 3, regarding the role of economics in making business students different. Accordingly, the changes over time that we observe for business students are unlikely driven by their exposure to the teaching of economics. If economics courses were the culprit, the trends in the values and beliefs of economics students should be at least qualitatively similar to those observed for business students, since economics students are exposed to more economics than business students. Instead, we observe that the values and beliefs of economics students are inert. Exposure to economics can therefore not be driving the trends in the beliefs and values of business students.

The take-away of this section is that we cannot reject hypothesis 2 in several instances: some beliefs and values of business students change over time during their studies. We, therefore, find that socialization affects both the beliefs and values of the typical business student. For other disciplines and for some of the beliefs and values under consideration, there are also instances where hypothesis 2 is not rejected. These changes are likely to contribute to the difference between business students on the one hand and students from other disciplines on the other. On the contrary, we do not observe socialization effects for the typical economics student over time and, therefore, reject hypothesis 3.¹⁸