Academic journal article Agenda: A Journal of Policy Analysis and Reform

Ethics in Economics

Academic journal article Agenda: A Journal of Policy Analysis and Reform

Ethics in Economics

Article excerpt


Thank you very much for inviting me to give tonight's address. In considering what to speak about that would be of most interest and use to the Economic Society of Australia membership here in Canberra, I was inspired by my understanding that my friend Dr Cameron Murray's recent talk to you was very well-received, and by a confluence of recent events and media stories that centre on the theme of ethics. These events and stories focus on behaviour spanning different economic sectors- from academia to the government sector to the private sector-and exemplify Game of Mates-style collusive behaviour along networks of favouritism (Murray & Frijters, 2017), as well as single individuals getting up to various supposed misdeeds all on their own. So tonight, I want to talk about some examples of unethical behaviour, to offer some conceptual musings about ethics from the perspective of economics, and (hopefully of most use to you) to share my views about how to combat behaviour that could be legitimately deemed unethical from the point of view of an economist.

The ethics underpinning economic science

A sad and surprising lesson I've learned over my 14 years in Australia is that the reputation of economics in the Australian public discourse is not great. The public does not associate our profession with ethical principles (and we could talk for hours about why that is). The reason I was surprised about this is partly that it's not as true in my home culture of America, and partly that my undergraduate major at Yale was Ethics, Politics and Economics, which is Yale's version of the Oxford PPE (Philosophy, Politics and Ethics) program. This program's very raison d'etre rests on the existence of mutual relevance across the three branches of the degree. I was indoctrinated with this mutual relevance so early in my life that it is second nature to me that economic decisions are inevitably bound up with decisions in the moral and political spheres. To my mind, attempting to deny these profound interdependencies is not only foolish, but dangerous.

Some people seem to get confused about the relationship between economics and morality due to the apparent juxtaposition between 'positive' economics on the one hand, and 'normative' economics on the other. Some of this confusion relates to the idea that scientific inquiry should be objective and unbiased. Let me address this latter idea first.

There is no doubt that the ideals of science, both in Australia and internationally, include the notion that a scientist should do everything in his power to maintain objectivity when searching for truth about the world. Whether or not it is justified to draw conclusions on a given subject that are influenced by personal biases, belief or pre-conceptions has been the question that divides 'scientists-as-a-group' from other groups throughout the centuries, from the condemnation of Galileo by the Catholic Church to the Scopes trial.

Economists are fundamentally scientists, to the extent that we seek ever more accurate theories to explain human behaviour. This then implies that there is a moral role for economists-as-a-group in upholding scientific ideals like objectivity, which we promote when we call for transparency in research, for example. Objectivity itself exists as an aspirational ideal, guiding individual economists like an internal lighthouse, constantly keeping us in check to more or less of a degree. We develop that internal lighthouse through years of indoctrination: it's part of what the slog of graduate school is for.

Ultimately, the useful application of economists' pursuit of truth is that it helps us craft better and better policy advice for the stewards of our economies. Hence we are a special variety of social scientist, identified not only by our adherence to scientific ideals like objectivity, but by our deep commitment to the notion of promoting total social welfare. As expressed succinctly by Henry Hazlitt in his classic primer, Economics in One Lesson:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences ofthat policy not merely for one group but for all groups (Hazlitt, 1962, p. …

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