Could economics be improved by incorporating the best lessons of literature? Northwestern’s Morton Schapiro and Gary Saul Morson discuss a dialogue between the disciplines.
Gary Saul Morson is the Lawrence B. Dumas Professor of the Arts and Humanities at Northwestern University in Evanston, Illinois. Professor Morson’s past research has focused on literary theory and the intersection of literature and philosophy. He has particular expertise in Russian and other Slavic literature. He is the only Northwestern professor to simultaneously hold two endowed chairs: one for research and one for teaching and is a rare individual in excelling at both endeavors. His course “Introduction to Russian Literature” is the most popular course among students at Northwestern. He has also written many books including acting as the editor of an abridged version of Dostoevsky’s diary entitled A Writer’s Diary (2009); Anna Karenina In Our Time (2007); Hidden in Plain View: Narrative and Creative Potentials in ‘War and Peace’ (1988); and also, along with Morton Schapiro served as editor of The Fabulous Future?: America and the World in 2040 (2015). Before joining Northwestern’s faculty, Professor Morson was the Chair of the Department of Slavic Languages and Literature at the University of Pennsylvania and received his Ph.D. from Yale University.
Morton Schapiro is the President of Northwestern University as well as a Professor of Economics in the Weinburg College of Arts and Sciences. He also teaches courses in the Kellogg School of Management. Before joining Northwestern in 2009, he was the President of Williams College. President Schapiro is one of the nation’s leading experts on the economics of higher education and has testified on the subject of access and affordability in higher education before the United States Congress. He has written or edited nine books including The Student Aid Game: Meeting Need and Rewarding Talent in American Higher Education (with Michael McPherson, 1998) and, along with Gary Saul Morson, served as editor of The Fabulous Future?: America and the World in 2040 (2015). President Schapiro received his Ph.D. in Economics from the University of Pennsylvania.
EW: I’m extremely appreciative of your agreeing to speak with us. For someone like myself, who has a background in economics and enjoys Russian literature, this book was almost uniquely tailored.
MS: We have a new fan. Here’s a picture of us with Jeremy. We just came back from England and that’s actually Jeremy Bentham. His face fell off about ten years ago and of course, he’s been dead since I think 1822. He has a wax face now, but that’s his skeleton. They have him right at the entrance to the president’s office at University College, London.
EW: He’s the Vladimir Lenin of the United Kingdom.
MS: Do they have Lenin stuffed?
GSM: Yeah, they have him in a mausoleum. He’s on display.
EW: You both discuss your backgrounds in the first chapter of the book, but I was curious what led you to write this? I know you wrote another book together called The Fabulous Future. Did it come together slowly or did you have a sudden epiphany?
MS: The moment was about eight years ago because we decided to teach a course together. I had just come to Northwestern. We overlapped briefly on the faculty of the University of Pennsylvania, but we didn’t know each other there. We found that we had a couple of friends in common and of course Saul’s our greatest humanist so when I became president I invited him over just to talk. I saw that Saul was teaching this class on Russian literature that had greater demand than any other class taught at Northwestern, some unbelievable number – perhaps a third – of students had taken this class with him. So, I said, “Saul, how about teaching a class together?” and he said “great.”
When we talked about the details of the class we realized that a great topic would be the relationship between economics and the humanities. We’ve taught the class seven times now and over the history of the course we’ve added stuff and subtracted stuff.
Saul, did I get any of that right?
GSM: You got it all right.
We did have another theme at one point, which was how different disciplines understand the concept of choice. That led right into the ethical dimension of this book.
MS: This is my ninth book and Saul’s nineteenth book and it’s the first one either of us has written that came straight from teaching an undergraduate class. We have taught books we’ve written, but never before has a book arisen from us directly from a course.
What percentage of the material in this book do you think we’ve done in class?
GSM: That’s a good question. Probably eighty percent.
MS: The Adam Smith problem is something we got from the reviewers, so that’s new. But, how economies develop – that’s two weeks of the class. The good and bad of Gary Becker is two weeks of the class. What Jared Diamond got right and wrong is a week of the class. Economics of higher education is another two weeks of the class.
EW: I bet they wish they could have taken the class before they applied to universities.
