Ethics for economists
TEXT OF COMMENTARY
Kai Ryssdal: This week marks a year since the first of the big consumer reforms to come out of the financial crisis. New regulations for credit card companies, changes to how they're allowed to impose fees and penalties. The idea was to create more transparency; to make that fine print a little bit bigger.
Commentator and economist Nancy Folbre thinks similar rules should be applied to her own profession.
Nancy Folbre: When economists speak, whom do they speak for?
Most academic disciplines have an official code of ethics. But the American Economic Association has never developed an official code of ethics. Sadly, some of its members seem to be in dire need of one. We are now living through a period of extremely high unemployment and foreclosures, with economists playing a particularly important role in public policy debates.
Yet research by my colleague Professor Gerald Epstein revealed potential conflicts of interest among many prominent academic economists who played a key role in recent debates over financial reform. They either invested in or advised for-profit financial institutions likely to be affected by their policy prescriptions.
They didn't disclose these potential conflicts of interest before offering their opinions in public. Why not? Maybe no one asked them to.
Long before the current financial crisis burst upon us, Harvard economist Andrei Shleifer was taken to court to face accusations of advancing his own financial interests while receiving support from U.S. taxpayers to advise Russians on the best way to develop a stock market.
Both Professor Shleifer and Harvard University agreed to settle the case with no admission of wrongdoing, but paid hefty financial penalties. The case quickly disappeared from sight.
But what could undermine our professional prestige more than suspicion of unethical behavior? At its recent meetings in Denver, American Economic Association agreed to set up a committee to study the issue, but decided to keep the membership of this committee anonymous. So no economists on the committee will be required to publicly disclose whether they have any reason to fear public disclosure.
I sincerely hope that their secret deliberations lead them to challenge professional secrecy.
Ryssdal: Nancy Folbre is a professor of economics at the University of Massachusetts at Amherst. Don't keep your comments secret from us -- send 'em in.