When you're discussing economic systems with your students, how often do the students bring in issues of ethical behavior? And when they do, how do you integrate their interest into the discussion? One option is to dismiss the concern because the "focus is on economics." Another option is mention Smith's Theory of Moral Sentiments as well as The Wealth of Nations, and discuss both of his works. However, many of us are not familiar with both, or may only be passing familiar with one. And it still may not answer the question "How does ethical behavior play in the marketplace?"
While not an academic study, a survey done by The Wall Street Journal may give you a starting point. It provides some insight on how consumers reward and/or punish producers based on perceptions of ethical production. According to this article, consumers are willing to "reward" perceptions of ethical behavior, but not as much as they will "punish" perceptions of unethical behavior. In short, ethical behavior pays, but not as much as unethical behavior costs.
This raised a further question in my mind: why the asymmetry? Is it possible that it makes us feel better to "avenge" the wronged than to reward what we feel should be normal behavior? I don't know. But I think human behavior is such that the feeling of "superiority" in punishing an unethical producer could well outweigh the feeling from rewarding someone who may actively do more than we do.
What are your thoughts? Or your students?