Did economists ruin business schools?
The Harvard Business Review has for the past couple of weeks been hosting a hoedown of an online debate on How to Fix Business Schools. Upon initial examination I thought it suffered a little from the usual malady of such giant group blog efforts: Lots of people saying their piece with little reference to what everybody else has said. But then I started looking at the comments. The discussion after Chicago business school prof Steve Kaplan's defense of economists in business schools, for example, is pretty cool.
Wrote Kaplan:
Human beings are self-interested today and they always have been.
The economy has experienced booms and busts for decades, if not centuries, well before economists taught in MBA programs. The geneses of the Panic of 1907 and the Great Depression have many similarities to those of the current crisis. The tools economists give to students better equip them to understand the business world they will experience. In fact, one of the ways CEOs of financial services firms (e.g., Lehman's Dick Fuld, Merrill Lynch's Stan O'Neal and Citigroup's Charles Prince) failed was in not understanding the agency theory and economics taught in business school. In particular, it is a simple economic point that it is a bad idea to pay up front fees and bonuses for investments or loans that have long-term payoffs.
Responded Stanford's Bob Sutton, whose anti-economist screed had set off Kaplan:
I ... want to challenge the Professor Kaplan's comment that "Human beings are self-interested today and they always have been." There is a stream of research -- which economists routinely ignore, reject, or are unable to process -- that shows self-interest is not hardwired as he implies, and it is fact a social norm that gets stronger or weaker depending on the assumptions that people hold about their own behavior and those around them.
Elaborated management consultant Dev Patnaik:
Business schools moved to a model that emphasized quick thinking, confident elocution and a style of reasoning that looked more like combat than it did contemplation. Indeed, the entire case study approach values explicit data (economic or otherwise) at the expense of intuition, snappy answers at the expense of thoughtful questions, and competition at the expense of collaboration. Students are rarely encouraged to confess “I don't know, but wonder if…” They're instead encouraged to look like they know the answer, whether they know it or not. We didn't just teach students that economists view people as self-serving with guile. We taught students that they should be self-serving with guile if they wanted to do well in our classes. And we taught them the “soft skills” they needed to get really good at it.
-
1
the problem isn't (usually) the economists, its the demagogues who take highly specialized and/or qualified economic arguments and use them to make general and/or unqualified political/economic arguments. (There are exceptions -- 'economists' like Milton Friedman are a problem themselves).
_
One example was that Gaussian co-efficient thing you cited a while back. Another example is the good old Lauffer curve.
_
economics is like academic feminism -- as long as you understand the basis behind statements like "marriage is rape", its possible to have a smart discussion; but if you don't understand the theoretical underpinnings of feminism, and the history of marriage (and sexuality), saying "marriage is rape" doesn't lead to productive discourse.
_
the problem is that there was lots of money to be made by pushing the economic equivalent of "marriage is rape" into the public sphere... -
2
Naturally, there is a huge intellectual gap between economists and the rest of humanity: e.g 100% of economists believe that it is possible for baby boomers to save for retirement and live on these retirement savings.
-
However, MBAs are even lower in the pecking order. -
3
Having just completed an MBA, I feel compelled to point out that the implication that this level of hegemony exists among MBAs, business schools, economists, etc. is pretty ridiculous. There are plenty of thoughtful people and disagreement among those categories. Saying, "economists taught this" or "business schools teach that" is like saying "white people" or "black people" think this or that. Not nearly as offensive, but just as ignorant.
-
4
Dotybj, I finished my MBA 27 years ago, and nevertheless agree with your point completely. Their hegemony argument IS ridiculous and whoever thinks that business school students emerge from business schooll with a mass produced, unified way of thinking is completely ignorant (not just about business schools, but about human nature). To point out how ridiculous such a notion is, how did law schools produce Anthony Scalia and Ruth Ginsberg? Their ways of thinking about issues could not be more diametrically opposed, yet they both came from "law schools".
-
5
economists have ruined a lot of things on their own, no need to go blaming any 'ruination' of business schools (from which supposed Golden Age?) on them as well. Business schools have done a fine job of that on their own.
-
6
This may be slightly off topic but I have a bone to pick with the many MBAs who seem to be representing themselves as economists these days. It's become something of an epidemic and has served to greatly muddy the debate on public policy. And it's gotten to the point that when I read an article by an "economist" that sounds like it is not really their field, I go and google their actual training and it inevitably turns out they are actually an MBA. John Tamny, the editor of Real Clear Markets is a case in point. I'll make a deal with the MBAs. I'll promise not to claim to be an expert in business and finance if they promise not to claim to be experts in economics.
-
7
"Management consultant" Dev's comments on the case study approach are absolutely asinine. My MBA program focused on the case study method, which emphasized thoughtfulness, thoroughness, the need for humility and insightful decision-making in the face of informational ambiguity, and collaboration with one's team. Of course to the extent a professor "cold calls" you in class on a specific case, the answer should be "snappy," but this snappiness is only achievable to the extent that you've already spent time evaluating the case through intuition, thorough analysis, skepticism and collaboration with one's study team. I'm not sure where Dev has spent time learning about the case method approach, but Dev's allegations about purported weaknesses of the case study approach certainly don't jive at all with my MBA experience.
- foxjust @MichaelWolffNYC Come on, it's the 'Burn Rate' of post-traumatic stress disorder thrillers! - 4 hours ago
- foxjust An acronym we can believe in RT @moorehn RT @shannybasar DOLTS, Dangerously Over-Leveraged Triple-A Superpowers http://bit.ly/bJq48M - 5 hours ago
- foxjust My first UK book interview (at Fool.co.uk). Complete with bestest, most gushingest intro ever http://bit.ly/aJaW2c - 6 hours ago
Most Popular »
- Undercover Boss Is Phony and Manipulative. But Don't Hold That Against It.
- NH Poll: Dems Face A Thumpin'
- Paul Ryan Won't Run For Prez In 2012
- Today's Health Care Checkup - GOP Plans Under the Spotlight
- Love At First Byte: Your Nerdy Valentine's Day Guide
- CO Gov Poll: Hickenlooper +4
- Driver's licenses for the Internet, Part 2
- OH Gov Poll: Kasich Maintains Lead
- In The Spotlight, Paul Ryan Faces A Purity Test
- Jack Murtha, 77, Dies
- Foreign Fish Species Threaten Great Lakes Ecosystem
- Al-Qaeda, Yemen, Wedding: Unlucky Name, Celebration
- Tea-Party Convention: Lessons on Palin and the Movement
- Venezuela: Chavez Protests at Ball Game Over Electricity
- Is the Bible Fact or Fiction? Archaeology's Discoveries
- Why China Needs The U.S. -- And Vice Versa
- Marja: Operation Moshtarak Tests Obama's Afghan War Plan
- 'Black Hearts': On Green, Iraq's 'Triangle of Death'
- Spain's Troubled Economy: Fears Over Euro Zone Outlook
- Who Were The First Americans?
Quotes of the Day »
RSS