Does the phrase “ethical economist” transport us into the kingdom of oxymorons, along with “European Community” and “fresh prunes”? Apparently the membership of the American Economic Association (AEA) doesn’t think it should. At the 2012 AEA convention, held in January in Chicago (perhaps that itself says something about economic wisdom), the assembled gathering responded to calls for a professional code of ethics by adopting some specific conflict-of-interest guidelines. Primarily requirements or suggestions for disclosure, the new rules are intended to help the public evaluate the “objectivity” or “neutrality” of analysis or policy recommendations coming from economists. Perhaps we will now learn more about who is feathering the nests of the analytical birds who are providing guidance on economic matters.
By turning over a few rocks and shining a bit of light into dark places, the financial crisis and “great recession” of 2008–09 provided impetus for development of the new guidelines. Journalists and documentary filmmakers, along with political leaders and some economists themselves, questioned the advisory roles played by well-connected and high-profile economists who were also closely tied to and financially rewarded by private corporations or institutions who could be impacted by their analyses or policy recommendations. Some of the apparent conflicts of interest were striking. A number of the distinguished gurus offering guidance to policymakers turned out to be sitting on boards of directors of, or receiving substantial payments from, entities affected by those high-level policy decisions.
Therefore, the AEA’s initial response to the call for a code of ethics has been to require disclosure of financial support or other potential conflicts of interest by economists wishing to publish in any of the AEA’s seven professional journals. Economists will need to reveal sources of financial support for research they wish to publish; and with every paper submitted, they will be expected to reveal “each interested party” from whom they have received support “summing to at least $10,000 in the past three years.” The scholars must also reveal any positions, paid or unpaid, held in any “relevant non-profit advocacy organizations or profit-making entities.” (Yes, this includes sitting on boards of directors.) The requirements also apply to any “close relative or partner” of an author. Further, each author must disclose whether any institution or group had the right to review the paper prior to its circulation and/or submission.
Although the AEA can only require these disclosures for material submitted to AEA journals, the January action “urges its members and other economists to apply the … principles in other publications: scholarly journals, op-ed pieces, newspaper and magazine columns, radio and television commentaries, as well as in testimony before federal and state legislative committees and other agencies.” Obviously if the guidelines were substantially followed, the public would be better able to ascertain which piper might be calling the tune.
Of course, we can all hope that economists, like all conscientious professionals, can take objective and principled stands on issues and offer unbiased analysis. However, we also have come to expect that AFL-CIO economists are likely to have a different take on policy issues than are economists employed by the U.S. Chamber of Commerce. Our eyebrows lift differently if we are reading research funded by the Koch brothers or the Heritage Foundation rather than the Economic Policy Institute or George Soros. It helps us evaluate those analyses if we are aware of those sources of support.
And, although many of the high-profile potential ethical lapses in the news may involve the government of Iceland or the board of directors of AIG, Nebraska, of course, is not immune to the problem. As University of Nebraska-Lincoln economics professor Greg Hayden reports in his recent study on “Conflicts in the Licensing Process for TransCanada’s Keystone XL Pipeline,” even in this heartland of America’s “traditional values,” financial flows can give the appearance of influencing analytical outcomes and policy decision-making. (Professor Hayden does not report any outside funding in support of his research.)
Of course, reporting who is supporting their work, even if the AEA suggestion is followed meticulously, will not prevent economists from making mistakes. Sometimes they make errors in judgment; sometimes they have inadequate information and sometimes they simply aren’t thoughtful enough to make the right call. Sometimes outfielders drop a fly ball. But economists can attempt to alert the public to their temptations to willful misperceptions, or preconceived notions, or financial incentives. If they are trying to catch that ball while wearing a patch on one eye, they ought to let the crowd know that.
Such problems and issues are not unique to economists. And disclosure of financial interest in research projects or supporting the researcher herself/himself seems a useful action in any professional area. As of January 2012, the economics profession has taken a step toward more transparency in its research and advocacy efforts. It would be useful for all of us to ask that the new AEA guidelines be followed when economic analysis or policy suggestions are being offered to us.