For some time, David Levy and I have been skirting around 2 big projects, on ethics and economics (or economists), and the nature and role of expertise in social science (and society). Both interests emerged from our earlier work on paternalism and then eugenics. They’re hard topics so perhaps it’s not surprising that we’ve made piecemeal progress on them. We brought the topic of ethics to the 2003 Summer Institute for the History of Economics, at which my friend and former colleague, Marty Zelder, David Levy’s colleague, Dan Houser, Deirdre McCloskey and (of course) we presented papers. Two of these were revised and presented at the Joint Statistical Meetings in San Francisco.As we say in the introduction to the short symposium on the topic that will appear in the Eastern Economic Journal, those facts alone suggest a certain eclectic flavor.
Our original goal was to explore the nature of ethics and ethical constraints within economics. We have argued that an important check on such policy recommendations, such as eugenic proposals, follows from the acceptance of a form of what we have called “analytical egalitarianism” – the presumption that we are equally competent. If we are equally competent, or must treat people as if they are, then it follows that policy makers, economists and other experts on social matters, are equally able to be ethical and to be unethical. We are all tempted to the unethical, by whatever tempts any amongst us. The trick is to recognize this and to put into place constraints which attenuate the temptations that experts, those whose advice is sought, face.
While we do not hold that “efficient” is (quite) the same as “ethical”, we see enough overlap to at least begin to tackle the ethics problems using the machinery associated with efficiency. So we develop the statistical equivalent of a prisoner’s dilemma in the economic account of expert witnesses. The motivating mechanism for this is the Smithian device of sympathy or the desire for approbation. In our account sympathy is truncated – partial – since it consists of the statisticians’ sympathy for the client’s desired outcome. The outcome is that we recommend a change in the incentives facing expert witnesses. A (somewhat old!) pre-print of the paper is posted here (with permission from the EEJ). In his column this week, David Warsh picks up on the incentives questions we ask here, in relation to recent developments on Wall Street.