A code of ethics for professional economists

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One of the most interesting things to come out of this year’s American Economic Association (AEA) meetings is the formal adoption of a code of conduct in relation to  potential conflicts of interest in the AEA’s publications. The idea of the code is to provide more information to readers of published work about the funding sources and other commitments authors of reports may have about their subject matter.

The code of conduct, reports Olaf Storbeck, contains the following points:

(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.

(4) The disclosures required above apply to any close relative or partner of any author.

(5) Each author must disclose if another party had the right to review the paper prior to its circulation.

(6) For published articles, information on relevant potential conflicts of interest will be made available to the public.

(7) The AEA urges its members and other economists to apply the above 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.

Storkbeck did a follow up interview with one of the progenitors of the idea, Prof. Gerald Epstein, who seemed cautiously optimistic about the wording, while wisely holding judgement on the efficacy of the code until five years or so have elapsed. Interestingly, Epstein argues for the adoption of codes like this in other professional economic associations:.

Would you recommend economic associations abroad to adapt similar guidelines?

Yes. Absolutely. I think this would be a good starting point for other associations. If they do not have publications, then they could still recommend the broad guidelines as indicated in point 7 of the guidelines. In fact it would be good to start with point 7 and then if they have publications, then require that they apply to the organizations’ publications.

In Ireland we have the Irish Economic Association, and its publication, the Economic and Social Review. The annual meeting of the IEA is on 26/27 of April this year in Dublin. Does it make sense to consider these types of resolutions, and if so, what do commenters feel the wording should look like?

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33 Responses to “A code of ethics for professional economists”

  1. One-Off Ireland Says:

    Each author should state the unthinking economic ideology from he or she pre-analyses the subject matter.

  2. Michael Hennigan - Finfacts Says:

    No need for this in Ireland.

    Conflict of interest has served us well and we have no need to take any dictation from foreigners. We have enough of them screwing us already like German banks!

    On the other hand…

    It would be welcome for people to practice what they preach.

    Also wouldn’t it be strange if RTÉ board members couldn’t pitch for work from producers; local councillors with a commercial propertyy interest could not get involved in land reazoning and Big auditing firms did not operate as if it was still the 19th century?

  3. Stephen Kinsella Says:

    While I’m sure cynicism is great fun, it isn’t *that* useful in moving forward-what about different recommendations/penalties etc?

    What specifically would you like to see in a code like this?

  4. Philip Lane Says:

    I imagine IEA and other national economic associations will simply follow the AEA guidelines.

  5. Philip II Says:

    There is no professional body to accredit economists so what possible penalties beyond tut-tutting could be applied? Of more use would be the journal issue : make a clear statement of background
    “Professor Pointyhead has in the past worked for The Central Bank, and has gained access to this data through a request to the CB. ” That sort of stuff would be a start, in say the ESR.

  6. The Alchemist Says:

    How many people in the public sector have engineered jobs for their spouses and family members while solemnly proclaiming the neutrality of the selection and interview processes?

    Too often people close to the public purse turn a fact, it is almost impossible to eradicate conflict of interest, into a deformed virtue. The entire political system is dyed through with patronage.

    The oldest trick in history is to recite the rule book chapter and verse, while flaunting it at every opportunity.

    Formal rules seem dandy but with realistic penalties for breaches, they are just frippery.

  7. EWI Says:

    I can see this being unpopular with economists associated with outfits like, say for example, ‘Lord’ Lawson’s AGW denialist outfit.

  8. EWI Says:

    @ The Alchemist

    How many people in the public sector have engineered jobs for their spouses and family members while solemnly proclaiming the neutrality of the selection and interview processes?

    Oh, my, that one’s rich for someone proclaiming the moral superiority of the private sector. Unless you believe that O’Reilly Jr and all the rest of them rose to such rewarding positions in Daddy’s empire through natural talent?

