Compromising Academics
Posted on December 28th, 2013 in Uncategorized | 8 Comments »
The Times weighs in today with a piece on how academics who defend Wall Street also tend to make a lot of money from Wall Street. I am shocked, shocked by this.
When asked about the financial benefits of his outside activities, Mr. Pirrong replied, “That’s between me and the I.R.S.”
This is, of course, a point first and most prominently made by Charles Ferguson in his terrific documentary about the financial crisis, Inside Job, in which he skewered far more prominent academics at Harvard and Columbia for taking money from Wall Street—without disclosing it—and then arguing pro-Wall Street positions.
In the wake of that film, a few prominent economics departments, including Harvard’s, promised that they would do more to disclose their professors’ outside sources of revenue.
Which brings us, inevitably, to Larry Summers, a man who only recently was a leading candidate to chair the Federal Reserve and who, I am confident, has no plans to abdicate a role in public life. Some of his extracurricular activities—serving on the board of an online university (not Harvard’s), investing in a company that lends at high interest rates to people who have trouble borrowing money —have been documented in the press.
But you will find no mention of them or any other paid outside activity on Larry Summers’ personal website. Nor will you find any disclosure on his Kennedy School website. Hey—isn’t the practice of transparency a part of good public policy? And isn’t the Kennedy School supposed to teach public policy?
Interestingly, you will find on Summers’ website a contact for media inquiries, a Gmail address for a woman named Kelly Friendly. Her work with Summers appears to be a side gig for Friendly; according to her LinkedIn page, she’s the director of marketing at Flagship Ventures, a Boston-based private equity firm. (And nothing against Friendly, by the way; it’s hard to imagine that her employer would mind her having a strong connection to Larry Summers.) It’s just telling that if the press wants to reach Summers, they’re encouraged not to go through Harvard, but through a woman at a private equity firm.
There is no “media contact” listed for Summers on his Kennedy School page.
I don’t mean to pick on Summers, because I’m sure that the push towards greater disclosure in Harvard’s economics department—which still lists Summers as a member—never amounted to much, and there are likely any number of Harvard professors who could be faulted for the same lack of transparency.
(By the way, on his website, Columbia’s Joe Stiglitz has a section listing his speeches; Yale’s Robert Shiller has a section titled “Disclosure of Outside Activities“; I took a look about the personal and econ department web pages of about half a dozen different Harvard professors, including Ken Rogoff, Greg Mankiw, Martin Feldstein and Robert Barro, and could not find one word of disclosure about paid outside activities. Lot of stuff about how many articles they’ve written, though. To be fair, I might have missed something…but if the disclosure is that hard to find, one has to assume that the discloser doesn’t really want you to find it.)
But Summers’ case is high-profile, and he could set a good example of ethical leadership by disclosing at least who pays him for what (if not how much). And then, of course, there’s the issue of how much time one of Harvard’s highest-paid professors actually spends doing stuff for Harvard, versus even more lucrative things in the private sector.
A funny thing about the Times’ piece: It singles out a couple of academics you’ve never heard of before. Imagine how much more shocking it would have been if it had examined one of the most powerful economists in the world.
8 Responses
12/28/2013 5:02 pm
It appears that “Outside Activities” is an optional rubric on the standard Ec Department home page template. Look at the page of John Campbell, who I believe was also featured in Inside Job; to his credit, he lists his activities in some detail. Campbell is just an example. Some do and more don’t.
We do report this kind of information to the university every year. There has been absolutely no suggestion that I am aware of that the university thinks it would be a good idea to disclose it. A couple of years ago I talked to my CS colleagues about it, and nobody seemed opposed (in fact several though it would enhance their reputations), but there didn’t seem to be much reason to do it either (and there is always the problem of keeping it up to date, of being accused of hiding something if it is then overlooked or the connection seems too tenuous to mention, etc.).
I have heard that in Ec and HBS the sentiment is the opposite — opposed, unless everybody has do to it maybe, on the basis that a voluntary disclosure would suggest, unfairly, that the concerned individual felt there WAS a conflict of interest. This seems to me wrongheaded; the fact that you think people would be interested in what you had to disclose seems to me a pretty good indicator that it would be better to disclose it. I suppose it depends on whether you think the public has the wits to interpret what you would be disclosing. Why should economics and business be so different from medicine in this regard?
