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1 1 of 6 12/24/2011 8:35 AM Log in Register My account Subscribe Digital & mobile Newsletters RSS Jobs Help Search Saturday December 24th 2011 World politics Business & finance Economics Science & technology Culture The World in 2012 Blogs Debate Multimedia Print edition Economics by invitation Join our invited guests to debate economics RSS feed The question is: Do economists need a code of conduct? Jan 7th 2011 by R.A. The Economist This week the American Economic Association will take up this question. Many academic economists have financial ties to industry, government or other organizations, and critics say this biases their research. Do these associations create a conflict of interest? If so, how should it be addressed? Do academic economists need their own version of the Hippocratic Oath, a formal code of conduct, or a more vigorous policy of disclosing potential conflicts of interest? Guest contributions: 8 Economists need a code of conduct, and to be honest with themselves Laurence Kotlikoff wrote on Jan 7th 2011, 0:26 GMT ECONOMISTS, no less than anyone else, need a code of conduct. The economics profession already has such a code, which the vast majority of economists respect and observe. Economists learned about this code of conduct, not by seeing it in black and white (it's not written down), but by observing the behaviour of older economists when it came to reporting the Latest guest contributions» About our guests» Featured guest Laurence Kotlikoff William Fairfield Warren Professor at Boston University United States Contributions: 34 Laurence J. Kotlikoff is a William Fairfield Warren Professor at Boston University, a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a Research Associate of the National Bureau of Economic Research, and Advertisement See all guest contributors»

2 2 of 6 12/24/2011 8:35 AM sources of their funding and their relationship to the funder on the front page of their studies, e.g. "Consultant for XYZ, Inc". I think having a written code of conduct is important and that the American Economic Association has a responsibility to write it. But the fact that no code has been put to paper thus far does not excuse any economist who has reported research results in a manner that would suggest that he or she is a disinterested party when that, in fact, was not the case. That's an ethical lapse, pure and simple. In addition to disclosing potential conflicts of interest on research and policy studies, economists must, as a matter of professional ethics, disclose on their bios, vitae, and websites for whom they consult or otherwise work. And if they are providing testimony to government bodies, they need to begin their testimony with fully disclosing their potential conflicts of interest. But the deeper ethical problem that economists face is remaining honest with themselves. No one can buy our self respect unless we sell it. And we didn't join our profession to become paid spokesmen for corporations, politicians, governments, or anyone else. We joined our profession to discover economic truths, not to invent them. Most active questions By number of guest contributions Is inflation or deflation a greater threat to the world economy? Should policymakers focus more on structural adjustments or aggregate demand? 16 Recommend (126) Comment (5) Who should lead the IMF? 15 Ethical doubts pose negative externalities David Laibson wrote on Jan 7th 2011, 0:30 GMT All academic researchers economists included should be compelled to disclose potential conflicts of interest. Without such disclosures, all research is tarred by the vague possibility that a conflict might exist. Researchers who have potential conflicts of interest should be obligated to reveal them, thereby eliminating the externality on everyone else. How has the crisis changed the teaching of economics? Which economists are the most influential? Should a bank tax be used to limit financial risk? Recommend (73) Comment (1) Advertisement A code of conduct is a good idea, but probably wouldn't help much Tyler Cowen wrote on Jan 7th 2011, 13:18 GMT I FAVOUR such codes, but I'm not sure they will help much. First, most economic research doesn't matter in the first place. Second, the research

3 3 of 6 12/24/2011 8:35 AM which does matter very often is distorted anyway. It is pulled out of context, exaggerated, presented by intermediaries and political entrepreneurs without qualification, and so on. That's the real problem. In this context I'm not sure that a conflict of interest statement is going to push people closer toward truth; the process wasn't accurate or finely honed in the first place. What is published is already so much more scientific than the policy process itself. Improving the former inputs with an ethics code seems like pushing on the less important lever and to some extent it is a very weak substitute for the almost complete lack of an ethics code in politics itself. Third, a lot of the problem is economists in government advising rather than what is published in economics journals. Newspapers already have conflict of interest policies for many (or all) of their writers, but I don't see they are much enforced or have much improved the quality of most op-ed pages as policy advice. Ideally, the employing university should enforce such policies, but of course individual universities do not have much incentive to "move first" on such issues. Furthermore, universities are notoriously selective in their enforcement of other rules, such as limitations on how much time a professor can spend consulting. Products & events Stay informed today and every day Subscribe to The Economist's free newsletters and alerts. Get newsletters Recommend (86) Comment (1) Subscribe to The Economist's latest article postings on Twitter Economics needs to maintain rigorous competition between ideas Gilles Saint-Paul wrote on Jan 7th 2011, 18:19 GMT I DO not believe in disinterested research. People choose their topics and methodologies in order to satisfy some urge. This will lead to biases. Left-wing economists will write about the adverse consequences of inequality. Right-wing economists will write about the inefficiency of government interventions. If your biases come from your faith, ideals, or political beliefs, that does not make them less of a problem from a scientific point of view than if they come from a so-called "conflict of interest". In principle, even though your research stems from an agenda you might be pursuing, it must pass some criteria in order to be validated. That is, the fact that it is affected by your personal biases does not make it factually wrong. Follow The Economist on Twitter See a selection of The Economist's articles, events, topical videos and debates on Facebook. Follow The Economist on Facebook Advertisement So what we need is not a "code of conduct" but rather to have the right filter