  9. Paul Hunt Says:

    @Stephen Kinsella,

    This is primarily a US solution to a US problem where numerous economists were acting as cheerleaders and useful idiots for the Masters of the Universe when submitting peer-reviewed articles to prestigious journals. I think Philip Lane is correct when he suggests that most national associations are likely to adopt this code as a matter of course. It should not pose a problem for them, or for the relevant Irish association – though there should be a means of verifying independently any such declaration of interest – because its absence – or lack of sufficiently detailed information – is not the principal problem in Ireland.

    The problem that arises is when, for example, universities and the ESRI have these various research centres that receive funding/support from ‘industry stakeholders’, or directly from government or from government or other public agencies and the resulting output is presented as independent, objective research and analysis, but no detailed breakdown is provided of the parties involved and the funding/support provided by the various parties.

    The resulting reports acquire a status or standing in the public domain and in public discourse that they do not deserve because, by omission or commission, they advance the interests of those providing funding and support. There is no end to the bullshit produced in this manner and it is eagerly seized on by government when it is giving in to the demands of some narrow sectional economic interest or other to the detriment of citizens in general.

  10. The Alchemist Says:

    @EWI

    That’s like comparing apples and oranges.

    BTW: The last line of my post should read: “Formal rules seem dandy but without realistic penalties for breaches, they are just frippery.”

    @Stephen K
    I think it is very difficult in Ireland to police let alone put in place realistic penalties in Ireland. The attitude towards dissent is repressive and resistant to being dug over. For example, no one seems to find it remotely peculiar that so many political advisors return in the form of various consultancies to serve ministers, departments, government briefs, etc. Local councillors have frequently sat on both sides of the table at planning meetings. I could give chapter and verse on bits of farmland I have seen rezoned in circumstances that most people would consider merited more scrutiny at its mildest. The Taoiseach thinks nothing of lobbying for an advisor to get a pay rise of €35K, while the rest of the country is told to stay ‘on message’. The tribunals revealed such obfuscation around conflict of interest that at times the political sphere appeared no more than a moral vacuum. And people take example from their leaders.

    Many multinational have strict rules about ‘fraternization’ between different grades of staff for fear it could give rise to conflicts of interest and partiality. I am not sure the same applies in the public service.

  11. Chris Says:

    A positive initiative, points 1, 2 and 3 should at least be adopted at the Irish annual meeting, the wordings are fine.

  12. Sean Lyons Says:

    One element arguably missing from the AEA code is disclosure of any direct role the funders had in the study itself. E.g., from the BMJ Group guidelines for authors:

    “Funding

    All sources of funding should be declared under the heading “Funding” at the end of the manuscript file (before the references). Authors must describe the role of the study sponsor(s), if any, in the study design; in the collection, analysis and interpretation data; in the writing of the report; and in the decision to submit the paper for publication. If the funding source had no such involvement, this should be stated.”

    http://group.bmj.com/products/journals/instructions-for-authors/editorial-policies#competing

  13. Stephen Kinsella Says:

    @Sean,
    Excellent point-another might be to state whether the study sponsor(s) had any role in hiring policy for the report or in the PR stuff coming after the report. Given the recent kerfuffle with Richard Tol it might make sense to allow as much disclosure of this type of information as possible.

  14. Ninth Level Ireland » Blog Archive » A code of ethics for professional economists Says:

    [...] “One of the most interesting things to come out of this year’s American Economic Association AEA meetings is the formal adoption of a code of conduct in relation to potential conflicts of interest in the AEA’s publications …” (more) [...]

  15. PR Guy Says:

    Be careful what you wish for. PR practitioners in Ireland now subscribe to three codes of ethics – the European Code of Professional Practice, adopted by the European Public Relations Confederation (CERP) in 1978 and commonly known as the Code of Lisbon, the International Code of Ethics, also known as the Code of Athens and the PRII Code of Practice for Public Affairs & Lobbying in Ireland.

    You’ve got Portugal, Greece and Ireland in one sentence there. I suppose you could call it: “a basket case of ethics.”

