The student asks:
My school offers two main elective history courses for seniors: Government and Economics. Due to scheduling limitations, not many kids are able to take both. I’ve noticed something interesting as the year has progressed. The students who are taking the government course are increasingly endorsing leftist ideologies while the economics students are becoming increasingly right wing. For instance, my school’s paper recently ran an editorial that ‘complained’ that too many of Lawrenceville’s finest were going into investment banking, and not into seemingly ‘socially beneficial’ careers. What is your view on government intervention on economic equality and the like? Do all economics students show republican (or right of center) tendencies?
To my surprise, Mankiw actually says “I believe the answer is, to some degree, yes“, and he outlines three reasons:
First, in some cases, students start off with utopian views of public policy, where a benevolent government can fix all problems. One of the first lessons of economics is that life is full of tradeoffs. That insight, completely absorbed, makes many utopian visions less attractive. Once you recognize, for example, that there is a tradeoff between equality and efficiency, as economist Arthur Okun famously noted, many public policy decisions become harder.
Second, some of the striking insights of economics make one more respectful of the market as a mechanism for coordinating a society. Because market participants are motivated by self-interest, a person might naturally be suspect of market-based societies. But after learning about the gains from trade, the invisible hand, and the efficiency of market equilibrium, one starts to approach the market with a degree of admiration and, indeed, awe.
Third, the study of actual public policy makes students recognize that political reality often deviates from their idealistic hopes. Much income redistribution, for example, is aimed not toward the needy but toward those with political clout.
And of course:
Nonetheless, studying economics does not by itself determine one’s political ideology. I know good economists who are distinctly right of center and good economists who are distinctly left of center. In my department at Harvard, I would guess that Democrats outnumber Republicans among the faculty (although there is surely more political balance in the economics department than in most other departments at the university).