27 January 2011

Ethics and Economics

The Econ blogosphere has had a little bit of buzz over the idea of ethics lately. Specifically, the question has been whether there should be a code of ethics for economists.

I understand the theory behind the question.  I get that people would be more inclined to trust economists if they swore to conduct their research ethically, without allowing bias to enter the picture, etc. ad nauseum. Implied in the desire for trust, though, is the hope that economists will have their ideas taken seriously and implemented as public policy.

Unfortunately, given the relative disarray in the field of economics, giving more credence to the dismal scientists seems incredibly misguided.  How many economists foresaw the housing market implosion?  How about the tech bubble?  How many economists believe in the need for deficit spending?  These answers to these questions are unsatisfactory at best.

In addition, giving economists more credence isn’t just misguided, it’s also pointless.  It’s downright difficult to get a majority of people to agree on one issue, and economists are worse than people when it comes to, say, addressing budget issues, fiscal policy, regulation, and so on.  Even if people were to put more trust in economists, they would still have to choose which economist to trust the most, since all of them differ on major policy issues.

Finally, the signal that economists can be trusted would likely have negative long-term results.  Scientists were once considered a very trustworthy set of people, worthy of emulation, and possessing the answers to the most complex questions.  Now, some are starting to regard them as bull(spit) artists, especially when it is discovered that they, just off the top of my head, manipulate temperature data.  Given how the scientific method itself is starting to show serious flaws, there really isn’t much reason to rely on the word of scientists anymore.

The same thing can happen to economists.  They, like scientists, can abuse the trust that people place in them.  Eventually they will become discredited, and undermine all the gains that have been made thus far.  Frankly, no one will be well-served by this.  The absence of a code of ethics should help to provide the level of skepticism necessary to keep researchers honest.

So, in answer to the question posed at the beginning, a code of ethics has the potential of high costs coupled with minimal benefits.  You don’t need to be an economist to figure out that a code of ethics is a bad decision.

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