Economists in a Spotlight of Debate

On Sunday the revealing documentary “Inside Job” won an Oscar for Best Documentary (trailer, official site). This work has made waves by analyzing the financial collapse in 2008 and points the finger at corrupt politicians, financial advisers, journalists and economists.

And rather fittingly, a lot of people have recently been asking economists:

“Why are you one of the few professions left that operate without a code of ethics?”

While “Inside Job” was winning awards for exploring the financial tsunami of the last few years, economists reacted with an internal debate over disclosure. While some practice areas, including health economics (iHEA), do have disclosures and policy, the profession overall does not.  According to this NYT article, there is lots of room for improvement.

Tom Getzen, Professor of Risk, Insurance and Health Management at the Fox School of Business, Temple University and Executive Director and CEO of iHEA, has difficulty understanding how scientists who study incentives cannot understand why payments as consultants, etc.  shouldn’t be revealed in a public forum. (Disclosure: Professor Getzen is Network Director for SSRN’s Health Economics Network)

ICMJE (The International Committee of Medical Journal Editors) is concerned about the issue and has a well thought-out policy about conflicts of interest. This type of involvement shows that these type of standards are becoming an expectation.

A sweeping change was recently proposed to Economists. Over 300 economists urged President Robert Hall that the AEA (American Economic Association) should adopt a code of ethics that would enforce:

Disclosure of potential conflicts of interest that can arise between economists’ roles as economic experts and as paid consultants, principals or agents for private firms.”

The letter also emphasized additional disclosure requirements, making ethical transparency not only expected, but required.

Earlier this year the AEA’s annual meeting, the group stated:

“The executive committee of the American Economic Association voted unanimously to create a committee to consider the association’s existing disclosure and other ethical standards and potential extensions to those standards”

While this is a welcome first step, some say a code of conduct is long overdue. Yet others are more skeptical saying such a regulation would have no positive impact on credibility.

In light of “Inside Job”and the challenges specific to the AEA, what do you think? Is disclosure a no-brainer or is the issue more complex than everyone is making it?