MS: Yeah, unfortunately they have to get into the university to take the class.
EW: You mentioned that your class on Russian literature is the most popular at Northwestern. How has this class on the intersection of the humanities and economics been received?
MS: The course evaluations are pretty good. We made the decision, in the beginning, to cap the class at 225 students, which is a large class, but Saul teaches War and Peace to 550 students or something like that.
After we taught the class five times or so, we started to question whether we should continue or not. But, we found a really good classroom on campus that was a little smaller, but had great acoustics and was in a great location. So, we decided to start teaching the class there and cap it at 75 students. The evaluations now are better than they’ve ever been before, but they were always good. It’s constrained, so potential students have to read the syllabus and write a brief essay about why they want to attend.
GSM: It’s a demanding course and we want them to know that.
MS: This year we had the galleys of this book, so it was almost like handing the students their class notes. There are a couple of things we do in the course that is not in the book. But, it’s mostly the same.
GSM: We should redesign it from scratch.
MS: We’re thinking about calling it, “What Economics can Learn from the Humanities.”
EW: Are the students mostly economics or humanities students?
MS: There’s a distribution requirement for many of our students, where you have to take a series of courses in ethics and values. The class counts not for economics. It does count for literature, so you can use it for that. Most people take it for the ethics and values requirement.
We also get a fair number of engineering students who want to take it and the engineering school doesn’t require ethics and values. So, some people take it because they’re looking for something different.
GSM: A lot of students get their first exposure to economic thinking in the course.
EW: When I was reading the section on what you call the ‘dehumanities,’ I thought very much of Harold Bloom. I read The Western Canon when I was younger and I think he was really criticizing people who were overlaying many aspects of the social sciences on top of literature. Reading Shakespeare, for example, with a Marxist perspective and missing the true value of the literature.
GSM: Harold Bloom was one of my teachers at Yale. He was in his 30s and at that time he was the youngest person ever to get tenure at Yale.
He was always on the verge of some mystical revelation or off in the clouds. The lectures were as if he was talking to another poet as well educated as he, so the students couldn’t make any sense of what he was saying. We had to go home and read his book to figure out what he had said in class that day.
The only two lectures that everyone understood were both about Wordsworth and rightly or wrongly, students guessed that the reason was that he doesn’t like Wordsworth. So, those were the best lectures because he was actually talking instead of going off on his own mystical adventures.
EW: You also made the case that it wasn’t just the soft sciences invading literature, but more and more it is the hard sciences.
GSM: A lot of it is the literature people themselves, not those from other disciplines. They’re so desperate to justify what they’re doing because they don’t believe in literature. Instead of asking questions and searching for tools to find the answer, they start with the tools, like digital humanities, and then try to figure out which questions to ask.
Of course, you can learn certain things that way. But, the core of understanding literature has to be understanding literature. It might be fascinating to figure out how many books had the word “The” in the title in 18th century England. I could imagine some use for that, just as I could imagine some use for knowing what book bindery was sewing books together in certain times in Europe. But, clearly, that isn’t what literature is centrally about.
EW: But, why do you feel that’s become the case? Do people think everything that can be said of Shakespeare has already been said?
GSM: I don’t think so. I don’t think everything’s been written on any subject. I’ve never had a moment where I thought that everything I wanted to say about Tolstoy has already been said.
Literature professors who believe their own theories for long enough don’t believe there is such a thing as great literature. The value from specific literature derives from having a meaning that the powers-that-be say it has. They don’t believe that authors have anything to do with the greatness of the work, so that’s not interesting to them or the intentions of the author.
One thing after another has diminished the value of literature and so within the profession, as these theories became accepted it came to be true that the one thing that gives you professional advancement is diminishing the profession itself.
EW: Do you have hope that that can reverse?
GSM: You can hope even when the odds are against you. Do I think it’s likely? You’d be reversing a trend. But, trends have been reversed. It’s probably more likely not to happen than to happen. I hope this book will steer it in the other direction.
MS: In the market for higher education, people respond to the right kind of incentives. If you look at the decline in humanities courses, they don’t decline in courses like Saul’s that teach what the writer intended. As an economist, I have to believe that kind of humanities teaching will become more valuable as it becomes scarcer.
