MacroScope

New ethics standards for economists

It seems sensible for most professions but in economics it’s nothing short of a revolution: The 17,000-strong American Economics Association has adopted a stringent new code for disclosures meant to prevent or at least highlight possible conflicts of interest.

The unexpected move is the result of pressure on the profession about dubious ethical practices and a pay-to-play culture, including  a Reuters story that dug into conflicts relating to testimony on financial reform – and found that about one in three who addressed Congress on the subject of Dodd-Frank failed to come clean on some type of relevant financial interest. The issue of conflicts among academic economists was first brought to light by the movie Inside Job, in which former Fed governor Frederic Mishkin is questioned sharply about having been paid over $100,000 to write a glowing review of Iceland’s financial system not long before it imploded.

Here is what the new AEA code will require academics to do:

1) Every submitted article should state the sources of financial support for the particular research it describes. If none, that fact should be stated.

(2) Each author of a submitted article should identify each interested party from whom he or she has received significant financial support, summing to at least $10,000 in the past three years, in the form of consultant fees, retainers, grants and the like. The disclosure requirement also includes in-kind support, such as providing access to data. If the support in question comes with a non-disclosure obligation, that fact should be stated, along with as much information as the obligation permits. If there are no such sources of funds, that fact should be stated explicitly.  An “interested” party is any individual, group, or organization that has a financial, ideological, or political stake related to the article.

(3) Each author should disclose any paid or unpaid positions as officer, director, or board member of relevant non-profit advocacy organizations or profit-making entities. A “relevant” organization is one whose policy positions, goals, or financial interests relate to the article.

Why this blog really is worthwhile

This blog may actually be worth the web page it is electronically printed on. A paper from the Center for Economic and Policy Research (not Dean Baker’s shop but the other CEPR, in London) discussed here at VoxEU by University of Bologna economist Paolo Manasse, finds that, at least for American economic thinkers, blogging yields high returns — even from an economists’ strictly utilitarian, efficiency-maximizing perspective.

In the U.S. the blogs of individual economists, often academics, significantly increase the visibility of scientific papers, the reputation of the authors, and affect the readers’ opinions – three good reasons to ‘waste’ time blogging.

Why then, Manasse wonders, have Italian economists not taken the lead of their American counterparts and started their own blogs? He thinks it has something to do with lower economic literacy and a less individualistic culture. Yet the urgency of economic matters in Italy and a strong presence of Italian journalists and economic pundits on Twitter suggests there is room for the emergence of more Italian economics blogs.