Nation of Beancounters

Has economics been captured by big business?

Posted in Uncategorized by Navin Kumar on January 10, 2012

This chap seems to think so:

As a small test, Zingales looked at the 150 most-downloaded papers that had been done on executive pay. He found that papers supporting high pay for top executives were 55 percent more likely to be published in prestigious economic journals. They were also much more likely to be cited in other papers.

Except… the data supports more than one conclusion.

Conclusion 1: Economists have been captured by business and have to produce papers that cater to the interests of big business.

Conclusion 2: High pay for executives is a good idea and that’s what most economists discover when they look at the data/models.

If you start with the assumption that high pay is a bad idea, you will blank out #2. But in a serious debate you have to show that #2 is false. Anything else is insincere.

I think disclosure is a good idea, of course. But I dislike the current tendency to declare research invalid just because of funding. Repeat the process and if your results come out different, feel free to impugn. There are lots of reasons to disagree with a particular paper – methodology, data, overlooked alternatives (see above), etc. But impugning a paper because of the source is a lazy thing to do.

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