Economists Lack Ethics Code

  Economists Lack Ethics Code, Posing Challenges for Journalists
Posted by admin2 • October 17, 2011 • Printer-friendly
By Craig Silverman

Unlike doctors, architects, dentists, building contractors,
journalists and a wide range of other professions and trades,
economists do not have a code of professional ethics.

That would seem more of an internal matter for the profession if it
weren’t for the fact that journalists rely on academic and applied
economists as sources. Economists are viewed as credible,
authoritative experts. Their words carry weight. So should the lack of
an ethical code change the way journalists deal with economists? Or is
it irrelevant to the quality of commentary and information they
provide?

There’s a scene in “Inside Job,” the 2010 documentary about the
financial crisis, in which Frederic Mishkin, a former member of the
Board of Governors of the Federal Reserve System and a professor at
Columbia Business School, is rendered speechless.

It comes after director Charles Ferguson questions Mishkin about his
co-authorship of a 2006 report, “Financial Stability In Iceland,”
which painted a very positive picture of the country’s banking system.
Ferguson notes that Mishkin was paid six figures by the Icelandic
Chamber of Commerce to deliver the document — yet nowhere in the text
is this information disclosed. The exchange is captured in this clip,
which concludes with Mishkin fumbling for a response.

It’s a damning few minutes of cinema, and has become a
frequently-cited piece of evidence in a growing debate about the lack
of formal ethical requirements of economists.

George DeMartino, a professor in the global, finance, trade and
economic integration program at the University of Denver, said in an
email interview that the lack of a code poses a problem for
journalists:

“Up until now (and by now, I mean up until the release of Ferguson’s
film and the subsequent reporting and studies), journalists tended to
presume that academic economists have no significant interests outside
of their university appointments — no financial entanglements that
might in any way affect their judgments. …

[I]t’s now clear that leading economists can and do make substantial
sums from consulting, lectures, service on boards of directors and the
like. And yet, when they give testimony before Congress, say, or take
other positions on pressing policy matters, they do not routinely make
full disclosure of their financial entanglements. That’s a problem —
for our profession, and for those who rely on economic expertise.”

Advocating for a code

DeMartino isn’t alone in thinking the lack of a code is a problem for
his profession. Earlier this year a letter signed by roughly 300
economists was sent to the president of the American Economic
Association. It called upon the AEA to adopt a code of ethics. The
organization responded by creating an Ad Hoc Committee on Ethical
Standards for Economists, which Nobel laureate Robert Solow is
leading.

When contacted, the AEA said it could not provide additional details
about the committee’s work. But AEA associate treasurer-secretary
Peter L. Rousseau said in an email that a draft report will be sent to
the AEA Executive Committee for its January meeting.

“This draft will be for internal discussion only,” he said. “When the
report is finalized it will be made available on the association’s
website. At this time we do not know when exactly this will occur but
we anticipate sometime by late Spring of 2012.”

In the meantime, economists operate without a code of ethics. At the
very least, it’s something journalists need to be aware of, according
to Stephen Ward, director of the Center for Journalism Ethics at the
University of Wisconsin-Madison.

“Without a code, the public has trouble knowing how to keep
professionals accountable because they can’t cite specific principles
and standards that the professionals accept and have violated,” Ward
said by email. “Unethical practitioners have great space in which to
operate if rules are never written down. So codes are not everything
in ethics, but they are not nothing, either.”

When I contacted Reuters financial blogger Felix Salmon to offer an
opinion about the lack of a code, he answered my questions in a blog
post. Salmon offered a blunt assessment of the problems posed by the
lack of a code, and the way sources deal with disclosure.

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.

Ward said the job of every journalist is to “make sure they know who
their sources are, what political perspectives they may have, and what
conflicts of interest may be hidden in the background; and to convey
that understanding to the public.”

As a result, he said we have a responsibility to perform due diligence
on our sources, rather than expecting them to speak up about any
potential conflicts.

“Journalists should investigate the integrity, expertise and possible
biases of their expert sources in the same way that they investigate
any other source of information,” he said. “In fact it may be more
important to investigate economists and other experts given their
power in shaping public discourse.”

Warren Watson, executive director of the Society of American Business
Editors and Writers and a former business journalist, said in a phone
interview that his organization’s code of ethics has become an
important touchstone for members. However, he doubts business
journalists consider whether a source is bound by a similar code.

