An ethics code for economists

by on January 7, 2011 at 7:28 am in Economics, Philosophy | Permalink

Richard, a loyal MR reader, asks:

What are your thoughts on the recent proposal to implement an ethics code for economists? Do you see this having any effect on the general field/body of work being published in the near future? Will the general public find that these ethical guidelines afford them a more scrutinized body of work (i.e. Will they trust the profession more? Will this help to serve as a bulwark against negative views of the profession?)

Annie Lowrey offers background.

I favor 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 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.

If you take the cases presented in the movie Inside Job (which by the way is half very good and half terrible), a code of ethics would have changed individual behavior but it is very unlikely that it would have improved economic policy in the United States.

The biggest potential gain is simply keeping or extending the public's trust in the economics profession.  In other words, the biggest potential gain is fairly small.

Is there any downside from trying to raise ethical standards and transparency in research?  One problem is that "all-government funded" probably will be seen as high status, when I am not sure it should be.  Explicit political bias is not my main concern, rather this funding source encourages false precision and an excess of technocracy.  Another issue is how disclosure might interact with anonymous donations to universities.  Either anonymous donations become more costly or impossible, which makes universities poorer, or they become a means of circumventing the transparency. 

I don't have easy answers there, but I wouldn't conclude that we should give up trying on matters of professional ethics.  It still seems to me that some individuals are creating a negative externality for the economics profession as a whole.  Simply doing the right thing, even when you can't see what immediate gains it will bring is often…the right thing to do.

1 Andreas Moser January 7, 2011 at 3:52 am

I am absolutely against any ethics codes.
– Economics is a social science. It should not be curtailed in any way, but free thinking and discussion should be encouraged.
– There are laws. That's enough for an ethics code.

2 david January 7, 2011 at 4:17 am

Economics stopped being value-free the day it moved from "this is what people do of their own free will" to "this is what is good for those people". You may think that is obvious, or true, but you cannot deny that it is a normative statement.

3 Frank Howland January 7, 2011 at 4:28 am

There is definitely a negative externality problem for economists. Ed Glaeser wrote a sensible piece arguing against an ethics code for the American Economics Association (AEA)–saying it would be ineffectual–and in favor of journals adopting conflict of interest disclosure rules. See:…. Being paid to write a piece is clearly a potential conflict and should be noted. But it will take a long time, if ever, before trust in the economics profession is restored.

I think an even bigger (though less publicly visible) problem for the profession and one that can be and to some extent is being solved is the scandal of empirical economists not presenting their data and explaining carefully how their data sets were constructed. Replication, or rather the fact that it is very difficult to replicate empirical studies, has been a huge, generally unacknowledged problem. Here the AEA has taken positive steps, getting authors to put their data sets online for its journals.

4 Frank Howland January 7, 2011 at 5:19 am


Almost everyone knows that Krugman is partisan; his Nobel prize doesn't have much effect on how people respond to his writings at the Times.

I think Tyler is referring to the numerous economists who, in the lead-up to the current financial crisis, said positive things about financial institutions and pretended to be objective but were in fact being paid by those financial institutions. Those folks have done real damage to the professional credibility of their fellow economists.

5 Bill January 7, 2011 at 6:02 am

Typing from an iPad, I don't know how the word angrier got in my comment above. Maybe was supposed to be academic

6 Maxine Udall January 7, 2011 at 6:47 am

I think it's a good idea. My reasons why at

7 chris January 7, 2011 at 6:50 am

I think Tyler is referring to the numerous economists who, in the lead-up to the current financial crisis, said positive things about financial institutions and pretended to be objective but were in fact being paid by those financial institutions.

ISTM that an even more widespread problem is economists making policy recommendations based on simplifying assumptions that are known to not hold in the actual society that they're making recommendations for.

Extending your results beyond the conditions of their applicability is intellectually dishonest, but the economics profession is *full* of it, most notably conclusions based on the unrealistically strong forms of EMH (the market will police itself for fraud, worker safety, product safety, etc.).

