• September 12, 2014

Economists' Group Forms Panel to Consider Ethical Standards

The executive committee of the American Economic Association voted unanimously on Thursday to create a committee "to consider the association's existing disclosure and other ethical standards and potential extensions to those standards."

The vote, which took place as the association's annual meeting opened in Denver, came three days after the release of a petition in which approximately 300 economists called on the association to adopt a code of ethics that would require academic economists to disclose potential conflicts of interest. The signers included George A. Akerlof, a professor of economics at the University of California at Berkeley who is a Nobel laureate and a former president of the association.

Some of the association's journals already require contributors to disclose any relationships they have with companies or other entities that might have financial interests in the topics of their scholarship. But the signers of the petition would like the association to also insist that members disclose such relationships in other contexts—when they testify before Congress, for example, or when they write essays in the popular press.

In a paper released two months ago, Gerald A. Epstein, a professor of economics at the University of Massachusetts at Amherst, and Jessica Carrick-Hagenbarth, a graduate student there, scrutinized the behavior of 19 economists who made policy pronouncements about financial reform after the 2008 crisis.

Thirteen of them, it turned out, worked as consultants, as directors, or in other capacities for banks, rating agencies, and investment firms with interests in the outcome of financial regulation. And only two of those 13 economists routinely disclosed those financial ties in their academic papers and their news-media appearances.

"The public is not well served when they read an economist's views about ratings agencies if they aren't also told that the economist sits on the board of directors of a ratings agency," Ms. Carrick-Hagenbarth said in an interview this week. (She and Mr. Epstein are among the organizers of the petition.)

In a blog post at The New York Times this week, Edward L. Glaeser, a professor of economics at Harvard University, argued that a new association ethics policy would be a mistake, a "vast institutional overreach." Universities, not scholarly associations, are best positioned to enforce ethics rules, Mr. Glaeser wrote.

It is far too soon to say what, if anything, the association's new committee will recommend. Since the 1920s, the economic association has faced periodic calls for the creation of an official code of conduct. But none of those efforts has ever come to fruition.

That history is sketched in The Economist's Oath: On the Need for and Content of Professional Economic Ethics (Oxford University Press), a new book by George F. DeMartino, a professor of finance and trade at the University of Denver.

In an e-mail message to The Chronicle on Thursday, Mr. DeMartino wrote that objections like Mr. Glaeser's miss the point. It may be true that the economic association is not equipped to enforce a code of conduct, Mr. DeMartino said. But the association can promote a broader "critical inquiry into the full range of ethical issues that necessarily arise in the context of economic practice," he wrote.

A professional-ethics program, Mr. DeMartino wrote, "would certainly engage the question of conflict of interest—and it may be that in this area, clear rules backed by some sort of sanctions are indeed appropriate—but it would engage many, many other vitally important and difficult questions besides. It would investigate not just the ethical obligations facing the practicing economist, but also those that apply to the profession as a whole and not to any particular economist." An example, he said, "would be a commitment to theoretical and methodological pluralism. After all, we got into the current global financial crisis in part because of the herd mentality of the economics profession."


1. jffoster - January 07, 2011 at 08:29 am

"...to adopt a code of ethics that would require academic economists to disclose potential conflicts of interest."

"Require"?? They haven't got the power or authority to "require" much of anything of their members. They do not accredit, they do not encredential, they do not license. And they don't run closed or union shops -- very few people are "required" to belong to the AEA as a condition of employment.

My objection is not to the discussion of ethics. It is to the pretentiousness of academic professional organizations and associations.

2. rossemmett - January 07, 2011 at 09:10 am

Has a professional code of ethics ever prevented ethical abuses? Is there any punative power to a code other than increasing public scrutiny?

Also, in the last line, DeMartino talks about the "herd mentality" of the economics profession. I'm quite confident this is nothing unique to economists. It's a human thing, not an economist thing!

3. lexalexander - January 07, 2011 at 09:27 am

Anyone, regardless of discipline, who is doing research needs to disclose funding sources.

That said, in terms of the field's impact on real life, at least here in the U.S., I think failure to disclose, although an important problem, has been nowhere near as diastrous as continued adherence to an ideology whose practical ramifications demonstrably LED TO and ARE NOT HELPING US ESCAPE FROM the current disaster.

Fact-aversion in the field of economics led directly to the Great Recession. Fact-aversion in the field of climate study appears likely to lead to the destruction of species, the endangering of the food supply and the disruption of the lives of tens of millions of people worldwide, likely with calamitous consequences.

You can ignore reality all you like, but unfortunately, reality will not ignore you.

4. corwinamber - January 07, 2011 at 11:58 am

Consider the relationship of any professor in business disciplines to the Chamber of Commerce (a leader in climate science denial and opposition to health and finance reform, etc). Are we doing independent scholarship and impartial teaching, or are we shills for the powers that be? Economics is only one of many fields with this problem.

5. crazyfrog - January 07, 2011 at 03:58 pm

As part of the examination of economic ethics, economists would do well to examine whether much of what they believe has any grounding in physical and social reality. It certainly seems unethical when the creation of abstract theories and mathematical models that become accepted "wisdom" does great harm to the environment and societies.

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8. mteshome - January 10, 2011 at 08:14 am

The disclosure must also be extended to those economists serving as advisors or consultants to foreign governments. Often it is done discreetly and the implications and consequences of the policies and recommendations devised or approved by the economist has a far reaching consequence, and felt only by the citizens of the nation.

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