Finance and the Common Good

That is a new paper by E. Glen Weyl, and here is one excerpt:

Using relatively crude methods to translate publicly-available data into income estimates, I estimate that approximately 40% of income of authors in both fields comes from consulting activities,  roughly consistent with self-reported income figures for the broader profession in the National Center for Education Statistics’s National Study of Postsecondary Faculty. Second, I show that consulting activity in industrial organization is primarily policy-oriented while consulting work in finance is primarily geared toward private interests. Together these two facts are weakly suggestive that material incentives are at least complementary with research focus.

But this is not Inside Job either:

…the view I put forward is not that financial economists defended the interests of the firms for which they worked in regulatory disputes; this is precisely what I believe industrial organization economists, in contrast to financial economists, often did. Instead it is that financial economists were simply not interested in such disputes instead focusing on aiding private accumulation of wealth in markets rather than pushing public policy in one direction or the other.

Glen predicts that future work in finance will become more like research in industrial organization and move in a more legal and regulatory and policy-oriented direction, as the real world shifts toward greater regulation of finance.