Finally, ethical economists

It seems appropriate to close out my second year as a blog writer with a topic near and dear to my heart: ethics in business…

Prior to its annual meeting, the American Economic Association, has leaked to the New York Times that it intends to discuss a “code of ethics” for its membership to sign and, hopefully, adhere to in the future.  The A.E.A. has lagged other professional associations in forging and enforcing a code of ethics for its members.  This is shocking to me.  Why?

Economists are a very special kind of academic because the profession frequently is called upon to advise politicians at every level: local, state-level and national.  It is very common for high profile economists to advise the Democratic, or Republican parties and senators and representatives.  These relationships create conflicts of interest when academic “research” is sponsored and utilized by an interested party.  The problem is that academic research has the whiff of “scientific impartiality.”  Up until now these conflicts of interest were not required to be disclosed to the public.  See, for example, my post entitled, “more financial industry b.s.“

Expect resistance from lots of levels of society; the academic finance folks, especially.  The reason is that they believe in a myth that has been perpetuated for many generations of academia.  Namely that the finance academic must be compensated similarly to what they would make as a professional on Wall Street, lest they be lured away from the university and into the secular world.  This is a legitimate concern.  However, there is no reason that these relationships cannot be disclosed.  I would love to hear the argument of why they shouldn’t be disclosed.  Let’s imagine some…

• I’m actually embarrassed to admit that my opinion has been bought; I’m really just a shill.
• I’m afraid that I won’t be compensated as richly by my clientele as I was before.
• And…?

I say: if research affects the public then the nature of the interrelationships should be public, too.  Duh!  If you are interested in more information about the American Economic Association, or would like to contact them directly, try:

• www.vanderbilt.edu/AEA or aeainfo@vanderbilt.edu.

I hope that each of you has a wonderful, safe New Year’s Eve and a very fruitful 2011!

Jason