    :-(

  16. Michael Hennigan - Finfacts Says:

    @ Stephen Kinsella

    While I’m sure cynicism is great fun, it isn’t *that* useful in moving forward-what about different recommendations/penalties etc?

    Well Stephen, maybe you don’t like Mondays; it was later in the day for me and we had some news to be happy about.

    In the US where people can become millionaires because of political connections or professional celebrity, guidelines like this may help.

    Although in the case of Paul Krugman even though he had accepted a $50,000 a year fee for membership of the Enron window dressing advisory board, he was very critical of the connections President GW Bush had with the same Texan energy buccaneers.

    Is disclosure in respect of a particular paper or all fees from different areas ( if not the latter, then it’s very easy to cheat the system)?

    In the context of a system where conflict of interest is generally ignored, I implied earlier that guidelines for economists in themselves are not a big deal.

    However, the issue of full-time paid academics doubling up as entrepreneurs, forcing PhD students into areas of research that is in the commercial interest of the supervisor and then cashing out without any real value added for the taxpayer, certainly merits attention.

    RTÉ last year suggested its lack of concern for conflict of interest. It said it had bought commissioned programmes worth €2.7m from companies that were owned or controlled by board members or their close family members.

    In recent years, in response to reports that its highest earners were in receipt of free BMW cars, a spokesperson made a distinction between the high-paid contractors and the non-management staff: “As Pat Kenny, Gráinne Seoige and Diarmuid Gavin are freelance contractors, it is the RTÉ policy not to comment on their personal matters,” she said. “We would consider the matter of transport a personal matter.”

    Of course it’s hard to prevent cronyism where producers’ friends set up their own companies and then pitch for business. However, the state organisation doesn’t even see it as an issue to warrant attention.

    These people may not be members of the NUJ but they are journalists.

    RTÉ itself reported in 2007, that local  councils with up 45% of the membership with commercial property interests, participated in rezoning of land for development. In addition, the lobbying of planners that was common in Ireland, would be a criminal offence in Scandinavian countries.

  17. Paul Hunt Says:

    @Stephen Kinsella,

    “Given the recent kerfuffle with Richard Tol it might make sense to allow as much disclosure of this type of information as possible.”

    I hope, for your own sake, you are not doing a solo run on this – and that you have some indication of support from your peers. There are a lot of people in very powerful and influential positions who wouldn’t like this one little bit.

    If you were to follow your suggestions through to their logical conclusion, you would end up with a lot of reports being filed in various categories under the broad heading “Selected Narrow Sectional Economic Interests – special pleading, study scope constrained by sponsors, report modified by sponsors, etc.”

    The researchers would be p1ssed off because it is unlikely the reports would provide the basis for publications in peer-reviewed journals and the sponsors would be seriously p1ssed off becasue they were spending their money to secure this cachet of independent and authoritative analysis – and these disclosures would blow it.

    I’m all for reducing the supply of bullshit and for treating any of it that might have some merit as the special pleading it is, but, if one were to do this systematically, there would be very little of any substance left in the public domain. The Forces of Darkness and Resistance would oppose this strongly. Let Richard Tol’s villification be a salutary wraning.

  18. Stephen Kinsella Says:

    @Paul, This most certainly a solo run, as I speak for myself in this and other fora. The Forces might not be as powerful as you think, and as Ben Goldacre says, sunlight might be the best disinfectant.

    @Michael, you make a really valid point when you say

    However, the issue of full-time paid academics doubling up as entrepreneurs, forcing PhD students into areas of research that is in the commercial interest of the supervisor and then cashing out without any real value added for the taxpayer, certainly merits attention.

    If that could be ‘policed’ a bit better, then a positive outcome might be achieved.

  19. Paul Hunt Says:

    @Stephen,

    You probably haven’t been at the receiving end of the FODAR’s attentions. Some amount of a public profile probably provides some insulation. Good luck.

