Thank you, Inside Job
The documentary Inside Job put a spotlight on conflict of interest for “experts,” specifically business school and economic professors at well-known universities. The conflict was that they’d be consulting for some firm or government, getting paid tens or hundreds of thousands of dollars, and would then write academic papers investigating the methods of that firm or government, without disclosing the payments.
Since it’s human nature to do so, these academic papers would end up supporting those methods, more often than not, even when the methods weren’t sound. I’m being intentionally generous, because the alternative is to think that they actually sell their endorsements; I’m sure that happens, but I’m guessing it isn’t always a conscious, deliberate decision.
Last Spring, the Columbia Business School changed its conflict of interest policy to address this exact problem. From the Columbia Spectator Article:
Under the new policy, Business School professors will be required to publicly disclose all outside activities—including consulting—that create or appear to create conflicts of interest.
“If there is even a potential for a conflict of interest, it should be disclosed,” Business School professor Michael Johannes said in an email. “To me, that is what the policy prescribes. That part is easy.”
The policy passed with “overwhelming” faculty support at a Tuesday faculty meeting, according to Business School Vice Dean Christopher Mayer, who chaired the committee that crafted the policy.
The new policy mandates that faculty members publish up-to-date curricula vitae, including a section on outside activities, on their Columbia webpages. In this section, they will be required to list outside organizations to which they have provided paid or unpaid services during the past five years, and which they think creates the appearance of a conflict of interest.
Good for them!
Next up: the Harvard Business School. I don’t think they yet have a comparable policy. When you google for “Harvard Business School conflict of interest” you get lots of links to HBS papers written about conflict of interest, for other people. Interesting.
I don’t understand what the reasoning could be that they are stalling. Is there some reason Harvard Business School professors wouldn’t want to disclose their outside consulting gigs? I mean, we already know about them advising Gaddafi back in 2006, so that can’t be it. Just in case you missed that, here’s an excerpt from the Harvard Crimson article from last Spring:
But Harvard professors have focused on the political conclusions of the report, which, among a set of recommendations, indicated that Libya was a functioning democracy and heralded the country’s system of local political gatherings as “a meaningful forum for Libyan citizens to participate directly in law-making.”
The report was a product of Monitor’s work consulting for Gaddafi from 2006 to 2008. The Libyan government—headed by Gaddafi, who has ruled since a 1969 military coup—hired consultants from Monitor Group to provide policy recommendations, economic advice, and several other services.
The consulting group carries a distinct Harvard flavor. On its website, the company touts the Harvard ties of several of its founders and current leaders.
I’m wondering if this would have happened if there already was a conflict of interest policy, like Columbia’s, in place. And I’m focusing on Harvard because if both Harvard and Columbia set such policies, I think other places will follow. As far as I can see, this is just as important as conflict of interest policies for doctors with respect to drug companies.
mathbabe 
Harvard adopted a university-wide conflict of interest policy in July 2010: http://news.harvard.edu/gazette/story/2010/07/conflict-of-interest-policy-adopted/
Such a thing is long overdue.
The conflict of interest issue for economists is definitely a much bigger problem than just business schools. Influential economists are not necessarily affiliated only with business schools.
Some of the economists highlighted in the Inside Job movie do not hold appointments with business schools but rather with economics departments inside an arts-and-sciences divisions.
Indeed, there are economists in almost every school at Harvard–at the law school, at the medical school/school of public health, at the design school, at the Kennedy School of Government, as well as Arts & Sciences and the business school. Indeed, perhaps the only place at Harvard you won’t find an economist is at the Divinity School (and I am not even sure about that!)
Then too, there was the notorious Andrei Shleifer affair, which involved an economist affiliated with Harvard’s Kennedy School of Government as well as Harvard’s economics department, but not with the business school.
(If you are not familiar with the Shleifer story, here is a good summary: http://www.economicprincipals.com/issues/2008.06.01/320.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EconomicPrincipals+%28Economic+Principals%29.
For more details, check out the cover story of Institutional Investor Magazine in January 2005. https://docs.google.com/viewer?url=http://janinewedel.info/harvardinvestigative_InstInvestorMag.pdf&pli=1 In the opinion of some–including Warsh and myself–the disgraceful handling of the Shleifer debacle is the real reason why Larry Summers was forced to resign as Harvard’s president.)
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Further thoughts:
it is interesting to look at Columbia Business School professor’s webpages in the light of the new policy. Prof. Mishkin’s webpage now very prominently highlights a link to “Disclosure of Outside Compensated Activities,” http://www0.gsb.columbia.edu/faculty/fmishkin/ but I did not see anything comparable on Dean Hubbard’s page or on any of the other half dozen or so finance/economics professors whose pages I visited.
There does not seem to be a definite time deadline by which professors are required to comply with this new policy. Also the the use of the phrase “which they *think*” in the wording of the policy you quoted above leaves room for ambiguity: “they will be required to list outside organizations to which they have provided paid or unpaid services during the past five years, and which they think creates the appearance of a conflict of interest.”
The Columbia policy also might not have headed off the Harvard Shleifer mess, since that had primarily to do with family members (Prof. Shleifer’s wife and his aide’s girlfriend setting up the first Russian mutual fund at a time when he was administering a big US AID contract to advise the Russian government on how to set up a capitalist free market stock exchange.)
Still, I think the Columbia policy is a very good step in the right direction.
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“Inside job” won the 2010 Academy Award for the Best Documentary Feature but I never heard it mentioned by the mainstream media. I just stumbled upon it l at the library last month. It’s a must-see but I think only few people have seen it (which is sad). People are more interested in watching fantasy movies, reality TV shows than reality itself.
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