There are a number of people in our English department that try to teach literature in a similar way to how Saul teaches it.
GSM: It’s not where the prestige lies and it’s not the majority, but it’s always been there.
MS: People are attracted to literature in the first place because of the truth and beauty it contains. It will continue to be popular as long as there are people who continue to teach it.
EW: The other person that I thought of besides Harold Bloom was Charlie Munger, the Vice Chairman of Berkshire Hathaway. He often speaks about a multi-disciplinary approach to learning and life and often repeats the quotation, “To a man with a hammer, the whole world looks like a nail.”
You speak a lot in this book about a dialogue between disciplines, but it seems like we’re in a world that values specialization. Is there a solution to that? Is there value in the more traditional liberal arts degree that we’re missing by over specialization?
MS: I think the era of specialization has peaked. There was a time like I said before when I was in econ and Saul was in Slavic languages at Penn and we had no idea who the other one was. There is a lot more interdisciplinary learning and research happening, particularly in the sciences. It’s just a lot harder to divide chemistry versus chemical physics versus medicine.
Even in economics, there has been some pushback in recent decades against extreme specialization. There was a time when you could get a Ph.D. in economics without studying the history of economics. Those days are over. There are a lot of people at Northwestern getting Ph.D.’s who are studying a range of things.
My daughter’s getting a Ph.D. in art history and she’s taking Slavic, she’s doing history, she’s doing sociology, several languages. I’m quite vocal about this because as an economist I do believe in markets and I think what the humanities does best give you a cultural understanding. Cultural skills cannot be outsourced. Empathy cannot.
This book is one of a number that is now emerging in my field. At the presidential address of the American Economic Association by Robert Shiller called “Narrative Economics,” he talked about our book by saying that there’s this new book which of all things discusses how literature can teach economics because stories matter. Economics ignored stories for so long. We took data points without understanding them, we treated culture as something that’s exogenous. So, when you get Bob Shiller – a recent Nobel Prize winner and President of the American Economic Association – discussing it, it’s pretty good. We were shocked. He has a blurb on the back of the book. That gives us a little credibility.
EW: I think you had plenty before.
MS: I don’t know about that. We have an economist with a day job as an administrator and a literature professor doing a critique of economics. We need people like Bob Shiller to give us credibility.
EW: I suppose academic arrogance is a component of the thesis of the book.
MS: There’s a lot of hubris in the field. There’s one thing we didn’t get in the book because we came across the survey after it was published, but there was a survey of American professors in various fields. They were asked, “Is it better to have a multi-disciplinary approach or should you stick to your own discipline?” Seventy-nine percent of psychology professors said it’s better to be multi-disciplinary. So did seventy-three percent of sociologists, and sixty-eight percent of historians. Only forty-two percent of economists said it was better. That means fifty-eight percent of economists believe there is virtually zero to be learned from other disciplines.
EW: I don’t want to be too critical of Gary Becker, we’ll discuss him later, but do you think it’s that approach of ‘we have things to teach them but not in reverse’ that’s producing that.
MS: It gets back to the fact that economics is more like physics to many people because we use math.
I know someone who’s working on the economics of voting right now, but is he really engaging with the people he’s studying? I have friends who work on the cycle of poverty, but are they really engaging with the literature from sociology on the topic?
The New York Times Magazine came out with an article in February about how insular economics is. The writer said, “Do you believe that fifty-eight percent of economists say that there is nothing to be learned from other fields?” My answer was, “Yeah.” I read the economics journals and it’s so rare that they cite anyone outside the field of economics.
EW: The chapter on higher education was very fascinating. You talk about some of the limits of a pure economic approach. Thinking like an economist would, it seems obvious that the root problem here is that the incentives aren’t aligned properly. I don’t know exactly the metrics that the Board of Trustees or Alumni would use to judge your performance, but I’m sure they are very aware of factors like the U.S. News and World Report rankings. Is there a way to change the incentives themselves and to move towards measuring the things that really matter in higher education? If there is, what factors would you weigh heavily?
MS: In terms of releasing data, they should be audited by a consumer organization or the Federal Trade Commission. One of the things I liked from when Obama was in office was the development of a college scorecard – and those were audited numbers. It was only a few factors, but I put a footnote in the book saying that it’s a step in the right direction.
