By George DeMartino
At the annual meetings of the American Economic Association (AEA), held the first weekend of January in Denver, the association’s leadership established a committee to explore whether there is a need for rules in the profession to govern disclosure of apparent or real conflicts of interest. The issue arose in reaction to Charles Ferguson’s new documentary Inside Job, which exposes what appear to be stunning failures of leading academic economists to reveal the large incomes they received from business interests when writing reports and taking positions on policy matters of direct concern to those interests. The film, and a series of reports by journalists and economists that further documented failure to disclose, led the AEA leadership to break with a century-long habit of side-stepping ethical issues that arise in economic practice. It’s far too early to know what will come of this initiative, it just might mark the first step toward the emergence of a new field of inquiry in economics: the field of professional economic ethics.
This development is long overdue. The economics profession exerts enormous influence over the life chances of others — not a few others, but all those who populate the economy. This influence necessarily implies that economic practice, from teaching and research to advising, forecasting, forensic work and the like, is ethically fraught. There is no adequate way to paper over this ethical fact, though the profession has done its best to do so. When a profession enjoys substantial influence over others but fails to examine and raise the awareness of its members and the public regarding the responsibilities that this influence entails, it is falling far short of its deepest professional responsibilities. It is a rogue profession. If Ferguson’s film ultimately has the effect of inducing the profession to mend its ways, he will have made a much greater contribution to economic welfare than have many recent Nobel Laureates.
But there is a danger here as well. All of the recent attention has been focused on just one professional ethical issue: disclosure of conflicts of interest. Though hardly unimportant, this is a very narrow issue that is perhaps most easily addressed, as I’ve outlined here. The danger is that the AEA and other economic associations will fix this one problem, and believe themselves to be done with professional ethics altogether. But economists face much more important and difficult ethical challenges and professional responsibilities.
In my research for The Economist’s Oath, I interviewed 40 applied and academic economists about the nature of their work, and the challenge they routinely face as they try to do their work with integrity. Turns out that these arise all the time. A simple example includes time and resource constraints: applied economists in particular are asked to do the impossible, generating reports in hours or days that would take weeks or months