But you won’t believe us that ethics courses in business school are a total waste of time and money. As Orwin says:

By the time a student arrives at university, and a fortiori several years later when he ambles on to his MBA, his ethical character is already firmly set. Whether virtue can ever be taught was already a thorny question for Plato. Whether it can be taught to adults, in a classroom, shouldn’t be a thorny question for anyone.

Yet even with the latest amazing, high-profile evidence for our position, people continue to resist the idea:

A former student at Harvard Law School, [Mathew Martoma] co-wrote papers on medical ethics before seeking a business degree at Stanford University and joining a little-known Boston hedge fund. … [Martoma is] at the center of what U.S. prosecutors describe as the most-lucrative insider-trading scheme they’ve ever uncovered… [At Harvard Law School he] wrote two medical-ethics papers, one of which identifies him as a member of Harvard Law’s class of 2000 and as the former deputy director of the National Human Genome Research Institute’s Office of Genome Ethics.

Martoma’s partner in crime, University of Michigan professor Sid Gilman, spent decades on safety and ethics and compliance committees.

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16 Responses to “I have tried to tell you. Clifford Orwin has tried to tell you. Stanley Fish has tried to tell you.”

  1. Van L. Hayhow Says:

    To use a term from an old Doonesbury cartoon, in a paraphrase, Right and Wrong 101 is not likely to do much good when you are already in grad school.

  2. Ani Says:

    Is this materially (pun intended) different from maintaining a roster of English majors who write poorly, or philosophy majors who reason poorly, or economics or business majors who make financial mistakes? I’m genuinely unsure how you or those you cite purport to demonstrate, by citing headline-grabbing individuals with ethical failings, that coursework in ethics is useless — for those individuals or for others.

    Not to mention that medical ethics likely bears only incidentally on insider trading.

  3. Daniel S. Goldberg Says:

    We’ve had this out before on the blog, UD, but many of these arguments are utterly question-begging because they simply assume that the evidence produced shows that ethics cannot be taught. An equally valid inference is that the ways in which ethics is being taught — or was taught to these yahoos — is useless.

    Concluding from the fact that moral agents have behaved badly after taking what passes for ethics classes that ethics cannot be taught is a rank instance of the post hoc fallacy.

  4. Margaret Soltan Says:

    Daniel: Well, the post was brief, etc. — but I’ve gone into greater detail, and provided evidence of other kinds, in earlier posts. I think it’s reasonably demonstrable that ethics courses on the graduate level – in business school, in this instance – have so far been largely a failure. So much so that no one blinks at articles with titles like Do Business Schools Incubate Criminals? (Answer: Yes.) (And this article calls for an end to ethics courses in b-schools.)

    The reasons – relative to business school in particular – are pretty obvious. Virtually everything in the curriculum – which stresses the often cut-throat competitiveness and acquisitiveness of sophisticated finance – implicitly runs counter to the one measly ethics course. As the author of the article I link to writes:

    My colleague Gary Becker pioneered the economic study of crime. Employing a basic utilitarian approach, he compared the benefits of a crime with the expected cost of punishment (that is, the cost of punishment times the probability of receiving that punishment). While very insightful, Becker’s model, which had no intention of telling people how they should behave, had some unintended consequences. A former student of Becker’s told me that he found many of his classmates to be remarkably amoral, a fact he took as a sign that they interpreted Becker’s descriptive model of crime as prescriptive. They perceived any failure to commit a high-benefit crime with a low expected cost as a failure to act rationally, almost a proof of stupidity.

    That’s the University of Chicago we’re talking about.

    You cannot teach ethics when everything else you’re teaching is interpreted by many people as having a strong amoral, selfish cast to it. The ethics course just ends up looking lame and hypocritical. What you can do is try to infuse into your courses about hedge funds cautionary tales about how you can end up in jail or destroy the reputation of your firm if you do illegal things. As you may know from earlier posts, I think business schools should have regular guest lecturers who’ve done time in jail for financial crimes.

  5. Jack/OH Says:

    The good people I know who’ve abandoned business careers have done so for a few reasons. (1) Low pay with respect to the responsibilities they’ve been given, (2) Excessive and uncompensated commuting and other travel expenses, (3) Uncompensated clothing and entertainment expenses, construed broadly, (4) Demands from superiors that they engage in conduct that’s dubious on its face, or may be civilly or criminally actionable.

    I know nothing of business ethics courses. Any course worth its salt ought to at least broach the idea that the good guys will end up worse off than the bad guys. Why? Because it happens.

  6. Z Says:

    Jack, I am taking heart because of your points, especially 1-3, I do not feel so alone in academia any more.

    Re business ethics, I thought it was so business people would understand why others found things unethical, so as to be able to talk about them and have better public relations, and about how to avoid lawsuits. At my university they talk about very egregious things very far away, like Bhopal. I do not know what they say about BP but I would bet that there is a lot of discussion of safety standards and that this is about caring on the surface and limits of liability really.