I argued in Washington for years that if you put a figure on your web page, you should be able to defend it. U.S. News doesn’t care. The Federal Government doesn’t think that it’s very important. When I go to D.C. and say, “Do you realize all the games people play with figures like graduation rates and so forth,” people are just shocked.
EW: Why can’t they just tell you how to properly define a metric?
MS: U.S. News does, but you could interpret it different ways and then some people just lie. There’s just no accountability.
EW: There’s no market incentive to increase the accountability, either.
MS: What it means is that every year there’s some scandal. Somebody gets busted, but not busted for being creative with the data, it’s for just completely making up the data. People ask me, “Are you surprised they got busted?” And I always say that I’m surprised they just flat out made up the numbers when they could have just played the game. It’s easy to say that your average SAT’s are 1400 instead of 1300 when you could just get rid of the international applications or get rid of the athletes or the legacies. Rather than just make up 1400, you can manipulate the data to get to the number that you want.
The whole thing is just a mystery to me. I’ve been very public about this for years. I think it’s going to take some independent agency on the numbers before people supply the right numbers.
EW: Do you think the Department of Education has an interest in that?
MS: I don’t think they have except when they did the scorecard, I said, well, maybe this is the beginning of some accountability. The things they looked at were not my favorites, but the fact they looked at it at all was encouraging.
Here it is – footnote 26. “While the College Scorecard is far from perfect, it provides some previously unavailable data on a school’s student debt, loan repayment, and the earnings of its graduates.”
Hopefully this is the start of verifying all of the data. Because I’m a college president, it’s a little hard to name names, but some of the stories are just incredible. One story in the book is a university that increased their giving rate among alumni by five points in one year. The reason was not that giving rates actually increased, but because they just purged the alumni from their database that had not given in a long time. That university is one of the best in the world.
EW: Has anyone from U.S. News commented or reached out to you since the book was published?
MS: Our op-ed on U.S. News hasn’t come out yet. I don’t remember exactly where that one will appear. I don’t know what U.S. News is going to do.
We were trying to write a book on the relationship between economics and the humanities, not do an expose on U.S. News and World Report. The truth is that all the rankings have similar problems.
EW: There’s too much emphasis on certain numbers, even for the people who behave in a sensibly ethical way and waste a lot of time chasing numbers.
GSM: If some people behave dishonestly, it creates a big challenge for the people who want to behave ethically. If they don’t, it can be misleading.
MS: Another course I teach is a senior seminar called applied econometrics. One of my students wrote a paper about how if you don’t lie, you’re doing a disservice to yourself. It’s the slippery slope. It doesn’t matter if you’re alumni giving rate is 33% or 43%, it just matters how it compares to your peer group. Should you always try to lie as much as your peers?
On the other hand, we’re supposed to reflect the best values in society. How do you reconcile that with lying the average amount?
GSM: It’s a very corrupting process. If you only look at the mathematical models, you miss how a system like this can corrupt your own soul.
MS: That’s one of the essay topics for the class: how to decide the right amount to lie. Ethical questions are not simple. They’re difficult.
EW: You also talked about government spending on higher education in the same chapter and said that as government support for higher education has scaled back, what is the best way for states to decide how to allocate their remaining funds? I don’t think you came out and specifically said why you think higher education costs have increased so much. Do you think it’s primarily a reduction in the government support that’s causing that?
MS: Government subsidies as a percentage of public universities operating costs have declined for some time. So, that’s one thing. The other thing is, you don’t want to confuse sticker price with the price actually being paid. The average four-year public, in-state tuition is about $10,000 per year and the average student pays $4,000. For private tuition, the sticker price is about $35,000 per year and the average student pays $14,000.
Of all students attending four-year public and private institutions, only 14% pay the sticker price.
EW: But, it is ironic though the point you made about how a lot of funds that were going towards education are now going to health care. A lot of people don’t equate the problems of our health care system with the availability of funds for education.
MS: There’s a really smart guy named Tom Kane at Harvard Ed School. He had a great line – and this was probably fifteen years ago – that the future of American higher education is the containment of Medicaid. That’s exactly what happened. Even though the share of our budgets coming from the state has plummeted, it’s still indispensable.
