MYTHBUSTER: The Bogus Economics Professor That Didn’t Know Economics

 

For over fifteen years, a story about a professor’s classroom experiment of ‘socialising’ grades has been circulating around the globe in various forms, and mostly recently as a chain email.  The story apparently shows that ‘social loafing’ is inevitable in a society where rewards are averaged for a group, rather than efforts rewarded individually.

Taken to its conclusion, such a finding would presumably demonstrate that team sports could never be competitive, since each player gets the same result as the rest of the team regardless of how much effort they put in.

There must be more to the group dynamics than the overly simplified model of the mythical professor’s classroom.

Psychologists, in experiments of group performance, have found that performance results from aggregation of group rewards are not so clear-cut.  Indeed, the opposite effect, of improved average performance from group formation, is also possible in many circumstances.

First, here’s the story of the professor (remembering of course, that it is completely bogus)

snopes.comWhen the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. Is this man truly a genius?

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, “OK, we will have an experiment in this class on Obama’s plan”. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.

As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed.

It could not be any simpler than that. (Please pass this on)

Remember, there IS a test coming up. The 2012 elections.

These are possibly the 5 best sentences you’ll ever read and all applicable to this experiment:

  1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
  2. What one person receives without working for, another person must work for without receiving.
  3. The government cannot give to anybody anything that the government does not first take from somebody else.
  4. You cannot multiply wealth by dividing it!
  5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Can you think of a reason for not sharing this? Neither could I.

[INSERT NAME HERE]

Anyone who has actually been a student in a group university assignment (with, god forbid, socialization of marks) would realize there is more to group dynamics than loafing alone.  Psychologists have identified a process of ‘social compensation’  in experiments of group performance.  If the reward is highly valued by the majority of the group, they would put in extra effort to compensate for the chance of a few slackers bringing down the average result.  They will also put in the effort to help the poor performers improve their own individual skills.

As a general rule, where the reward is of low value, social loafing is likely to occur, and the group may breakdown.  After all, why expend the social effort of coordinating a group, especially for the individual high performers, for no particular reward.  Conversely, groups perform very well where the reward is highly valued by the majority of members, and even more so when competing against other groups.

The complexity of group interactions across the whole economy is one reason economics usually appears oversimplified, but it is a great relief that economists are now building on the understanding of human behavior.

Obamanomics will or will not fail, but only because he retained the same supposedly financial wizards from the same Bush Administration.

About Asmartrock

N. Mark Castro is the chief political communications strategist for PT AsiaLeads, a political and communications policy-making body based in Jakarta, Indonesia. He is also the Executive Director at the Southeast Asia Consulting Group, an investment advisory company assisting clients roll out their presence for the ASEAN Economic Integration in partnership with government. The views posted here are his own and do not in any way reflect the views of the companies he represents.

Posted on February 23, 2013, in General, Politics and tagged , , , , . Bookmark the permalink. 1 Comment.

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