Are B-Schools to Blame for Bad Ethics? | Wall Street Oasis

According to this article written by a professor at the University of Chicago Booth School of Business, the drop in ethical standards throughout the business world can be traced back to an unsuspecting culprit: graduate schools. He cites the case of insider trading between McKinsey director Anil Kumar, who recently pleaded guilty, former hedge fund tycoon Rat Rajaratnam, and former McKinsey director Rajat Gupta.Kumar and Rajaratnam went to UPenn Wharton, and Gupta went to Harvard Business School; needless to say, both are elite institutions where business ethics classes are offered and taught by esteemed and respected professors. What gives?

According to the author, there are two reasons for this breakdown. Firstly, in most business ethics classes offered, ethical dilemmas are illustrated but a prescription is not given; the students understand the issue but are not taught the proper decision to make. The second reason is much more harmful:

Oddly, most economists see their subject as divorced from morality. They liken themselves to physicists, who teach how atoms do behave, not how they should behave. But physicists do not teach to atoms, and atoms do not have free will. If they did, physicists would and should be concerned about how the atoms being instructed could change their behavior and affect the universe. Experimental evidence suggests that the teaching of economics does have an effect on students? behavior: It makes them more selfish and less concerned about the common good. This is not intentional. Most teachers are not aware of what they are doing.

So what is Zingales's solution? Not to teach ethics in a separate class; rather, ethics should be built-in to the core classes and stressed there. In this way, students get to learn in realtime both the principles of business and the right thing to do. So instead of taking Business Ethics, a student would have normal Accounting or Corporate Finance, and within the classes, anecdotes and ethical principles will be illustrated.

I think this is a fantastic idea. Everyone knows that going into a Business Ethics class, the basic idea is to do the right thing. The disconnect lies in taking these classes and practicing the ideas in real life. Stressing ethics in regular business classes lessens the disconnect, and thus enables students to make better decisions in general. I'm curious as to what you guys think about this concept.

"Money doesn't talk, it swears." - Bob Dylan

Source: http://www.wallstreetoasis.com/forums/are-b-schools-to-blame-for-bad-ethics

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