Category Archives: Epstein

Department Profiled in The Washington Post

In the wake of the Herndon paper, The Washington Post profiled the UMass Amherst Department of Economics, providing a detailed history of the department’s growth and development over the last 40-plus years. Interviewed for the piece were Professors Richard Wolff, Gerald Epstein, Nancy Folbre, Arindrajit Dube and Robert Pollin.

The Washington Post
Inside the offbeat economics department that debunked Reinhart-Rogoff
Posted by Dylan Matthews on April 24, 2013 at 4:00 pm

It was surprising to learn last week that Harvard professors Kenneth Rogoff and Carmen Reinhart’s argument for austerity is based in part on an Excel blooper. What’s not surprising is who found it out.

The rebuttal came in the form of a paper released by the Political Economy Research Institute, a group at the University of Massachusetts – Amherst with close ties to its economics department. Two of its authors, Michael Ash and Robert Pollin, are UMass professors, and the other, Thomas Herndon, is a grad student in the department. No one who knows the UMass department was surprised they’d trained their considerable analytical firepower on Reinhart and Rogoff. Amherst has, over the past 40 years, developed a reputation as perhaps the single most important heterodox economics department in the country.

It wasn’t always that way. In the 1960s, it was a fairly mainstream department, with a moderately conservative inclination, according to emeritus professor and influential Marxist economist Richard D. Wolff. It employed Vernon Smith, a noted libertarian who shared the 2002 Nobel, from 1968 to 1972, and Hugo Sonnenschein, who would go on to be president of the University of Chicago, from 1970 to 1973.

That was when things started to change. The tipping point, Wolff says, was the denial of tenure for Michael Best, a popular, left-leaning junior professor. “He had a lot of student support, and because it was the 1960s students were given to protest,” Wolff recalls. That, and unrelated personality tensions with the administration, inspired the mainstreamers to start leaving. Read more…

AEA sets new guidelines on ethics

Gerald Epstein

Last year Gerald Epstein, UMass Amherst economics professor and co-director of the Political Economy Research Institute, and Jessica Carrick-Hagenbarth, UMass Amherst graduate student, sent an open letter to the American Economic Association urging the organization to adopt a code of ethics for the economics profession that would require “disclosure of potential conflicts of interest that can arise between economists’ roles as economic experts and as paid consultants, principals or agents for private firms.” The letter was signed by over 300 economists including Nobel laureate George Akerlof and Christina Romer, a former advisor to US president Barack Obama.

At its annual meeting earlier this month, the Executive Committee of the American Economic Association adopted extensions to its principles for authors’ disclosures of potential conflicts of interest in the AEA’s publications. Epstein said in a recent interview that “the AEA guidelines are a very big step forward. They make very clear the importance of disclosure of potential conflicts of interest by economists and set out in detail the types of conflicts that should be disclosed. In some ways these guidelines are stronger than i had expected… They require disclosure with respect to publication in AEA journals, rather than just recommend it.” (Economics Intelligence, 1/8/2012; Wall Street Journal, 1/9/12)

Econ faculty featured in Chronicle of Higher Ed

UMass Amherst Economics Professors James Boyce, Gerald Epstein and Nancy Folbre and Econ4, a collaborative organization which originated at UMass Amherst earlier this year, are featured in a Chronicle of Higher Education article which discusses the effort to expand viewpoints and teaching methods in the field of economics. Boyce, Epstein and Folbre argue alternatives to the orthodox approach. (The Chronicle of Higher Education, 12/13/11)

 

James Boyce

The founders of Econ4 want the economy, and the study of economics, to pay more attention to such issues as the fair distribution of opportunities; to emphasize minimizing vulnerability in the economic system instead of maximizing efficiency; and to strive to give a fuller accounting of the costs and benefits of market and government decisions, including consequences for the environment and the value of caring for dependents.

“Our basic aim is to try to produce a change in economics in the United States,” said James K. Boyce, professor of economics at UMass-Amherst, and a founder of the group. “We see a connection in how the economy is such a mess and what has happened in the economics profession over the last two decades.”

The continuing political debate over whether the government should intervene in the markets, or whether they should be left to themselves, also needs to be reframed, Mr. Boyce said. “The central question is the distribution of wealth and power,” because the two are increasingly correlated.

“If you don’t have purchasing power, you lose when markets operate. If you don’t have political power, you lose when it comes to how governments operate,” he said. “Do we live in a democracy or an oligarchy?”

 

Gerald Epstein

Higher education is no stranger to complaints of ideological dominance in certain disciplines, but they regularly come from conservative scholars who see a bias against their viewpoints. The irony is not lost on those who want economics to be more intellectually inclusive.

