Wednesday, June 24, 2009

Academics have more to declare than their genius

The FT is running a most important comment piece today entitled Academics have more to declare than their genius . It starts like this:

"Crises always prompt an anguished and angry search for causes and culprits, and the current financial crisis is no exception. Fingers have been pointed at supine regulators, greedy bankers and investors, naive consumers and feckless politicians. One group, however, that has escaped careful scrutiny has been the academic community, particularly economics departments and business schools."

Well said. There is more:

"as the size and influence of the financial sector mushroomed in the past quarter-century, business schools and economics departments reaped a rich harvest. Money – and with it salaries, endowments and institutional power – moved in their favour.
. . .
A . . . troubling reason behind the failure of academics in the current crisis is the nature of their financial incentives and the resulting conflicts of interest – not dissimilar to what so many in Wall Street faced. Academics have stressed the critical importance of incentives in shaping human behaviour. But they have been reluctant to shine the light on how their own behaviour may be affected.

Who could doubt it? It adds:

"In recent years, the biological sciences have moved considerably to ensure greater transparency where there are potential conflicts of interest between research and financial remuneration, providing mechanisms for whistle-blowers to report conflicts of interest. Regrettably, these requirements are extremely weak in the social sciences and business schools."

We agree. We know that a number of different critics of TJN suffer from these particular incentive problems, some more obviously than others. Time for more transparency, anyone? (for the record, TJN's sources of funding are here - and the 2008 accounts, which are awaiting approval, will be made available shortly.)


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