Assuming that a society is on the descending slope of the Laffer curve when all available evidence shows that it is on the ascending slope is another big one.

8 a January 7, 2011 at 7:45 am

“The biggest potential gain is simply keeping or extending the public’s trust in the economics profession. ”

You mean loss not gain, don’t you?

9 dirk January 7, 2011 at 8:54 am

I favor a code of wisdom and insight. That should make them wiser and more insightful.

10 Bill January 7, 2011 at 9:48 am

I agree with Eric's wall of shame approach.

In fact, having an aggregation website nown about prior engagements is another step forward.

11 aow January 7, 2011 at 10:07 am

I think TC gets off to the wrong start when he makes a distinction between economic research that "doesn't matter in the first place" and "economists in government" who advise. While academic economists might like to believe there is a pure, philosophic realm called Economics which contributes to general understanding, there isn't. Professors of Economics are not equivalent to professors of English Literature. They are much closer to Professors of Military History in that they are focusing on an subject around which governments justify their very existence.

12 crass January 7, 2011 at 11:19 am

I am unpersuaded that the medical ethics code has helped.

Look at the debates in psychiatry. They seem to have done as much, if not more, harm than economic policy makers with even fewer consequences while hiding behind the shield of SCIENCE.

Consider the fight over DSM-5 and the attacks on definitions of disorder from the author of DSM-4.

13 Steve Sailer January 7, 2011 at 12:09 pm

Two words: Andrei Shleifer.

14 Frank January 7, 2011 at 12:56 pm

Full disclosure of an author's remunerative activities in a publication is sufficient for purposes of this discussion.

15 Dana January 7, 2011 at 1:21 pm

Doesn't economics, as an academic discipline with established (if somewhat subjective) standards for granting ph.d.s and tenure, already have a code of ethics of sorts?

16 CGG January 7, 2011 at 2:30 pm

"From a public perspective, clearly the former is the big deal, and the latter is important only as a warning sign, or (per Somin) not at all."

But what of the government perspective? My point is that in order to for this to really be a problem, there must be some sort of information asymmetry which renders the non-economist party unable to evaluate economic research on its own terms. I don't think this is the case for governmental actors, who have (or hire people who have) the necessary expertise.

A code of ethics can protect economic ideas consumed by the general public. But when government bureaucrats with econ degrees start claiming they need that same protection the options aren't good. Either (a) they're looking for a scape goat or (b) all the resources we put into having these guys in government is wasted.

17 Eric January 7, 2011 at 3:54 pm

Here's the problem with ethics codes: ethical people don't need them and unethical people ignore them.

18 Jeesh January 8, 2011 at 10:31 am

This chris person seems bitter — are you angry that you can't do math?

19 Matt January 8, 2011 at 4:21 pm

"but it is very unlikely that it would have improved economic policy in the United States"

If you look in the short term, then this might be true. But the economics profession has suffered so long from the vast majority of practitioners having such massively weighted ideological prior beliefs that we can end up in a situation where the vast majority of economics researchers and professors believe so strongly, ideologically, not scientifically, in lower taxes, that myths like the Laffer curve can gain traction. Sure, economists might blog or say in private settings how laughable the use of the Laffer curve by the political right has been, but you don't see any huge outrage among economists that their "science" is being cheapened or any such, and no push back against the political right claiming "scientific" backing for their empirically false ideological beliefs.

20 Edwin Perello January 22, 2011 at 5:14 am

The only code of ethics I think economists should have to abide by is a small bit of disclosure. There's a bit of difference between a plainly put blog post or paper written about the virtues of lower marginal tax rates and the kind of "Don't tax me, man!" posts I have read from the world-class economist Mankiw recently. Those blog posts were more about his own personal desires than anything else and it was very noticeable. Man up and outrightly disclose you'd make a killing if your proposed policies would. It's no different than journalists disclosing their personal politics instead of keeping it hidden from everyone — there is no level of journalistic integrity or code of journalistic ethics that will keep bias out of any reporting. This is why the whole Juan Williams vs NPR firing him fiasco was so ridiculous: disclosure of bias is IMPORTANT.

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