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Professor [David] Teece doesn’t dispute estimates that his career earnings from expert consulting amount to at least $50 million.

That is from today’s WSJ, it is a fascinating article about economic consulting.  Teece estimates that sixty people at his firm earned $500,000 or more last year.  Here is Teece’s home page.  Here is another article on Teece.

Comments

Is there anything the man wouldn't shill for? Isn't it odd that a company can come to an "expert" who has no knowledge of the subject, the "expert" will crunch some numbers and then magically the numbers end up telling a story the company likes?

From the WSJ article:

"Judges don't always agree. In a 2001 case involving a patent owned by Rambus Inc., a semiconductor company, federal district court judge Robert Payne of Richmond, Va., branded Prof. Teece's estimate of the royalties owed to Rambus "a wild guess" and refused to admit that section of his analysis as evidence. The judge added, "I have the impression, from what I have read, that Mr. Teece will say just about anything.""

I would be really curious to hear Tyler's opinion on this kind of consulting. I'm a very free market kind of guy but the expert witnesses seem to produce some of the most amazingly propaganda crap out there, Teece himself putting forth absurd estimates of lost sales in the Napster case and the Rambus sham. Don't they give economists a bad name? If you can pay someone to say anything, how valuable is anything they say in an objective arena?

Seeing academic economists in their consulting capacity is, without a doubt, one of the most depressing aspects of my real-world education about academic economists. I have seen more than one brilliant economist produce what I consider shoddy garbage in their capacity as consultants.

For many academic economists, their academic work is where they put their energy and their integrity. For many of those same academic economists, their consulting work is where they whore themselves out to the highest bidder for cash, and in some cases, for access to extremely good data from their clients for the purposes of further academic research. As far as I see, the quality of the work simply does not appear to play any factor whatsoever. In my view, many consulting economists are simply selling their name as a brand and then attaching it to pretty much anything.

My view: Courts and regulatory agencies should disregard any consultant testimony unless that testimony consists simply of direct cites to the consultant's own peer-reviewed research.

We have jury duty, can't we have expert duty and make it just a little better paid.

Given the obvious problems with the current system and the increasing weight given to experts, isn't there a good case for the idea that exeprts could have a civil duty to contribute to the justice system in the same way citizens have such a duty? At least for academic experts paid in public universities.

If parties to a dispute want experts they must agree to covering the costs of these individuals' regular salary for the time invovled in the case. Then there would be some expert selection process like jury selection.

Completely crazy?

"In that view I would not call what Teece is doing immoral."

Well, that depends. I haven't seen Teece's testimony or his work on that issue, so I can't speak specifically to what Teece did.

But before somebody takes money to advocate a certain position, I personally would like to see them study the significance of variables and form an informed opinion about how the variables affect the outcome, and then to consult for the side that they conclude is actually right, even if it might mean a smaller (or no) paycheck now and them. From my point of view, that's part of the price you pay for having a tenured position, especially at a government funded university, and even more especially when you are using the perceived integrity and objectivity of being an academic to influence others.

If somebody has to keep themselves in ignorance in order to advocate a position, then they're full of it, and I judge them harshly at a moral level.

People respond to incentives, but I can judge individuals based on their particular response to given incentives. If an evil genie appeared and gave people $10,000 every time they ran over a pedestrian in their car, I might predict that people would run over more pedestrians, but I'd still disapprove of people who ran over people for money.

Well, Martin, you're kinda forgetting the most important part here. I have the option of deciding which side I will work for and whether or not I will testify at all. There is no professional duty for economists to consult that I know of.

If anybody wanted me to testify, they'd get my full report, which would say "In my opinion, $10,000 is an incentive for running over pedestrians, and jailing people for running over pedestrians is, in my opinion, a disincentive away from running over pedestrians." The jury, judge, and both attorneys could do with that what they liked.

As for pharmacists, I think they have every right (as long as they've cleared that with their employer) to refuse giving out the morning after pill, so long as there is ample opportunity for customers to use other pharmacists that have no such moral issue. I may require a pharmacist to violate their beliefs if that was the only way for a customer to get their morning after pill in time. I think it's pretty easy to acommodtae everybody on that one. I think the people who want to make every pharmacist, regardless of their personal beliefs, hand out the morning after pill under every circumstance, are ogres.

3) There is a difference between presenting one side of an argument and being flat out disingenuous.

In economics, I don't believe there is a relevant distinction. A consultant is handed a large data set and from there, he cleans it, loads it into Stata or his software of choice and proceeds to crank out a whole bunch of regressions. Out of probably dozens of specifications, the only ones that will be used in court are those that show a statistically significant result that the consultant can vouch for on the stand. I should point out that publishing in journals tends to be similar, except the stakes are much lower.

Now I doubt most lawyers have the training or technical knowledge to challenge a tenured professor on the stand about his research and doubt even more that a jury of average citizens could figure out what was really going on. Presenting this kind of shoddy research is lying by omission and the people who do it ought to know better. Economists, unlike doctors or lawyers or accountants, have no recognized set of professional ethics and that lack leads to things like this.

Brent, you confused the economic consulting profession, i.e. economists who join consulting firms to work full-time, with academic economists who consult on the side, which is what I'm talking about. If you want to join a litigation consulting firm and make that your job, great. We all know that you're a hired gun.

But if you're using the imprimatur and prestige of your academic position to lend your name to crappy arguments and shoddy work in exchange for money, then yeah, I'll judge you. I find it unseemly to take the name you've built up doing good work and lend it to bad work in exchange for money.

"Economists are great at answering hypothetical questions with great precision," says Asim Varma, a partner in the Washington, D.C., law firm of Arnold & Porter. "But you have to find out what the assumptions are. If they're spinning the assumptions to help the client, all that precision is illusory."

telling commentary

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