    In any event, in the usual Irish fashion, I expect your suggestion, assuming it secures some traction, will be narrowed down to focus on pure academic research.

    I’m sure Ben Goldacre would love the attribution, but it was US Justice Louis Brandeis 100 years ago. We all stand on the shoulders of giants, but most people seem determined to ignore their insights.

  20. Peter Stapleton Says:

    A related issue is the popularization of economic ideas and ‘findings’. Two of the most popular economics books published in recent years are ‘Freakonomics’ and ‘Superfreakonomics’ by economist Steven Levitt and journalist Stephen Dubner.
    The following critique of these books says a lot about the short-comings of some of the economics fraternity: http://www.americanscientist.org/search/home_result.aspx?q=freakonomics.

  21. ObsessiveMathsFreak Says:

    The model that should be looked at is the medical profession and its relationship to pharmaceutical companies. The same kind of barriers need to be placed between economists and the financial industry.

  22. Michael Hennigan - Finfacts Says:

    On the capture of economists

    http://www.bloomberg.com/news/2012-01-07/on-the-capture-of-economists-the-ticker.html

  23. seafóid Says:

    @Paul Hunt

    This is very good

    Includes a vignette on how countries are brought down by special interest groups

    http://www.ft.com/intl/cms/s/0/fb95b4fe-3863-11e1-9d07-00144feabdc0.html#axzz1izCEGN38

  24. Paul Hunt Says:

    @seafoid,

    Thank you. Mentioned on previous thread and comment at 5:35pm.

    Threads open so rapidly that it compels a lot of frustrating thread-hopping and it’s difficult to maintain and progress potentially value-adding exchanges.

    Not sure of the ‘grown-ups’ here would consider having a few open threads on a number of topics.

  25. colm brazel Says:

    A major part of the academy award winning documentary Inside Job http://www.sonyclassics.com/insidejob/ was the exposure of ‘hidden’ financial interests driving public policy fed by economists, bankers, politicians.

    Independent thinking is a valuable commodity that should also be valued and protected.

    Was there an announcement last Autumn of a new private company led by some leading economists in UCD/TCD providing consultancy services? You can easily imagine entanglements where the hand that feeds wields power and influence over the economist in the venus fly trap.

    Its worthy of looking into on how to safeguard independence from contamination. A declaration of interests and a voluntary code of ethics to safeguard economists; maybe an independent tribunal managed by the industry where public complaints can be made could be very worthwhile.

    A little digging around and a white paper circulated with recommendations from a small group of volunteers could be very useful.

    If you havn’t seen the above documentary, you should see it.

  26. colm brazel Says:

    For example, Peter Bacon has been on the media rounds stating the state should now intervene again to guard against property prices going through the floor.

    But you won’t find out in these reports his pedigree as an economist.

    http://en.wikipedia.org/wiki/National_Asset_Management_Agency

    ” Economist Peter Bacon, who was appointed by the government to advise on solutions to the banking crisis, said the new agency had potential to bring a better economic solution to the banking crisis and was preferable to nationalising the banks.[11] ”

    You see NAMA this year to meet its maturing repayment schedule has an obligation to raise near €7 bn. London is terrified they are going to flog their complete London portfolio and kill the property market there. Likewise, in Ireland the flooding of firesale property against the backdrop of falling property prices going to the floor, the NAMites like Bacon see their waterloo.

    So they are returning to the taxpayer trough. Unfortunately, the media is pretty crap ……..apart from some exceptional people like Mary Raftery, huge respect and condolences to her family today.

    Might help if economists like Bacon were forced to be more forthcoming in declaring who they are puppets for. Even President of the IFSC puppets like John Bruton rarely get introduced on the media in their real role, but rather by way of their political career. We know of course that’s why they were given the job. But we can be assured he wont be asked any embarrassing questions as to the contribution of the IFSC to Ireland’s status as possibly the third biggest tax haven in the world perhaps even outstripping locations such as the Cayman Islands. Bear this in mind as he travels the media corridors lobbying against any FTT taxes or further transparency and accountability that might impact the IFSC…..

