Secret Life of Economists: Conflicts of interest throughout the Dismal Science are more common......

[marmar]

from In These Times:




The Secret Life of Economists
Conflicts of interest throughout the Dismal Science are more common than you know.

By Micah Uetricht


Would Americans be more concerned about the financial deregulations that helped trigger the Great Recession if they knew that some of the economists publicly advocating for them profited from their implementation?

It’s tough to know, because in op-eds and media appearances, academic economists often do not disclose their investments in or positions at private financial institutions that could bias their policy recommendations. But after two researchers exposed a rash of potential conflicts of interest among members of their profession, economists are now for the first time considering ethics rules that would require them to divulge any connection between personal finances and the public policies they advocate.

Late last year, University of Massachusetts Amherst economists Gerald Epstein and Jessica Carrick-Hagenbarth published a paper titled “Financial Economists, Financial Interests and Dark Corners of the Meltdown.” They suggested a previously unexplored cause of the crisis: Economists didn’t see the collapse coming because many were profiting from the policies that led to disaster. “conomists, like so many others, had perverse incentives not to recognize the crisis,” Epstein and Carrick-Hagenbarth wrote in the paper, which was published by their university’s left-leaning Political Economy Research Institute.

The study examined 19 unnamed academic financial economists whose opinions have been prominent in the media during the push for financial reforms before and after the market crashed. Thirteen of the academics had a stake in or held positions within financial institutions whose investments could have jumped in value if and when the economists’ suggestions became policy. Eight of those 13 did not report such conflicts of interest. ..........(more)

The complete piece is at: http://www.inthesetimes.com/article/7064/the_secret_life_of_economists

[Bonhomme Richard]

1. I think the same way with the nuclear experts coming on

the news. I have no idea of their agenda, who they consult for, or whose boards they sit on. Inside Job enlightened me to this sad state of affairs.

[Igel]

2. It's why the experts missed the collapse of the USSR.

Of course, they didn't have financial interests. To view all conflicts of interest as financial is to ignore most possible conflicts of interest.

The scholars' conflicts were two-fold: (1) Research/collaboration opportunities for themselves and their students and (2) reputation. The first is at least mercenary. The second is confirmation bias writ large: You have your grande idee fixe on which you have built your reputation and nothing short of having reality crush the life out of it is likely to cause you to reconsider it; if you suddenly reverse it and admit you were wrong when facts compel you to do so, what else might you have been wrong about?

Factor the latter in and few economists lack a conflict of interest. The first kind of conflict is inevitable except for those who espouse the highest standards of purity. For an economist, that means starving even when a good job comes along. Good luck with that.

[fasttense]

3. It's why the experts missed the Great Recession.

They were too busy trying to justify the greed of the corporate aristocracy and Ann Ryan-away to care. They were getting big bucks for their fairy tales for fascists that they didn't notice the collapse. Some have still have not noticed.

[xchrom]

4. if it's all right with you -- i am going to x-post this in SMW. NT

[marmar]

5. Bien sûr.

:hi:

[xchrom]

6. Merci! Nt