How journalists deal with economists’ ethics

By Felix Salmon
September 1, 2011
proposed economists' code of ethics, which I think is an excellent idea.

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Craig Silverman emails with some questions about the proposed economists’ code of ethics, which I think is an excellent idea. He has an interesting angle: how does this affect journalists? Here are his questions, with my answers.

I’m first of all wondering if you knew there wasn’t a code of ethics from the American Economists Association? If it’s new to you, I’d like to hear your thoughts on the lack of a code.

Absolutely. I’ve been writing about this for a while, and a lot of credit has to go to Charles Ferguson, who made the issue a central part of his Oscar-winning documentary, Inside Job, from which the above clip is taken.

There are lots of good reasons why there isn’t a code, with the main one being obvious to any economist: economists make more money when there isn’t a code than they would if such a code existed. And economists, even more than normal people, tend to act to maximize their own income.

Mostly, economists delude themselves that what they publish is exactly what they think, and is not tweaked so that the conclusion is what the people paying them want it to be. This isn’t true.

If you were aware of it, I’m wondering if you have thoughts on whether this presents a problem for journalists interviewing economists?

There’s definitely a problem here. For instance, Ric Mishkin was a natural interview on the subject of Iceland, seeing as how he’d written an in-depth study of the country. The study didn’t mention that he was paid a six-figure sum to write it, however — and journalists talking to him could easily be excused for not knowing that fact. What’s more, journalists shouldn’t feel the need to ask about conflicts and payments every time they talk to an economist — it makes interviews unnecessarily adversarial.

As a result of the calls to adopt a code, the AEA created an ad hoc committee to examine whether one should be created. What would you like to see in a code for economists?

Ideally, a code of ethics would say that economists can’t write papers about people and institutions they’re receiving money from. A disclosure rule is a poor alternative, but it’s better than nothing. Such a rule could be really simple: if you’re an economist with an academic affiliation, then you have to disclose all sources of outside income; such disclosure would include exactly how much you’re being paid. After all, the degree of conflict clearly increases with the amount of money involved: a million-dollar payday is going to have more effect on what an economist is likely to say than a hundred-dollar check.

As a financial journalist, I’m wondering if you have advice for other journalists in terms of using economists as sources. For example, do you ask if they have any conflicts of interest related to the issue you’re talking about? If they’re with a university, do you check their academic CV to see who they’ve consulted for?

As a rule, I don’t. And academic CVs, as a rule, tend not to include precisely the consultancy and speaking gigs which raise the most conflicts. This is one reason why the absence of any code of ethics is such a problem: there’s almost no way to find the necessary disclosures any other way. As a result, it’s all too easy to end up in situations like this one, where a story needs to be updated/corrected when a conflict is pointed out.

In general, do you think a professional code of ethics can have an impact on the way someone — economist or otherwise — conducts themselves with a journalist?

I’d like to hope so. All too often economists and other professionals feel comfortable with lies of omission when talking to journalists, simply not mentioning a fact that they know is germane. A good code of ethics should address this: even if there’s a disclosure somewhere about a conflict, the onus should not be on the journalist to find it, but rather on the economist to proactively mention that conflict to the journalist.

Finally, I’m wondering if you see any parallels with the Ben Stein story and this issue? (I realize he is not a professional economist, but he does identify himself as one…)

There are a couple of parallels: Ben Stein had a public gig at a respected institution (the New York Times), and he had to give up that gig when he started accepting money from the evil Similarly, if economists want to take lots of money from big corporations like banks or hedge funds or oil companies, then they should first consider the ethics of doing so, and how they will reflect on their academic institutions. There are similar conflicts in the life sciences, but it seems to me that the debates there are more out in the open. Economists don’t even seem to like to talk about ethics, let alone actually adopt a formal code. Which is sad, but, given the incentives involved, understandable.


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Only two thoughts. Firstly, I’m pretty sure Ben Stein is a professional economist because it’s largely a self-awarded title, isn’t it? I mean, where’s the Guild of Master Economists or suchlike? It also happens to be true that Stein is a very but very bad economist, but that’s another story.

Secondly, your article seems to be a long-winded way of saying “economists don’t want a code of ethics because they are basically unethical”. If so, I heartily agree.

Posted by ottorock | Report as abusive

For most economists (speaking as one of the majority), this is a non-issue and we would have no problems, because, essentially, all our income is earned from our employment. I’ve been doing this for about 40 years, and I have, in that time, had a dozen or so (paying) consultancies (mostly as an expert witness) and maybe four or five paid speaking gigs (with the top payment a $100 gift certificate at a restaurant). And I suspect that’s reasonably common.

Where the entire issue becomes germane is for the relatively few economists whose prominence makes them attractive to people who can (and will) pay substantial sums and, at the same time, makes them attractive sources for journalists. Out of the membership of the American Economic Association (18,000 according to Wikipedia, about half in academia), my guess is that no more than 500 or so would find that the sort of code of ethics you’re talking about would impinge at all on their activities.

But it’s still a good idea to have one.

(Incidentally, contra ottorock, I don’t think economists are, as a group, any more or any less ethical than any group of comparable size.)

Posted by DACoffin | Report as abusive

I often wonder if there is such an ethics code for journalists as they seem to get away with so much bias and dishonest reporting depending on what ‘angle’ their story is trying to present. The print media have of course been the worst for this, but with the multimediafication of news it does seem to creep in everywhere.

For instance, how often do you see TV News journalists substituting their voice over that of the actual speaker in a film clip long enough to have heard the original words? Or even worse, those times when the journalists puts his organisation’s overlay over what the politician is saying.

When a journalist interviews an economist, at least the economist starts from mathematics and logic; I’m not sure many media proprietors do.

Posted by FifthDecade | Report as abusive

FifthDecade, I agree there is alot of bias but I also think their is a shocking level of ignorance and frankly laziness when it comes to basic fact checking.

Posted by Danny_Black | Report as abusive

was talking about journalists.

Posted by Danny_Black | Report as abusive

Not about investment advisors?

Posted by TFF | Report as abusive

Them too :p

Posted by Danny_Black | Report as abusive