I don’t know if you saw it Ben, but we made the argument that the most vulnerable kids are the ones with the most price elasticity. If you increase the net price of college, they’re the first ones who are going to drop out. They’re not in the flagship public universities as much as the more community universities. Every state has a flagship, the one they consider they’re best. But, there are only thirty-four of them that are public that are good enough to be members of the Association of American Universities (AAU) and some of those are in the same state. Some don’t have any. So, if you have a flagship that is one of the best universities in the world, you’ve got to think long and hard about strangling them financially.
If you’re in the typical state like Tennessee or Kentucky, which have terrific universities like the University of Tennessee or the University of Kentucky, but not AAU universities, the problem of allocation might be a little less daunting. And a lot of our states don’t have any AAU schools. Now, if you’re in Knoxville or Lexington you’re going to say, give us the money because we’re going to become AAU and attract talent from around the world and then they’re going to stay in state. The fact of the matter is that when you have a University of Virginia, a University of Michigan, a University of North Carolina – these are the public ivies and they shouldn’t be strangled very hard.
EW: I really enjoyed your commentary on how underprivileged students versus students from more affluent communities that likely had parents who went to college approach the college selection process.
I did not have an underprivileged childhood when I grew up in Columbus, OH, but I was the first person in my family to go to college and it makes a big difference. It would be very hard to suddenly find yourself at Northwestern or the University of Chicago without a lot of guidance.
MS: You wouldn’t even know what questions to ask. This is an area where literature can definitely help. The great novels of history are filled with examples of impoverished individuals who arrive not knowing how to act, which fork to use, or the sophistication that’s expected and how they struggle to survive.
I think that at schools like Northwestern people would be well served to read that literature to develop a sense of empathy to see our institutions the way that students see them. The economics literature doesn’t dive at all into a situation like this when compared to other disciplines like sociology.
GSM: If you cultivate empathy, then you have to come to appreciate how other people think and what they value. It’s not a matter of just adding money. A bureaucracy is not enough. It might help, of course, but it’s not going to solve the unique problems this population has on its own.
EW: You approached it beautifully. I really enjoyed that section.
I thought you were a little tough on Gary Becker, even though your criticism was mostly fair. Your discussion of Becker reminded me of John Maynard Keynes’ famous quote: “It’s better to be approximately right than precisely wrong.”
MS: Becker’s not just a Nobel Prize winner but one of a handful of the great economists of my lifetime.
GSM: What pushes my button with Gary Becker is that he doesn’t say this is just my opinion or this is correct. He says that no reasonable, intelligent person would disagree and that people will look back and say, “How could anybody have thought differently?”
It’s OK to have an opinion, but when people say that only idiots disagree, that’s when my buttons get pushed.
MS: On the other hand, he had such a pure view of everything. You could always guess where Becker and his colleagues would come out.
Hedgehogs are very confident because they have the answer. That’s why people love hedgehogs, going back to Isaiah Berlin’s distinction between foxes and hedgehogs.
There is also a brilliance to Becker. You can always say what about this nuance or ask how realistic something is, but there’s a real beauty to the Becker approach.
GSM: I agree with that and I wish humanists were able to comprehend that. You don’t get rid of Becker, for God’s sake, what you do is modify it insofar as the world is the way Becker describes it.
MS: Saul, you brought up “soft Becker.” Becker took economics into fields no one had thought of bringing the field into. The insights are just so powerful. But a Becker with some sociology or political science or history would be the best that economics could do.
I am a little worried that people are going to think we’re a little hard on Becker, but we’ll see.
EW: No one should be immune to criticism.
GSM: Except us.
EW: I was a little surprised that you guys didn’t talk specifically about business. Literature could definitely help many executives who are excessively concerned with meeting short-term expectations to take a broader view.
How many of our challenges today are caused by a fetishization of markets? This thinking that business skills can be applied to every aspect of our lives. It seems to me that the areas of society that function the least well are the areas where markets are broken – like health care or education.
