12 October 2015


Is Money Corrupting Research?

This has been another episode of simple answers to simple questions.

The background:
THE integrity of research and expert opinions in Washington came into question last week, prompting the resignation of Robert Litan, an economist, from his position as a nonresident fellow at the Brookings Institution.

Senator Elizabeth Warren raised the issue of a conflict of interest in Mr. Litan’s testimony before a Senate committee examining a proposed Labor Department rule designed to protect consumers in their dealing with retirement-plan brokers.

The testimony was based on a paper Mr. Litan had prepared for the Capital Group, a mutual fund company. Mr. Litan disclosed that the Capital Group, which has a stake in the debate, had funded his paper, but he did not disclose that it had also commissioned it. Mr. Litan concluded that the regulatory rule, while well intentioned, would be too costly. He resigned because he testified as a Brookings fellow, violating a recent Brookings rule change that would have prohibited that.

Senator Warren was herself criticized by economists and pundits, on the left and right. Hal Singer, a fellow at the Progressive Policy Institute and a co-author of the research she criticized, said, “This is McCarthyism of the left.”

But at stake is the integrity of the research process and the trust the nation puts in experts, who advise governments and testify in Congress. Our opinions shape government policy and judicial decisions. Even when we are paid to testify as expert witnesses, integrity is expected from us. After all, our payment is not contingent on the kind of opinion we provide.

In fact, this was Mr. Litan’s defense. The Capital Group hired him to write a paper on the topic, but it did not dictate the conclusions. (Mr. Litan did get feedback from the Capital Group on his paper’s initial outline, as he told Senator Warren in response to follow-up questions after his testimony, and “some editorial comments.”)

Yet it is disingenuous for anybody (especially an economist) to believe that reputational incentives do not matter. Had the conclusions not pleased the Capital Group, it would probably have found a more compliant expert. And the reputation of not being “cooperative” would have haunted Mr. Litan’s career as a consultant.

And Mr. Litan’s defense that people should judge the content of his work and not its funding is also invalid. This is O.K. for a peer-reviewed journal, but not for Congress. Lawmakers hold expert hearings because they lack the expertise to evaluate certain technical subjects. They rely on the integrity of the process.

The assumption is that researchers will value their reputation of integrity more than their fee for any individual job. At some level this assumption is correct. Underlying this conclusion is not only an economic calculation (the compensation for lying once can hardly offset the revenues lost because of the reputational damage) but also a professional one: For most of us, academic prestige is more important than any amount of money.
As Alan Greenspan once noted, "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity—myself especially—are in a state of shocked disbelief."

Or as Upton Sinclair stated more succinctly, "It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

As I say, "Do you want some cheese with that whine?"

BTW, if you are not aware, the Progressive Policy Institute, the home of Hal Singer, who was co-author, and hence co-employee of The Capital Group, isn't in the least progressive. It's a vestige of the now shuttered Democratic Leadership Council, which spent its existence worshiping at the alter of Ronald Reagan, so they spend most of their time attacking progressives.

BTW, Charlie Pierce notes quite accurately that the problem here is note "McCarthyism", but rather that the think tank scene in DC is a particularly egregious form of pay-to play. (the PPP is even more heinous in this regard than Brookings)


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