social sciences
social sciences
A New Ethical
Illustration by Branden Vondrak
Economics
by Maggie Barrett
“We need to consider these other issues if we hope to prevent crises and downturns like this in the future.” — Martha Starr DO ECONOMISTS need
a code of ethics? That’s a question not often asked in the wake of the 2008 financial crisis and the great recession that followed. But should it be? Economics professor Martha Starr, editor of the new book, Consequences of Economic Downturn: Beyond the Usual Economics (Palgrave Macmillan, 2011), believes we should be asking this 14
question—and more like it. The book, a collection of essays by Starr and other economists, explores the ethical, as well as the social, political, cultural, and educational, questions behind the crisis and downturn. “We need to consider these other issues if we hope to prevent crises and downturns like this in the future,” said Starr, associate professor of economics
and former Federal Reserve economist. After the crisis, many people wondered why influential economic policymakers failed to act despite all the warning signs. Starr says it could be partly because economists have no code of conduct or ethical guidelines to ensure that they use their professional skills in the public interest. “Unlike almost any other
academic profession— statisticians, mathematicians, physicists, sociologists, you name it—economists have always opposed adopting an ethical code.” The result? Little or no incentive to spot and thwart developments that could (and did) spiral out of control and cause hardship for people, particularly the economically disadvantaged and average working Americans. George DeMartino of the University of Denver writes in his essay that such a code of conduct would oversimplify the complex ethical situations that economists face. Alternatively, he suggests establishing a field of professional
economics ethics to study how economists should approach particular situations. “A well-written code could make people think hard before, for instance, accepting $135,000 in speaker’s fees from an investment bank—and then giving that investment bank privileged access to the White House,” said Starr, referring to the relationship between Goldman Sachs and Lawrence Summers, then top White House economic adviser, in 2008. Another essay focuses on why organizations once considered too big to fail took on such risky investments in the first place. Risky investments,
of course, present the greatest opportunities for high returns; the reward is supposed to be tied to the risk. But, says Starr, in contemporary American capitalism, risk and reward have been effectively divorced, particularly for those with money and power. “Numerous laws, practices, policies, and institutions enable the wealthy and powerful to push risks off themselves and onto others—especially the unsuspecting taxpayer,” Starr said. Take the concept of limited liability, which protects investors from losing more than they invested in a venture. While it was designed to foster new business by protecting investors if a venture failed, it created a screen behind which people could set aside returns while they were accumulating new wealth. If things turned sour, investors could keep the returns they had earned and saved. When the boom-time bubble burst, the government’s Troubled Asset Relief Program shifted the risks onto taxpayers. “Not only had the average American not agreed to take on these risks and had not benefited from the outsized gains,” said Starr, “but they also bore most of the costs of the downturn through lost jobs, homes, home equity, and retirement savings.” That’s what motivates Starr to keep asking those questions.
Sum of the Parts “Electoral politics and statistics go hand in hand because polling is such an integral part of the election process.” — Carly Kinney WHEN JUNIOR CARLY KINNEY,
CAS ’13, graduated from high school, she vowed that she was done with math—forever. She was on course for a career in political science. But halfway through her freshman year, she found she kind of missed the quantitative work. So she signed up for a statistics class. And then another. “I’ve found that I like the statistics classes much more than I thought I would,” says Kinney. And so she devised a rather unusual way to combine her interests: double major in statistics and political science. The point of convergence? In a word, polling. Kinney refers to it as an art. Her career plans now involve elections and public opinion polling. “Electoral politics and statistics go hand in hand because polling is such an integral part of the election process,” she says. “I’m really interested in elections, so the fact that an election cycle comes around every other year keeps me
interested in political science. It changes the politics at every election—which means I never get bored.” If Kinney was apprehensive about the demands of a double major leaving no time for other activities, like studying abroad and interning and all of the other things going on around campus, she will be able to say she did it all by the time she graduates. She’s studying abroad in Rome for her fall semester, and she completed her second internship this summer working in the public affairs department at Ipsos, a market research company. “They do a lot of polls, they do corporate reputation studies and different studies for different entities, and I think that’s really interesting because they [do] a lot of statistical analysis,” she says. “I’d love to work more with election polls in the future, perhaps at a research company like Ipsos that designs and conducts them. It seems like a perfect mix of my political
by Kaitie O’Hare
interests and statistics, so I think I’d really enjoy it.” Her first internship was in the polling department at Huffington Post, where she compiled polls and analyzed trends. “You can hardly read a story about any national election without getting some kind of polling results,” she says. “I love being able to follow that closely and delve deeper into what the polls say, and my internships so far have only strengthened that love. At both the Huffington Post and Ipsos, I’ve gotten to meet and work with people who use political polls in their daily work, which has been amazing and a lot of fun.” Kinney admits that it all can be a bit overwhelming at times. “Coordinating my classes is definitely the biggest challenge of studying both political science and statistics,” she says. “I’m lucky because political science is a large department, which means that there are a lot of different classes that I can fit around my required statistics classes. So juggling the two majors can be done with careful planning.” Kinney says she would love to be able to use her career to advance social issues she cares about, like gay rights. “I’m not sure how I could use statistics to contribute to that cause,” she says, “but if I got the chance to do so, I’d definitely take it.”
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