(Before anyone complains about my own home page — I mention a few commitments, but I would actually not have a lot to add if I made a systematic list. Most of my “outside” speaking commitments are unpaid talks to Harvard Clubs.)
12/30/2013 9:21 pm
Please read:
http://blogs.reuters.com/felix-salmon/2013/12/29/the-non-scandal-of-scott-irwin-and-craig-pirrong-3/
and then discuss.
12/31/2013 4:51 pm
I think highly of Felix Salmon, Michael, and I’m inclined to agree with his point: as I mentioned above, the Times chose to pick on a couple of academics who aren’t all that prominent. As I wrote, imagine how much more powerful the article would have been if it focused on academics who, for example, are potential nominees to chair the Federal Reserve. I didn’t break the article down as deeply as Felix did, obviously, but I did note to myself a couple of times where I thought, “Hmmm, they don’t really seem to have that nailed down…” And the thing about the Chicago Merc giving to the business school is pretty silly; one would be surprised if it didn’t.
That said, I don’t think the issue of academics being influenced by payments from the private sector is thereby moot. Inside Job, I thought, did a pretty good job of showing otherwise.
Ultimately, it’s better to just disclose and let people make up their own minds.
1/1/2024 1:23 pm
Richard,
I’d agree with you that the issue of academics being influenced by payments from the private sector is not a moot issue. I think it’s a question of scope. There are, undoubtedly, some bad apples in the bunch, just like there are ethically questionable lawyers, journalists, doctors, name your chosen profession here. As Salmon points out, there’s a regular trope our there that somehow the academic profession is as a whole corrupted. I don’t think that’s the case. (If you want to specifically target an individual whose actions you find questionable — for example, Larry Summers — I agree that’s a different question, precisely because it’s limited and targeted in scope.)
I’m unclear that blanket disclosure is a suitable solution, although I think that’s a worthy point for discussion. In part it may depend on how it’s done. I admit I have some sympathy for Mr. Pirrong’s statement: ““That’s between me and the I.R.S.” Perhaps it makes sense that you know that someone has been paid; it makes less sense to me that it’s publicly available how much you’ve been paid, but perhaps I’m conservative or fussy in that regard. I don’t make public what I’m paid for consulting work, and wouldn’t want to, not because I think there’s anything wrong with it, but just because it seems tacky.
There are also cases where I don’t think it makes sense to announce the consulting publicly. There are sometimes valid reasons for confidentiality agreements, and I’m not sure how they jibe with “full disclosure” of consulting activities.
I admit that in my line of work many of the ethical issues that are of concern here don’t arise, as my work is removed from policy questions, unlike other academics. Nobody would pay me to promote a particular type of hash table, and even if they were willing to, the math would be the same regardless of what they paid me. I suspect the subgroup of academics where these concerns of research being influenced outside payments is actually fairly small, albeit highly visible.
1/1/2024 1:58 pm
Salmon used the term “hack.” Shill would have been more appropriate because it’s not so much the existence of a financial link as it is the hiding of that fact.
Some may not trust the public to differentiate between the appearance and reality of impropriety. But that invites the public to return the lack of trust.
The “bad apples” interpretation absolves the system of responsibility which is both incorrect and dangerous.
1/4/2024 10:46 am
I’m intrigued that the Wash Post is not commenting on the Ezra Klein speculations. Don’t you think newspapers, themselves utterly reliant on having news makers answer journalists’questions, should feel an obligation to respond to questions?
1/4/2024 4:18 pm
Anon—Yes, I do think so, for the exact reason you mention.
1/4/2024 4:20 pm
And Michael, we largely agree. Like you, I don’t think that the disclosure of specific amounts is generally necessary, but not so much because it’s tacky—though I know what you mean—but because I think that kind of detail falls into the realm of reasonable privacy. It’s more important to know that Goldman Sachs paid x academic to come speak than to know how much.