4 4 of 6 12/24/2011 8:35 AM in order to make sure that the required confrontation between conflicting ideas takes place, and that the "winner" is determined by a rigorous procedure. This implies, among other things, maintaining a marketplace for ideas where free speech and the right to scrutiny are not undermined by groupthink, political correctness, censorship, credentialism, or career concerns in an environment where too few people hold the key to publications, promotions, and grants. Maintaining a diversity of views is crucial. And ideally this should apply to funding sources too. Recommend (107) Comment (2) A professional code can't help those without a sense of personal ethics John Makin wrote on Jan 7th 2011, 23:59 GMT EVERYONE economists included needs a code of conduct. If one does not possess one s own set of ethical standards, a professional organisation, like the American Economic Association, can t help. Indeed they can hurt since unethical AEA members can and will claim they ascribe to the organisation s code while actually ignoring it. How does the AEA propose to effectively enforce its code of conduct? Recommend (87) Comment (1) A code of conduct would undermine the rigor of economic discourse Lant Pritchett wrote on Jan 8th 2011, 19:36 GMT THIS way lies madness. A Chilean friend told me that there had been no change in mining safety regulation for decades while after the accident there were more than a dozen of bills proposed. While some of these might be useful, many are just grandstanding by legislators, each of whom was after PR by being the most concerned about, and the most expert on, mine safety. The notion that because there was a problem there must be an increase in regulation/disclosure/codes of conduct produces a pressure to "legislate in haste, repent at leisure" in which future costs and sound reasoning are ignored in a blizzard of PR. This is the approach that leaves me losing time and toothpaste to overpaid government bureaucrats every time I travel, all to comply with procedures with mainly symbolic value as there is no compelling

5 5 of 6 12/24/2011 8:35 AM evidence these would have actually prevented any past, or will prevent future, incidents. This is not how an academic community should conduct itself. We should stand for allowing truth to emerge from a dedication to the evaluation of ideas, arguments, and evidence based on scholarly and disciplinary discourse. Recommend (81) Comment (6) It is the duty of professionals to reveal potential conflicts Hal Varian wrote on Jan 11th 2011, 15:15 GMT YES, economists need a code of ethics. Any economist who reports an opinion or advice on economic matters would be expected to reveal any potential conflicts of interest that could distort the objectivity of the report. This would include consulting arrangements, research support, directorships, and similar entanglements. The duty to reveal potential conflicts of interest is hardly limited to economists. Other professionals such as lawyers, accountants, scientists, engineers, journalists and so on should be expected to adhere to the same ethical code. Revealing potential conflict of interests up front should be expected of everyone who offers expert opinion on a subject. Ideally such information would be part of each communication. However, in some cases, reporting on a number of connections may be infeasible, so providing an easily accessible link to a web page with a list of such connections or a CV would be acceptable. Recommend (77) Comment (1) Economists must think about the ways they arrive at conclusions Paul Seabright wrote on Jan 11th 2011, 15:25 GMT IT'S attractive to think that the route to truth lies through the marketplace of ideas, and that we need therefore to concentrate only on removing barriers to entry in this marketplace. Unfortunately, though, in many respects the marketplace for ideas suffers major market failure, including a very major problem of externalities since ideas compete for a scarce and almost open-access resource which is the limited attention of decision-makers. The

6 6 of 6 12/24/2011 8:35 AM market for ideas that are used as inputs into public policy is even more problematic: there are few buyers, often only one, namely a government. And the scarcity of decision-makers' attention means that a limited number of "experts" will command substantial monopoly power in this market. That same scarcity of attention will also mean that the buyers of expertise will give undue credence to unreliable indicators of quality: having a Nobel prize does not testify to someone's good judgment, to their expertise outside the area for which the prize was awarded, or to their intellectual honesty. And many of the buyers of ideas don't even want quality, in the sense of theories that are true: they want theories that look true but advance the buyer's own interests in the wider world. The incentive to produce poor-quality thinking is no less serious than in other monopolised markets for goods with massively asymmetric information about quality. Recommend (93) Comment (3) Classified ads About The Economist Media directory Advertising info Staff books Career opportunities Subscribe Contact us Site index [+] Site Feedback Copyright The Economist Newspaper Limited All rights reserved. Legal disclaimer Accessibility Privacy policy Terms of use Help