Economists Do It With Models

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And Here I Thought The Only Bias To Be Concerned About Was Selection Bias…

August 18th, 2011 · 18 Comments

Hey remember when the biggest criticism of academia was that it was all up in its ivory tower and not in touch with the “real” world? Admittedly, that’s not ideal, but I am coming around to the notion that it’s better than some of the alternatives:

A foundation bankrolled by Libertarian businessman Charles G. Koch has pledged $1.5 million for positions in Florida State University’s economics department. In return, his representatives get to screen and sign off on any hires for a new program promoting “political economy and free enterprise.”

The contract specifies that an advisory committee appointed by Koch decides which candidates should be considered. The foundation can also withdraw its funding if it’s not happy with the faculty’s choice or if the hires don’t meet “objectives” set by Koch during annual evaluations.

(You can read the whole article here. HT to Tony Cookson.) I would hazard a guess that these “objectives” aren’t of the typical publish or perish sort, and I’d be more than a little peeved if I were denied tenure because my research findings didn’t show definitively enough that libertarianism is awesome.

In case you’re not familiar, the Koch brothers are the founders of the Cato Institute (a right-wing think tank) and the Americans for Prosperity Foundation (an organization closely affiliated with the Tea Party movement). They also fund the very libertarian-leaning Mercatus Center at George Mason University. In other words, the Koch brothers are very active in setting up and/or supporting organizations that further their political interests. Taken at face value, these actions are legitimate (after all, money’s got to come from somewhere), but problems arise when the output of these organizations is viewed as unbiased scientific research.

Economics isn’t the only science-y profession to suffer from this sort of conundrum. Consider the conflict-of-interest scandal a few years ago at Harvard Medical School:

In a first-year pharmacology class at Harvard Medical School, Matt Zerden grew wary as the professor promoted the benefits of cholesterol drugs and seemed to belittle a student who asked about side effects.

Mr. Zerden later discovered something by searching online that he began sharing with his classmates. The professor was not only a full-time member of the Harvard Medical faculty, but a paid consultant to 10 drug companies, including five makers of cholesterol treatments.

“I felt really violated,” Mr. Zerden, now a fourth-year student, recently recalled. “Here we have 160 open minds trying to learn the basics in a protected space, and the information he was giving wasn’t as pure as I think it should be.”

I wholeheartedly agree with Mr. Zerden on the feeling violated front. I think that there is an expectation, at least for introductory courses, that students are exposed to a reasonably unbiased treatment of a subject, whether it be medicine, economics, history, chemistry, or anything else. This expectation, in turn, causes most students and others to interpret the material presented as objective rather than to seek out potential sources of bias. A similar expectation exists, in large part, in academic publishing- if a paper is peer-reviewed before publication, it must be the objective truth, right?

The fact of the matter is that there are many open questions in economics, especially in macroeconomics. Because of the relationship between economics and policy, people (economists and otherwise) often have very strong opinions regarding what they would like the answers to these open questions to be. For example, people seem to care more about whether government spending is effective as a stimulus measure than about whether the force of gravity is equal to 9.8 or 9.9. Unfortunately, preconceived notions and desires don’t make for good science, since true scientists are more interested in finding out what the answer is than in proving that they are right.

Inherent ideological biases affect the research process in a number of ways. They affect what questions a researcher looks at in the first place, what approach the researcher uses, what the researcher chooses to speak about in public, and whether a paper gets completed and published or filed away in a desk drawer. Research funding with either implicit or explicit ideological strings attached only compounds this problem.

As a researcher, I feel that the deal between the Koch brothers and Florida State University greatly undermines the academic credibility of the university’s economics department. (This doesn’t mean that the faculty are unqualified or incompetent, but rather than they aren’t doing the job that they are supposed to be doing.) At least I’m consistent, since I feel mostly the same way about organizations like the Cato Institute and the Mercatus Center. I am also aware, however, that bias doesn’t equal fallacy, so, while I look at the output of these organizations with a skeptical eye, I don’t automatically assume that their conclusions are invalid.

