Personality Type and Student Performance in Principles of Economics
I got this from Greg Mankiw’s blog, where he posted a fascinating e-mail from a medical student on economists’ behaviour. According to the study above, students with ENTP, ESTP and ENFP personality types tend to do worse in Principle of Macroeconomics courses compared to ISTJ type students.
Abstract: This paper explores the relationship between student’s personality types, as measured by the Myers-Briggs Personality Type Indicator, and their performance in introductory economics. We find that students with the personality types ENTP, ESTP, and ENFP do significantly worse in Principles of Macroeconomics than identical students with the personality type ISTJ. We also find that introverted students earn significantly better grades than identical extroverted students. When we include the temperament variables described in the work of Kiersey and Bates (1984) in our model, we find that NT and NF students perform significantly worse in Principles of Macroeconomics than their SJ counterparts. We also find that a student whose temperament type matches the class instructor’s temperament does significantly better in the class than a student whose temperament type does not match the instructor’s. We believe this provides evidence of the importance of matching a student’s learning style with a professor’s teaching style. In conclusion, we discuss many options for improving instruction in the introductory economics course by offering a variety of different teaching and grading strategies that will better accommodate our students’ diverse personality types and learning styles.
I can see why NT and NF students tend to do badly in economics classes - some parts of textbook economics are surprisingly counterintuitive. The principle of comparative advantage is the first that comes to mind - the vast majority of people who have never taken an economics class believe that if American (for example) companies are less competitive than Japanese firms, America is doomed, mass unemployment will follow and Japan will take over the world. The reality is that mutually beneficial trade can and will take place even if Japan is better than America in all aspects. Although the logic behind this is unassailable, it does assume that displaced workers will find new jobs quickly - an assumption that may not be as accurate as we had hoped.
Suppose there are only two countries in this world - Japan and America - and these countries produce only two goods - pizza and cars. Japan is better at making both pizza and cars. Although Japan has an absolute advantage in both industries, America and Japan can both be better off by specialising in the industry that they have a comparative advantage in (eg if America has to give up more pizzas to make cars, it should specialise in pizzas - and if Japan has to give up more cars to make pizzas, it should specialise in cars). Trade takes place and everyone is better off - except for the American car workers and Japanese pizza chefs who are now out of work. Sure, they can retrain themselves and find a job in the other industry - but how long will it take? If it takes too long, they might not bother to retrain and would prefer to drop out of the workforce altogether. Or some automobile engineers may really, really suck at making pizzas. This is an extremely simplified view of the world, and fortunately in the real world displaced workers can find jobs more closely related to their skill sets. But I think some economists underestimate the time needed to retrain and find a new job. Yes, everyone is, as a whole, better off with free trade, but there will always be some people who are adversely affected. I think some of the gains from free trade should be transferred to the structurally unemployed, to help them find new jobs.
I’m currently reading ‘Hidden Order: The Economics of Everyday Life’ by David Friedman, son of the late Milton Friedman. It’s the best primer on neoclassical economics I’ve ever read. I was taken aback when he introduced indifference curves in the first chapter - something we never learned in A-level economics. Usually pop economics books begin with the basic principles of opportunity cost and supply and demand, but not this book. There is so much that is counterintuitive in this book that I wonder if neoclassical economists are from a different planet altogether. So far, the one that stunned me the most was Friedman’s assertion that you will be better off no matter what happens to the price of your house - whether your house price goes up or down, indifference curves show that you will still be better off. What Friedman neglects to mention (perhaps to avoid overcomplicating things) is that in many countries, but especially the US and the UK, it is common for homeowners to take out a second mortgage on their houses for consumer spending. In a booming housing market, borrowing against your house is like turning a portion of your capital gains into cash - your house is now worth more, so you take out a second mortgage (you can get more cash now because the price of your house has appreciated), pay off your first mortgage and spend the rest of the money. If your house price falls, you’re in deep trouble - we have what is called negative equity, where your mortgage is worth more than your house. It happened in the UK in the early 1990s and helped exacerbate the recession at that time.
If we ignore the fact that US and UK consumers love borrowing against their houses, the indifference curve theory works. But can we really ignore it? The mass hysteria currently taking place in US credit markets thanks to subprime mortgages suggests otherwise. Perhaps this is why ISTJ students tend to do better than the intuitive/feeling types - when studying economics, be prepared to leave intuition and common sense at the door. Logic and mathematics, along with the many simplifying assumptions we must make, rule the day.