“I don’t think business journalists would routinely ask a source if he
or she has a code of ethics,” he said. ”… It might be one of those
questions that come up at an awkward time in an interview, and it
might be off-putting [to the source].”

Watson said codes of ethics are important for all professionals, and
it’s key to keep them current.

“I think we all need something like this,” he said. “This kind of
stuff is good to have and good to freshen up from time to time and
make sure it’s still applicable and relevant.”

Questioning the need for a code

While the movement toward a code for economists appears to have
momentum, some prominent economists question the utility and
importance of having one.

Lant Pritchett made the argument in an online discussion hosted by
“The Economist” that a person’s clients, race, gender or other
characteristics should not be a defining factor in evaluating the
value of their arguments.

“People should be able [to] put ideas, arguments and evidence into the
public sphere of economics discourse to be evaluated on their
disciplinary merits, not based on their author and his/her peculiar
bundle of biases,” wrote Pritchett, professor of the practice of
international development and faculty chair of the masters in public
policy in international development program at Harvard’s Kennedy
School of Government. “To help readers fairly assess my ideas,
arguments, and evidence I should voluntarily disclose about myself …
nothing.”

In an Economist article earlier this year, economist Tyler Cowen
questioned the utility of a code. As evidence, he said he believes
ethical codes for journalists have little impact.

“Newspapers already have conflict of interest policies for many (or
all) of their writers, but I don’t see they are much enforced or have
much improved the quality of most op-ed pages as policy advice,” wrote
Cohen, author of “The Great Stagnation.” (He didn’t respond to a
request to expand on that thought.)

Of course, journalists can be guilty of making poor ethical decisions,
but that doesn’t mean ethics codes don’t help. The challenge is making
sure newsrooms talk about the codes they have and put them into
practice — not just when an ethical issue arises but in their day to
day reporting.

A code is not a panacea, be it aimed at economists, journalists or
anyone else. DeMartino, author of “The Economist’s Oath: On the Need
for Content of Professional Economic Ethics,” acknowledged that while
some people will violate a code, its existence provides important
guidance and increases the overall level of ethics and disclosure.

Would some people still cheat? Of course. But my sense is that most
economists want to do good work, work with integrity, and to do it
honestly; and this alone would lead most economists to make full
disclosure, were they simply asked to do so. And for the rest — their
self-interest would also have them give full disclosure, since failure
to do so would imperil their standing in the halls of power, and with
the media.

Economists want influence — and so they are apt to be careful to
conduct themselves in ways that allow them to stay in the game, so to
speak. Right now, there are no rules for them to follow, and so each
economist is left to figure out when to make a disclosure, and how
forthcoming to be in doing so.

Not surprisingly, DeMartino added one last item before signing off by email.

“BTW: I receive no salary outside of the university, and have no
outside financial earnings other than occasional honoraria for giving
lectures, paltry book royalties, and my 403b earnings (and losses!),”
he said. “See? That wasn’t hard…”

Three tips for interviewing economists

1. For academic economists, check the CV listed on his or her
university profile page. For applied economists, find a detailed
biography. Review these documents prior to the interview. Focus on the
boards they sit on, the companies or organizations they advise and the
entities that sponsor their research and retain them for consulting.
Who pays them for their expertise, and do they have any financial
arrangements related to the topic you want to discuss? “My sense is
that it would be good to check CVs and the like (though not all
financial entanglements might be listed there),” DeMartino said.

2. Ward suggests checking economists’ previous public statements and
their books or major articles to get a sense of who they are and what
their perspectives are. Coverage of their work may include information
that helps place their perspective in context.

3. During interviews, ask if they have any experience — such as
sitting on boards or consulting — that helped form their opinions on
this topic. You can then follow up their response with a direct
question about whether they have any engagements or relationships that
should be disclosed. “It is perfectly legitimate for a journalist to
ask economists directly whether they have any potential conflicts to
disclose,” Ward said. “In academia and elsewhere, experts are asked to
disclose any potential conflicts.”

Craig Silverman is a journalist, author and media critic in Montreal,
Canada.  He serves as editorial director of OpenFile, an online news
startup, and also writes weekly columns for Columbia Journalism Review
and the Toronto Star. He is the founder and editor of Regret the
Error, an award-winning site that tracks and reports on accuracy and
media corrections. This article was first published on Poynter.org and
is re-published with permission.



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