These sorts of conflict of interest place a fairly heavy burden on the consumers of economic research. In order to fully evaluate the conclusions of an academic paper, consumers need to know who wrote the paper, what his or her ideological bent is, where his or her funding comes from, what ties he or she has to outside organizations, etc. Some of this information is at least partially stated in the paper itself- researchers generally identify the institutions that they are affiliated with and what grants were used to fund the project. Paul Krugman even helps us out by naming his New York Times blog “The Conscience of a Liberal.” That said, this information gets less and less useful as the links to ideologies and outside organizations get more obscured- for example, would you have thought to investigate whether an FSU professor’s position was sponsored by the Koch brothers? Yeah, me neither, but I’m learning.

Luckily for consumers, like-minded researchers tend to congregate together, which makes their ideologies easier to identify. It also creates situations like this:

If you don’t immediately get it, you can find an explanation here.

My general advice to researchers is to keep in mind that we are in the business of discovering facts, and perhaps to put the following quote on a post-it or coffee mug or something in the office:

“People are entitled to their own opinions, but not to their own facts.” — Senator Daniel Patrick Moynihan

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18 responses so far ↓

  • 1 Steve_0 // Aug 18, 2011 at 1:43 pm

    But the vast majority of education being paid by The State lets you sleep like a baby.

  • 2 Andrew S // Aug 18, 2011 at 2:06 pm

    The best economics education gives you the tools and knowledge to be indoctrinated by your professors (any viewpoint) and question why. How many great economic theories started with a student listening to their teacher and thinking, “that guy is full of crap, I can do better”?

  • 3 Rev. Pfloyd // Aug 18, 2011 at 2:43 pm

    Stevo_o makes a point–it’s not like academia necessarily comes at you from a position of non-bias. Funding is funding, after all.

  • 4 Chris Foster // Aug 18, 2011 at 3:25 pm

    If FSU could offer 2 Econ degrees with the Koch Certified one being cheaper (due to the outside funding) we could calculate the value of bias. If we could get liberal groups to openly donate to a degree program they like, we can compare the value of liberalism vs conservatism based on the amount of money that gets donated to each cause. Oh, wait. I just reinvented the American political system.

  • 5 #13 // Aug 18, 2011 at 3:44 pm

    Can you not identify a poor argument without knowing who sponsored this guy? Pardon?

    And I agree totally with Steve_o.

  • 6 Dave M. // Aug 18, 2011 at 4:14 pm

    Sorry, Jodi. Libertarians are anything but right-wing.

    In fact, if we stuck to the traditional left-right definition (to the left if you want government to change, to the right if you don’t), then the entire American political system would be pretty mixed.

    Democrats want change on social policy, but are conservative when discussing whether the Keynesian/neo-Keynesian views entrenched in current policies and institutions should be discarded. The GOP obviously would for the most part tend to the opposite direction on those issues.

    Libertarians would be left on both those accounts.

    Another counter example would be K-12 ed policy. The Democrats are to the right and the GOP the left. At its historical root, those who what a change in policy are the left.

    Don’t perpetuate the oversimplified dichotomy through American lenses, please. 🙂

  • 7 Dave M. // Aug 18, 2011 at 4:21 pm

    One more thing, Jodi.

    How does one recognize a conflict of interest in Cato and Mercatus, yet ignore the same conflict of interest in state-provided academia (to include private institutions that accept government funds)?

    It’s government politicians that authorize the salaries of the professoriat in those institutions. Shouldn’t that fact be pared up with their policy prescriptions for similar scrutiny?

  • 8 Dave M. // Aug 18, 2011 at 5:28 pm

    typo… strike “pared”, insert “paired”

    Anyway, any policy prescriptions that come out of state-funded academia that call for expanding government power or political spending (i.e., the power of politicians to pad the pockets of their supporters) should also be met with an inherent grain of skepticism.

    When you are singing for your supper, its your patrons who call the tune, and you’d better perform those tunes well. If government is paying for studies that find a connection between the data and what it is the politicians want (regardless of its truth or falsity), and one depends upon government research grants in order to do one’s job and maintain one’s livelihood, the typical reaction is to not upset the apple cart, especially if what one finds runs clearly counter to political desires.