  7. Margaret Soltan Says:

    Z: Precisely. The wise business school doesn’t bother wasting time and money, and insulting everyone’s intelligence, by pretending that we’re all going to straighten our ties and go out there and be ethical. The wise business school scares its students with the consequences of acting with flagrant illegality — or, at the very least, with the consequences of getting caught.

    I have always found this Alan Greenspan speech the most pathetic thing, as he just revs up the rhetoric on behalf of being good boys and girls — in front of the graduating class of the WHARTON SCHOOL. America’s most prolific producer of insider traders.

  8. Daniel S. Goldberg Says:

    Hi UD,

    “You cannot teach ethics when everything else you’re teaching is interpreted by many people as having a strong amoral, selfish cast to it. The ethics course just ends up looking lame and hypocritical.”

    I entirely agree. But again, this just shows the enormous deficiencies in the way ethics is actually positioned and taught in business schools. The hidden curriculum matters, and much more so than formal pedagogy. But the latter just proves Aristotle’s points regarding how ethics can and cannot be taught, rather than illustrating that it cannot be taught.

  9. Margaret Soltan Says:

    Daniel: But much depends here on the actuality of the curricular content and behavioral standards of business schools. I’m arguing that there’s an immovable disconnect between scrupulous moral behavior and hedge fund capitalism — and that the more sophisticated, competitive, and aggressive the capitalism you’re learning — the more callously utilitarian — the greater that disconnect. High-flying biz schools like Wharton (which supplies many of our most amazing insider traders) are kidding no one when they offer play nice courses.

    Look at the cat and mouse game America’s most astounding fund – Steve Cohen’s – has been playing with the SEC for years. SAC has a vast staff of compliance people (just as all big-time university sports programs do) and Cohen points to them when the SEC notes that his firm keeps producing people who end up in jail for insider trading. That compliance group serves the same function as ethics courses in business schools.

    Remember: No one was more insistent that all employees pass ethics courses than Rod Blagojevich.

  10. Daniel S. Goldberg Says:

    Apologies for the broken record, but again, I entirely agree. You are pointing specific features of the way ethics is modeled, positioned, and taught within American business schools. These are sociological facts about a given ethical discourse, if you will.

    You will receive nothing but the most enthusiastic agreement from me on the harshest and most vituperative criticisms you can offer regarding the sufficiency of that discourse and the capacity to actually impart, model, or teach virtuous behavior.

    But none of that qualifies as an argument that an entirely different discourse about ethics would be similarly insufficient. The abject failures of current practices does not illustrate that any conceivable practice at all would fail.

  11. Ani Says:

    “You are pointing specific features of the way ethics is modeled, positioned, and taught within American business schools.”

    Perhaps there is another, prior post that does. But nothing in this post and the links provided demonstrates any actually knowledge of the ethics curriculum at leading business schools. UD and the linked piece by Luigi Zingales (who glibly supposes courses in which some “low-ranking professor preaches to students who would rather be somewhere else,” presumably in his own courses) imagine that “ethics should become an integral part of the so- called core classes . . . that tend to be taught by the most respected professors,” who would make “make their students aware of the reputational (and often legal) costs of violating ethical norms in real business settings, as well as the broader social downsides of acting solely in one’s individual best interest.” I don’t have the foggiest idea why anyone thinks this isn’t done (it often is), why adding an ethics course or module as something other than aside isn’t a good idea (that is, why one can’t do both), or why adding the endorsement of such “respected professors” is some cure-all for greed.

    Supposing that ethics courses cure unethical behavior by business school graduates is ridiculous. So is supposing that more ethical behavior will be induced by getting rid of such courses. And reaching the latter conclusion based on prosecutions or scandals seem intellectually slipshod.

  12. Margaret Soltan Says:

    Ani: My objection is really based on a bias against waste and self-delusion. You give no reasons for having the courses; you merely point out that not having them might also somehow be a mistake.

    It’s not intellectually slipshod to base attacks on big-time university football on a series of scandals — the most prominent of which (currently) is Sandusky. Neither is it problematic to point, as I, Zingales, and many others do, at the gathering synergy of some of our best MBA grads (many of them from one school, Wharton) and their escalating insider trading convictions. What is probably about to happen to SAC is not one scandal – it is the culmination of a structurally unsound set of practices, rather widely adhered to (when even Martha Stewart’s in on the game, you know it’s de rigueur.). It’s the nature of competition, isn’t it? Football or finance – got to keep your eye on what the strongest competition is doing, and how it’s doing it. The SEC goes after SAC because it’s the biggest. Setting the standard for the others, you might say.

    What’s positively destructive about specific ethics courses in the context of fast-lane American MBA programs is that they become sops, and everyone knows it. SAC has billions of compliance officers, you see – and by the same principle MBA programs should (as you suggest) enlarge their ethics offerings. Clifford Orwin points out what this accomplishes: Students are able to “talk a much better game of ethics.” Universities should not be hypocrisy-machines.