GSM: I’m not sure that’s true. One of the problems in health care is that we don’t have a market. Imagine if the way we bought groceries was to pay a set fee each month and then you could fill up your cart as much as you like. That’s what our health care system is. That’s not a market system. Market mechanisms ensure efficiency. It’s never wise to intentionally run a system inefficiently. Waste is not socially desirable. We want to create a system where health care providers are incentivized not to waste, but we also don’t want to create a system where poor people don’t get health care. The problem is not the market. The problem is inefficiency and inadequate coverage for the poor.
For example, if you had health stamps the way we have food stamps, you could have more of a market system.
MS: The other part of your question Ben, is I think that great business leaders are foxy. They don’t have just one big idea and try to force everyone into some assumed model. They’re flexible, humble, and nimble.
We were asked a couple of weeks ago to write an op-ed on what investors could learn from great literature. We try to make the argument that if you’re going to be a great investor, you have to decide if you’re going to go with the mob or be contrarian. That depends on how markets are going to react. Markets are made up of individuals that you want to try and understand. Literature gives you empathy to understand the other participants better.
GSM: There are some places where empathy would really help in business. Every time I get a device, I can’t figure out how in the hell to work it. Have they had their instructions read by someone who is not one of them?
MS: In London, I woke up in the middle of the night because of allergies and I wanted to take a Benadryl. I couldn’t open the bottle. I started thinking, “What’s going to happen in twenty years?” Who designs a safety cap so that it’s so difficult to open?
GSM: And a lot of times the instructions are in tiny print. It’s as if everyone in the world is your age or younger and no one is my age.
This is really important when designing products for international markets. You need to empathize with different cultures around the world to understand how to design products for them.
MS: There’s very little culture in economics, and yet the world is culture. It’s a mistake in development economics to just assume that what works in Korea is going to work in Botswana or work in Chile.
When you assume away culture and put it in the error term, that’s fine if you just want to create a model or publish an article. It’s not fine if you’re trying to improve lives.
EW: Yeah, I enjoyed your writing on economic development too. You mentioned that when you worked for the World Bank and searched for positive development stories in Africa…
MS: What a depressing story. I went all across the continent and was exhausted and I told the Bank that I couldn’t find any more positive development stories in Africa. And someone said, “What about Mauritius?” And I said, “It isn’t on the continent.” But we included it anyway.
In West Africa, there was an initiative to eliminate river blindness and it was eradicated. But, when we tried to promote the success we realized that the standard economic models said it was a failure in terms of return on investment because most of the people there earn low wages and so the economic value of their lives, by the models, was quite low. Poor Steve Younger said at the very end, “Well, with a very low discount rate it kind of works.”
GSM: For someone like me, the idea that saving all these lives by ending river blindness could not be a success is ridiculous.
MS: At the time it was the most successful health intervention in the history of West Africa.
EW: In my view, Singapore and Botswana are probably the two greatest development stories in the last century. Both countries were part of the British Empire at one point, so I’m sure they benefited somewhat from institutions left behind by the British. But, I think they also were both very aware of their own culture and didn’t try to ignore it or destroy it – but blend it in with good ideas and institutions borrowed from other places.
Do you think that cultural recognition is becoming a bigger part of development approaches and is bringing us closer to solving the poverty trap in some places?
MS: I think so. If you look at someone like Joe Stiglitz, the Nobel Prize winner, he has written scathing books in the last couple years on development economics. My experience in the field is fairly limited, but the people working on it are figuring out that culture matters and that you want to have a dialogue with the people living in underdeveloped parts of the world.
There’s an organization called The One Acre Fund, started by someone at Northwestern, which now has a million farmers in Kenya and is really successful in building market skills within the local culture.
Somebody in another interview, I think it was The Times of London, asked, so if economists read local literature it would make them better economists? I said, “It wouldn’t hurt.”
If they read the literature, understood the history, local family dynamics, and the religion, you think that would make them worse? I don’t.
GSM: Some rephrase the question that way, implying that you only need to go home for a few hours and look a novel. That’s not what we’re talking about. We’re talking about really engaging with the culture. Reading a book is just not going to do it.
EW: Perhaps that’s a good idea to end upon. Hopefully, the book will help economists – and everyone – appreciate viewpoints and disciplines that are less familiar to them.
It’s been extremely enjoyable and fulfilling to speak with both of you. Good luck with the book and much success in the future.
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