  • 9 econgirl // Aug 18, 2011 at 6:45 pm

    @ Andrew S: Personally, I think that all the time. 🙂 I think you’re right, but I also think that we don’t always get to this level with the economics education that is out there. If we did, people would be better at distinguishing when the models they were taught in their econ 101 classes do and do not apply.

    @ Dave M: The stand-up economist has a cute joke regarding your point about left versus right…it goes something like “and on my far right are the libertarians, and on the far left are the libertarians.” That said, Cato is often identified (or self-identifies) as being right-wing, so I just used that categorization.

    As to your point about Cato and Mercatus versus FSU, I think that the important difference is one of transparency. I feel like the Koch-sponsored profs at FSU are a bit like a Trojan horse, whereas it’s much more obvious what you’re getting when you read a report with a big old Cato or Mercatus logo on it.

    As for private versus state funding, my problem is mainly with the strings attached to the funding. On this front, government funding is much more open-ended than the particular example given here. Furthermore, I am reasonably confident that if policy makers were actively trying to support a big government agenda, the mix of viewpoints within economic academia would be very different from what we actually see. 🙂

  • 10 Dave M. // Aug 18, 2011 at 7:43 pm

    I wouldn’t be so sure it’s not already different and we just haven’t noticed.

  • 11 Follow-Up: Koch deal with FSU @ Rational Reactor // Aug 19, 2011 at 1:46 am

    […] Jodi at Economists Do It With Models made a post expanding on the many implications the deal may have. It’s definitely an interesting […]

  • 12 veganarchonomics // Aug 19, 2011 at 7:23 am

    You say that it is somehow a “bad” thing that economics research tends to reflect the ideological biases of the researchers, but I am not so sure. Last time I checked, research of any kind was supposed to contribute to making the world a better place. Since most people probably believe that the implementation of their political-economic vision would make the world a better place (“I have never met a socialist who desires the world that I think socialism would produce”-paraphrase of David Friedman) it seems to make perfect sense for researchers to use their research to help achieve goals that they believe would achieve their ends. Since the economics profession is full of disagreement over policy (I think it is said that every policy proposal has economists that support it) the battle of ideas would probably do a good deal to weed out bad methodology and bring evidence to the fore (the interventionists would search for evidence of market failure while the laissez-faire types would bring up evidence of public choice problems etc.) thus leading to a more or less “fair” and “complete” body of economics literature. Perhaps a better solution to bias is acknowledging it rather than trying to eliminate it.

  • 13 Hasdrubal // Aug 19, 2011 at 2:34 pm

    Mike Munger discussed this on his blog in May:

    “Look: that’s boiler plate. It’s essentially the same requirements that are imposed on any operating grant I have ever dealt with. ”

    Strings attached is apparently the name of the game for academic grants. They’re everywhere from my personal experience of defining which brand of network equipment you can install to veto power over the professor being hired for an endowed chair. It’s the name of the game, and not just the Kochs, but every donor does it.

    That everyone does it doesn’t make it right, but it does make singling out the Koch brothers disingenuous.

  • 14 Punditus Maximus // Aug 20, 2011 at 1:42 pm

    Libertarians are right-wingers who like to pretend that they aren’t. Their priorities are lower taxes and reduced government services, and they vote reliably Republican.

  • 15 RM // Aug 20, 2011 at 3:40 pm

    You are aware that the Ford and MacArthur foundations do this all the time, and people are only making a fuss about this because the Kochs are the only ones doing it? The Kochs do it on a much smaller scale than the progressive groups do so collectively.

  • 16 Rev. Pfloyd // Aug 21, 2011 at 12:41 pm

    Let’s not forget Jodi’s title example for this link on her Facebook page. Big labor unions already have their hands in academic pots now:

    I got a letter from the College of Industrial and Labor Relations of Cornell imploring me to apply. A little bit of digging and you’ll see it’s essentially a training camp for union operatives. “Have your classes taught by a former SEIU president!”

    No bias at all, right?

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