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When Big-Name Economists Have Jobs On The Side

A lot of big-name academic economists have side jobs working for private companies — siting on boards of directors, doing a little advising, that sort of thing.

But you wouldn't always know it when they publish scholarly work, testify in Congress, or write op-ed pieces in high-profile publications.

That's a problem, according to a recent paper by Gerald Epstein, an economist at U. Mass. Amherst.

Epstein his co-author look at two groups of prominent economists that recently published recommendations for financial reform. Of the 19 economists in the two groups, 13 "worked in some capacity with private financial institutions," the authors found.

Then they went through the economists' public appearances and publications between 2005 and 2009, and found that:

the vast majority of the time, these economists did not identify these affiliations and possible conflicts of interest.

Epstein doesn't argue that the economists' financial ties affected their recommendations. The sample of economists is small and not random, so it's impossible to draw any clear, quantitative conclusions along these lines.

But Epstein does say the economics establishment should adopt a code of ethics. In particular, he says, economists should disclose any relevant financial ties when they write papers or make other public pronouncements.

To get a sense of how this might work, it's worth looking at the world of medical research, which has made a big shift in this direction in recent years.

It's still common for big-name medical researchers to have financial ties to the drug industry. But many prominent medical journals now require researchers to report those ties, and the journals disclose the authors' financial connections, so readers can take them into consideration.

Epstein, for his part, told me that he's done some work for the UN but doesn't have any financial ties to the private sector.

Hat tip: Baseline Scenario