The Economist?s Oath: On the Need for and Content of Professional Economic Ethics

Published by EH.Net (September 2011)

George F. DeMartino, The Economist?s Oath: On the Need for and Content of Professional Economic Ethics. Oxford: Oxford University Press, 2011. xiii + 257 pp. $35 (hardcover), ISBN: 978-0-19-973056-8.

Reviewed for EH.Net by Peter J. Hill, Department of Economics, Wheaton College (emeritus).

George DeMartino?s basic premise is ?… the ethical universe that the economist confronts is irreducibly complex? (p. 176).? While many economists would agree with that statement, it usually serves as a justification for relative inattention to ethical issues in their professional lives.? DeMartino turns the complexity of the relationship between ethics and economics on its head, however, and argues that instead of ignoring ethics, economists need to take ethical issues seriously. In fact he is bold enough to propose an Economist?s Oath, a pledge that every economist would recite upon receiving a Ph.D.

DeMartino makes it clear that he is not concerned primarily with willful misconduct, things such as plagiarism, dishonesty, or the fudging of data. Those issues would be ruled out by the Oath but his main focus is on the actual way in which economists do their work, particularly the policy advice they give. His principle argument is that there is too much hubris in economics; the practitioners offer advice without enough consideration of the potential harm of their policies and enough involvement of the community affected by those policies.

The author prefaces his case for an Economist?s Oath with a discussion of what economics is about, how the pedagogy of economics forces concentration on technique rather than larger ethical issues, and the relative lack of philosophical sophistication of economists. These topics are thoughtfully treated, but are not the controversial part of the book.

The lack of ethical sophistication is surely a problem in the discipline and we would be well served to take ethical and moral issues seriously in our work. Of course not all economists have ignored ethical issues.? Among others, Robert Nelson (2001), Deirdre McCloskey (2006) and Paul Heyne (2008) have given thoughtful critiques of theological and ethical issues in the practice of economics. DeMartino takes those arguments a large step forward, however, arguing that economists, in their everyday practice of doing economics are not ethical. He uses two ethical standards, prudence, being aware of the down-side risks of a policy prescription, and autonomy, respecting the rights of those affected by the policy advocated.

DeMartino illustrates his argument that much of economics is unethical with several historical cases studies: the advice economists gave to the transition societies after the fall of central planning, the counsel given to the global South, particularly Latin America through adherence to the Washington consensus, and the failure of economists to predict and/or understand the economic crisis that started in 2008.

It is here that DeMartino becomes less persuasive. The second paragraph of his Oath states, ?That into whatever community I shall enter, it shall be for the good of the community to the utmost of my power …? (p. 232). And he believes that this principle was ignored in each of the three cases. But an alternative hypothesis to his charge of unethical behavior looms large; the policy advocates in each case had a different view of the distributional impacts and the efficacy of the proposals and analysis than DeMartino. It is doubtful, even two decades after the fall of the Berlin Wall, that the advocates of shock therapy would agree that they gave their advice with complete unawareness of the risks of their policies.

Did those who pushed the Washington Consensus fail to include in their analysis any consideration of short-term harm to certain groups? Perhaps their estimate of the harm was incorrect, but in all likelihood they thought their policies would be ?for the good of the community.? And perhaps those policy advocates were motivated by the failure of alternative policies that had been pursued for several decades in the global South. That possibility is not discussed as one of the reasons for the arguments for liberalization of markets.

Was the boom and bust of the early twenty-first century because economists were so unaware of ethical considerations that they unabashedly favored deregulated financial markets? An alternative explanation for the rapid rise in housing prices, along with the consequent collapse of financial institutions, namely inappropriate government intervention in the housing market, is not even mentioned.

Thus DeMartino?s basic thesis, that a code of ethics would serve the profession well is not convincing, particularly when this code is not directed at generally agreed upon principles of dishonesty, but rather at appropriately assessing risks of policy prescriptions and making sure all distributional aspects of those prescriptions are accounted for.

The economics profession is noted for strong disagreements about interpretation of data, the weighing of costs and benefits, and the appropriate theoretical framework to use for any analysis. Introducing the charge of ?unethical? to these discussions would seem to bring more heat than light. It is also not clear who would judge which pieces of economics work are unethical, i.e., not prudential nor respecting the principle of autonomy. And would there be an enforcement mechanism? Would charges that an economist acted unethically be investigated? By whom and using what standard? Prudence and autonomy are not simple rules that can easily be applied to economic work.

It is true that hindsight is very helpful. Not all policy advice has given the results the advocates desired. But it is too easy to charge those who gave that advice as ethically uniformed. Greater ethical awareness on the part of economists would be a good thing, and a better understanding of the ethical foundations of our economic reasoning would undoubtedly improve our work, but it is doubtful if a pledge such as that suggested by DeMartino would resolve many of the issues surrounding the efficacy and ethical implications of policy prescriptions.

References:

Paul Heyne (2008), ?Are Economists Basically Immoral?? and Other Essays on Economics, Ethics, and Religion [edited by Geoffrey Brennan and A.M.C. Waterman], Indianapolis: Liberty Fund.

Deirdre N. McCloskey (2007), The Bourgeois Virtues: Ethics for an Age of Commerce, Chicago: University of Chicago Press.

Robert Nelson (2001), Economics as Religion: From Samuelson to Chicago and Beyond, University Park, PA: Penn State Press.

Peter J. Hill is Professor Emeritus at Wheaton College and a Senior Fellow at the Property and Environment Research Center (PERC), Bozeman, MT. He is the co-author, with Terry L. Anderson, of The Not So Wild, Wild West: Property Rights on the Frontier, Stanford Press, 2004.

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