It looks like there is a debate about whether the economics profession should adopt a code of ethics. You can read about it here and here. A new documentary called Inside Job is the reason this issue is being brought up.
It appears that some economists did not fully disclose that they have close associations with financial firms. For example, according to the NYT article, one person co-wrote a book on overhauling Wall Street regulations, but did not disclose he sits “on the board of Moody’s, the credit rating agency,” while another person who teaches at UC Berkeley did not disclose “she is a director of Morgan Stanley.”
Universities and medical schools have tightened disclosure requirements and conflicts of interest policies for scientists, engineers and doctors in recent years, and the main professional associations for political scientists, sociologists and psychologists have all adopted ethical codes.
So why not economists?
The Slate article asks a good question, then answers it:
But can disclosure laws actually change outcomes? The answer, again, is yes, at least in a number of other realms. One study, for instance, looked at a change to the Securities and Exchange Commission’s rules, requiring every public company to publish its managers’ discussions of whether current earnings would mean future earnings. The result? More accurate share prices.
My friend Xuan provided me with a list of five oaths she suggests all economists take. If anyone from the American Economic Association wants to borrow them, I don’t think she would mind; just make sure she is given some type of acknowledgement for it. Scout’s honor right?
Here are the five oaths:
- I shall not engage in activities that result in information asymmetry.
- As a believer in the power of the free market, I will signal to Wall Street my supply price for my academic credentials in my c.v. This will assure that if Wall Street does have a demand for economists who are willing to sell their academic credentials, Wall Street would not have to incur high search costs, which in turns would contribute to the efficient use of time and resources for the macroeconomy.
- I will practice the prisoner’s dilemma game in my everyday life, which means I have a greater incentive to tell the truth–instead of lie.
- I will stick to the rule of efficiency and utility maximization. This means I will not reach frivolous conclusions in my studies that, in all honesty, do not increase efficiency or maximize societal utility
- On the other hand, I have to maximize my own utility first. Methodological individualism is still important isn’t it? Adam Smith was right. If I maximize my utility, then I will also contribute to societal utility maximization.