    Yep, given this island is so infected with doublethink and low standards in high places, a code of ethics for professional conduct and misconduct should be there for every profession.

  27. Robert Glynn Says:

    Re Code of Ethics for Professional Economists;

    Sounds like an oxymoron to me.

    Economics has become a total joke. It seeks the cache of the natural sciences through the adoption of mathematical techniques for predictive purposes whilst hedging its bets using language of obfuscation. It also seeks the advancement of the Socialist agenda. JMK was a Fabian. What more do you need to know? It is also is a profession quite prepared to sell bullshit to the highest bidder even when it is clear the client is a crook or in the case of Government a crook on the grand scale.

    If one is interested in the truth and feels the need to insulate oneself against the vexatious fallacies, the craven propaganda uttered by modern economists; if one needs to wash away the stench of hypocrisy, then one must turn away from the Socialists, Keynesians, Chicagoists, neo-Liberals and neo-classicals and purge ones soul of all the filth with a good dose of Austrian truth.

    Start with Henry Hazzlits “Economics in One Lesson” and Ludwig von Mises’s “Human Action”.

    The parallels with the sixteenth century upheavals in Christianity brought on by Luther and other Protestants seem obvious when considering the depth of distrust felt towards the economics profession today. What is needed is a reformation, indeed a revolt against the status quo, the Cult of Keynes.

    An alternate world view is required. The Austrians provide this.

  28. Robert Glynn Says:

    Sorry “Hazlitt”

  29. Tim O'Halloran Says:

    @Colm Brazel

    As you say Bruton is introduced with no reference to his actual current job, PR for the IFSC, and Bacon is introduced without reference to his directorship in a developer’s company.

    More nauseating though, was when I heard Sutherland introduced on Newstalk as ‘Irealnd’s most eminent economist’ when he was in fact a barrister, and no mention at all of his Chairmanship of Goldman Sachs Europe and directorhip in Bank of Scotland.

    The true problem with ethics in Irish economics is in the whole area of boostering the bubble, by the various ‘Chief Economists’. Why no mention?

    While Bacon’s record should be mentioned when he is interviewed as a god-like authority, (like Honohan in this) , so should all economists’ records be mentioned on every occasion they wish to lecture the general public. Like a health warning.

  30. Sarah Carey Says:

    1. I think the onus is on journalists, especially broadcast journalists, to explain potential conflicts and challenge them. They shouldn’t even have particular guests on unless they are going to explain precisely potential conflicts. The worst offenders were during the boom having the bank economists on and treating them as if they were independent analysts. But I always blamed the producers/presenters not the economists themselves.

    2. However on this (from Michael?) “However, the issue of full-time paid academics doubling up as entrepreneurs, forcing PhD students into areas of research that is in the commercial interest of the supervisor and then cashing out without any real value added for the taxpayer, certainly merits attention.”

    I’m not sooo sure about this.

    Monetising research is a huge factor in innovation in the US. Not only does it bring in big money for the universities but it genuinely drives invention/innovation.
    I acknowledge for economics it’s different but as a matter of principal I wouldn’t necessarily knock cash as a motivator. Once it’s transparent there shouldn’t be too much of a problem…

  31. colm brazel Says:

    There’s a celebrated part 4 in Inside Job that takes two of Columbia
    Business School, economists, Glenn Hubbard, Dean of the Business School, and Fred Mishkin, to task. The reporter Ferguson tackled Mishkin on an upbeat report for the Iceland Chamber of Commerce he got paid €124,000 dollars for during which Mishkin said the banks were in a very healthy state, the report was titled, ‘Financial Stability in Iceland’. Full of conflicts of interest and financial self interest, Hubbard had a resume full of work/payments for hedge funds and financial services sources and got extremely tetchy when questioned about these. I’m not sure whether in Ireland such records on individuals would be accessible or made part of the public domain due to the blanket they throw on commercial sensitivity issues. A similar programme from RTE is not likely to be made or aired, but an active media should surely by now have focused on the statements of economists and financial experts during the boom as they were often used to blow the bubble on every media outlet. None of that analysis will see the light of day.

