Since the financial crisis, and particularly the hit movie The Inside Job, questions about whether the economics profession needs a code of conduct, or a code of ethics, has been hotly debated.
The Economist and the Wall Street Journal have extensively covered the discussion about professional ethics in the economics profession. My personal view is that a code of ethics for the profession would go a long way to improving public policy debates, and I find the following by George DeMartino captures my views most closely.
The case for professional economic ethics is simple. Economists affect the lives of others, often substantially—that is the crux of the matter. Not just one person at a time, as is the case in medical practice; and not just a few people who consent to the economists’ influence—say, those who purchase economic consulting services.
No, economists affect the life chances of countless people across the globe, not least through their impact on economic policy. Perhaps it is the enormity of that impact that makes it difficult for economists to wrap their minds around their ethical obligations.
The push-back from this debate has led the American Economics Association to introduce a requirement that authors submitting articles must disclose any potential conflicts of interest.
It is a good first step.
I am currently pushing for the introduction of a requirement to study ethics in economics degrees. And like many others, am promoting the introduction of a code of ethics for members of the professional economics association.
But like DeMartino I am finding it that economists have a lot of trouble wrapping their minds around ethical issues. For someone whose training in property valuation made me acutely aware of professional responsibility, I found the resistance and confusion amongst economists quite surprising. Property valuers operate under a Code of Ethics, Rules of Conduct, Concepts, Principles and Definitions, and Practice Standards. Their opinions hold sway in court. Yet all they do is estimate the price of one property asset at a time.
Economists typically estimate policy impacts on prices, distribution and output, promote certain policies in the media, and provide advice to governments. The title of economist does hold sway in the community, yet they baulk at being required to conduct themselves in a manner expected by the community of qualified professionals.
This is despite most other professions having a code of ethics administered by a professional body, such as teaching, counselling, pharmacy, medicine, engineering, pubic servants, property valuers, and electricians among many others. Or alternatively a code of conduct in professions such as town planning, law and building and construction.
While 61% of the 530 Australian economists surveyed by the Economic Society of Australia in 2011 agreed that the Society should maintain a code of ethics that applies to all members (with only 19% disagreeing), I have heard a number of arguments a against a code of ethics for professional economists.
- There are no ethical issues for economists
- Ethics is too grey. How do we teach that if there are no solutions?
- We assume people act ethically – it’s not our job to give people their morals
- It is too hard to monitor or enforce
No ethical issues for economists
professional ethics draws attention first and foremost to the complexities that arise out of relationships — among the members of a profession, between professionals and their profession, and between these individuals (and their profession) and those who populate the communities in which the profession operates and that are affected by the profession’s work. Ethical duties stem from the professional’s relationship to clients and/or the institutions who pay for the professional’s services, of course, but also to non‐clients who may also be affected by the professional’s work.
My personal bug bear, one I commented extensively on in the past, are the vested interests within the profession. Paid to promote a point of view using the reputation of the economic profession as a whole. My view is that if it such conduct would be unethical for a doctor, than it should be unethical for economist.
Ethics is a grey area
Right. But so is economic theory, but that doesn’t stop anyone teaching it.
As DeMartino writes
This point is fundamental: the challenges of professional practice entail ethical ambiguity and aperture, not clarity and closure… We should not presume nor look for axiomatic solutions in this domain. To put the point in economic terms, there is no ethical equivalent of pareto optimality.
The whole point of teaching ethics is that it is not all black and white. And if you have trouble teaching how to think about ethical issues there is a fantastic blog devoted to teaching and discussing ethics and economics.
Need I say more.
Too hard basket
Not sure what to make of this. What really is the point of a professional body if not to have review processes in place to monitor the conduct of its members? Surely the value of membership of a professional body is the quality of service it signals to others.
If all the professions I listed before can do it I don’t see what is so difficult.
Finally, I want to present a basic outline of what might be included in a Code of Ethics, which draws on the Handbook of Economics and Ethics.
- Conduct between professional economists
- sharing of data, appropriate recognition, and rights of reply
- Honest teaching by professional economists
- include the full suite of assumptions applicable to economic theories
- objective representation of empirical record and analysis
- Conduct between professional economists and their employers and clients
- disclosure of potential conflicts of interest
- not presenting opinions without evidence
- Conduct between professional economists and the community at large
- disclosure of funding when making public statements
The forth point is critical. The title of economist has stature in the community. Economists are the ‘go to’ social scientists. Politicians don’t call sociologists for advice. When an economist writes in the media it is assumed they have some expertise, not that they are paid advertorial for a policy of their employer’s choice.
As a package I would hope this proposed code would bring some humility to the profession. A professional economist would not be able to simply offer an opinion in the media. They would be able to offer ways of thinking about a problem which would involve discussions about what factors are relevant to analysing a problem. But drawing conclusions from these alternatives would require some evidence presented, even if the case is understood to be overwhelming within the profession itself. A simple phrase could suffice, such as “multiple empirical studies show this relationship holds under such conditions. A recent overview is found in…”
Whether or not such a voluntary code would bring substantial change in the profession I am not sure. But combined with the compulsory study of ethics for economics degrees, the economics profession of the future could be one that conducts itself with far more integrity. Ultimately I would hope this leads to better policy.
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