    Much better, as I have suggested, to acknowledge the situation and invite Bernie Madoff in to conduct cautionary seminars. You can’t Aristotle smart unscrupulous 25 year olds out of bending and perhaps breaking rules. But you might be able to scare some of them.

  13. Ani Says:

    Thanks for the reply.

    1. As to reasons for having the course, I do doubt that it’s sufficient to have even the most esteemed professors tack on a little ethics coda in their core classes; I doubt that they can be convincing in their commitment to the centrality of ethics, and I doubt they are capable of discussing in a rigorous and effective manner how to employ ethical reasoning to deal with unforeseen issues. Students actually have a lot of questions, and glib representations that it’s bad business to break the law do not seem to do the trick. (Would you, based on your reading, be convinced of that proposition?) But it’s also that in the absence of any convincing evidence for or against additional dedicated instruction, I am inclined to defer to the schools that have thought hard about the question, rather than those capable of finding hyperlinks to headlines. I do get, though, that you believe business schools are entirely interested in generating better press and not in addressing the problem, and if one’s convinced of that then there’s far less reason to defer.

    2. Neither you nor I have any idea how substantial these scandals would be without dedicated ethics courses. Anecdotes don’t establish causation. (Or if they do, I’d note that the Gilded Age preceded most MBA programs.) The difference between this and your football coverage is that there you’re lamenting primary conduct in the university, and arguing that something has to be done in that “field”; here, you’re lamenting conduct among professionals (competition, etc.), and attributing blame to their education.

    3. I agree with you and with Clifford Orwin that ethics instruction will not magically produce better people, that there should be emphasis on informing students of professional standards, and that there’s undue optimism that ethical education is a cure-all. (Compliance departments have a completely different motivation.) But the assumption that ethics instruction encounters students fixed in their beliefs and behavior, and gives them tools for deception rather than tools for reflection and self-restraint, is just an assumption, and I’m not sure why we should accord Clifford Orwin any particular deference on this question.

    4. You propose, again, bringing Bernie Madoff in, as if a pinstriped version of scared straight hasn’t been contemplated before. You get my position that doing this isn’t incompatible with providing additional, more rigorous instruction (unless that education is really bad, because it gives fiends ethical words to use so as to lull their victims and regulators into complacency). You assume this works, and you assume that this isn’t already done to the extent it can be done. I have a hypothesis as to how students will react: man, that guy’s an idiot. But their reasoning is unlikely to be what you or I’d encourage.

  14. Margaret Soltan Says:

    Ani: You say I assume a couple of things that I don’t assume.

    I don’t assume that business schools only care about pr and don’t care about the problem. I think they do care. I simply think it’s the nature of things like hedge fund capitalism – the sorts of things MBA programs teach – that they’re pretty unethical as such. So no matter how you frame your ethics courses, in terms of what some of your grads are going to end up doing, you can’t get there from here.

    I don’t assume hauling Bernie in works very well at all. If it scared just a few bad actors every year out of doing far worse to the economy, and to other people, than they’re already doing, I’d be pleased. But unlike expensive, burgeoning ethics courses, Bernie’s cheap – practically free.

    See, my thing is that you’d expect people in universities to argue that because b-schools are producing a lot of our biggest financial criminals (or let’s say – more mildly – that because a lot of our biggest financial criminals boast MBAs from our top schools) we should have more, more, more ethics courses.

    And if, let’s say, over the next five years, our high-profile MBA programs graduate more and more criminals every year, people in universities are liable to say: This proves we need even more ethics courses. It’s sort of like Leonid Brezhnev saying Admittedly, comrades, communism in Russia falls short of the ideal; this is why we must deepen our commitment to it.

    After discussing some proposed changes to the MBA ethics curriculum, two b-school professors conclude that if major changes can’t be made


    [P]erhaps we should remove discussion of ethics from business schools altogether. Otherwise, it serves merely as empty PR for MBA programs and to appease the consciences of those who teach in them.

    I think it’s a good sign that serious b-school professors are broaching the possibility of removing ethics courses from b-school. That would be a good way to start from scratch: Stop asking highfalutin questions about ethics, and start inquiring, in a very simple way, into the internal character of some of our most high-profile b-schools.

  15. Ani Says:

    Your response is very reasonable, and I apologize if I misunderstood your views. I also thought the Slate article you linked was pretty sound (though the authors’ link to support the proposition that “in actuality, the picture suggested by the data is that business schools have no impact whatsoever on the likelihood that someone will cook the books or otherwise commit fraud” was pretty strange); in particular I’m sympathetic to their proposal for restructuring (their) courses, which I think dominates the burn-it-down part you highlight.

    I am not sure, though, that the business school ecosystem will continue to work as you suggest. My sense is that the ethics curriculum is fairly alien to the environment — the style of learning, its negative/restraining character, the limits to student interest as a function of job-getting potential, etc. — and that, perhaps even more than management or marketing, it is fairly likely to be evaluated by the results it achieves.

  16. Margaret Soltan Says:

    Ani: Yes – I so wanted to quote that “no impact” thing to you, but one look at the study he bases it on had me scratching my head…

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