  32. Paul Hunt Says:

    @Sarah Carey,

    We don’t talk about conflicts between various interest groups. To reveal or highlight these conflicts is seen as ‘unhelpful’ (unhelpful to whom you might ask) and often downright rude and impolite. On another thread I tried to differentiate the relatively few, generally high profile, Public Policy Focused Economists (PPFEs) from the remaining large number of academic and research economists. These PPFEs may be differentiated from the larger number of Public Policy Engaged Economists (PPEEs) embedded in the government machine and the wider quangocracy. And these, in turn, may be differentiated from the much larger number of Public Policy Influencing Economists (PPIEs) working in semi-states, private sector firms and civil society associations.

    The interactions between the various combinations of these categories of economists and how they impact on policy formulation is fascinating and totally under-explored. The PPEEs are under strict political control and, due to this ‘corporate sole’ nonsense governing a minister and his or her officials, any public utterances must be entirely consistent with stated government policy. On all other occasions they must observe a vow of silence. Sometimes, some of the PPFEs are appointed by government to honorific or advisory postions – or commissioned to perform some task or other – and are obliged – or feel obliged – to observe this vow of silence.

    Of course, many of the PPFEs will have taught or supervised many of the PPEEs and one would assume that constacts are maintained. It seems to be generally accepted that serious policy debates go on behind closed doors in government in which the PPEEs are involved – and, one might assume, some of the PPFEs might be involved – directly or indirectly. It is here that many of the conflicts between interest groups in society or the economy that impact on public policy are resolved. But it is totally hidden from public view.

    The PPIEs tend to be much more vocal in making their public ptiches on behalf of the interest employing them, but much of it is for the optics. It provides copy and entertainment value for the media. But the real activity is again behind the closed doors of government and the success of the PPIEs is measured by the extent to which they can influence – or, indeed, participate in – the hidden policy debate.

    To distract attention from these hidden debates and to convey the optical illusion that public policy is formulated and debated in an open and transparent manner, government and various quangos conduct reviews, commission studies and perform public consultation exercises. The declared intention is to consult and to secure ‘consensus’ among all ‘stakeholders’. No hint of conflict here; any conflicts will be resolved away from prying eyes and ears.

    These exercise provide a huge amount of employment (not a lot of it very gainful since the intention is to produce bullshit) for the PPEEs, many of the PPIEs (consultants tend to do well) and occasionally some of the PPFEs. Engaging in this optical illusion also takes up a lot of the time of the remaining PPIEs. The number of these faux ‘public consultations’ and ‘reveiws’ going on at given time is simply staggering. Most pass the media by. They’ll take and publish the PR copy produced, but, since any hint of confict is suppressed and most of the content is technical, boring and tedious, there is no interest or desire to dig beneath the surface.

    There might be some grumbles occasionally about the amount of time and resource expended on what all participants recognise is an optical illusion, but it is generally accepted as being worth it because it conceals how the deals are done behind closed doors with the ensuing policy decisions being promulgated as faits accompli.

    So it doesn’t really matter a damn what declaration of interest requirements are imposed on academic or research economists- it wouldn’t matter if this were imposed on every econiomist who makes a public utterance – either verbal or written. It’s what they get up to behind the closed doors of government that matters. And all the parties involved will make damn sure that the public won’t get a hint of what goes on there.

    Of course, some media and public pressure to get these policy formulation discussions out into the open in the Oireachtas and its Cttees would help, but nobody seems to care.

  33. nigele Says:

    @Robert Glynn:

    “JMK was a Fabian. What more do you need to know? ”

    Don’t share your antipathy to either, but what makes you think Keynes was a Fabian?

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