While he acknowledged that political bias probably does sometimes exist in such departments as gender or ethnic studies, the difference in economics is that the bias is not just one of perspective but also of methods, said Gerald A. Epstein, a professor of economics at UMass-Amherst and a founder of Econ4.

“The problem is that their view of how to think like an economist is extremely narrow to the point of being cut off from some of the major questions affecting society,” Mr. Epstein said. “In the end it is a form of indoctrination.”

 

Nancy Folbre

While every discipline is resistant to unorthodox ideas, said Ms. Folbre of UMass-Amherst, this tendency is amplified in economics departments because its scholars study how economic power is deployed. “Whether you favor the current deployment of power has big implications for what kind of resources you can get,” she said. “It’s more subject to ideological bias than sciences that aren’t so embedded in realpolitik.”

Ms. Folbre pointed to the pay that economists earn as proof of the perceived value of the discipline.

Over the past 30 years, economics and business professors have seen their salaries soar in comparison with their colleagues, according to a recent analysis published in The Chronicle. In 1980, a full professor of economics earned 13.9 percent more than a full professor of English. Thirty years later, the economics professor earns 41 percent more. Similarly, business faculty were paid 11 percent more than the typical full professor of English in 1980. Business professors now earn 50.9 percent more. The only gap larger was for law professors.

“The closer you are to the center of power, the better you’re paid,” Ms. Folbre said. The stakes and penalty for acting out, she added, also increase.

 

Epstein comments in WSJ on code of ethics

Gerald Epstein

Gerald Epstein, UMass Amherst economics professor and co-director of the Political Economy Research Institute, comments in a story about efforts to have academic economists adopt a code of ethics in response to criticism of ethical lapses in the profession related to the economic crisis in 2008. Epstein says a new disclosure policy adopted by the 1,200-member National Bureau of Economic Research is a good start. (Wall Street Journal, 10/12/11)

“What are Economics For?” A Truthout interview with Gerald Epstein

Gerald Epstein

Gerald Epstein, UMass Amherst economics professor and co-director of the Political Economy Research Institute, is interviewed about the history and role of progressive economics. According to Epstein, “A lot of the impetus for alternative economics came from opposition to the Vietnam War and in solidarity with the Civil Rights movement and New Left feminism. It was oriented towards peaceful revolution. The idea was to develop a better economics for a democratic society, a theoretically more valid way to understand capitalism. While its origins were revolutionary, they were also somewhat theoretical. In the last twenty years, alternative economics has become much more policy-oriented, toward developing more equalitarian policies – a lost idea.”

Epstein is an advocate of transforming the financial sector, including reducing its size. “The US should be – but we are not – transitioning from fossil fuels to renewables and a green economy. That would help us transition out of a financialized economy. We need to shrink the financial sector – which before 2008 accounted for 60% of the profits in the US – and find another sector where we can create jobs. (Truth-out.org, 10/10/11)

Epstein in Fox Business article on U.S. credit rating

Gerald Epstein

Gerald Esptein, UMass Amherst economics professor and co-director of the Political Economy Research Institute, discusses the impact that the downgrading of the U.S. government’s credit rating may have on consumers in this Fox Business article. While the effects remain uncertain, if the move is perceived as an in risk, banks will likely charge more for loans but won’t pay more for deposits. 

Epstein also warns that “The biggest long-term danger from the downgrade could be a bigger push for government austerity here and abroad, which could slow economic growth dramatically… ‘If (the ratings agencies) push each country individually to cut back on spending and cut their deficits, what they’re going to do is push the whole world economy down, cutting GDP all over the world,’ says Epstein. ‘It’s a self-defeating, self-feeding negative process.'” (FoxBusiness.com, 8/9/11)

Folbre on NPR’s Marketplace: Ethics for economists

Nancy Folbre

Nancy Folbre, UMass Amherst economics professor, discusses the need for economists to maintain a high level of ethics when commenting on the current economic situation. She cites research by UMass colleague, Gerald Epstein, which found that prominent academic economists didn’t always disclose their work outside of academia, such as investing in or advising for-profit businesses, and that the lack of transparency can lead to suspicion surrounding their policy recommendations. Folbre suggests this may be preventable by adopting a code of ethics. (Marketplace [NPR], 2/22/11)  Listen to the audio

Letter calls for code of ethics

Gerald Epstein

As Gerald Epstein, economics professor and co-director of the Political Economy Research Institute, and Jessica Carrick-Hagenbarth, economics PhD student, recently showed in their paper, “Financial Economists, Financial Interests and Dark Corners of the Meltdown: It’s Time to Set Ethical Standards for the Economics Profession,” the economics profession has no official standards or ethical code to regulate potential conflicts of interest between economists’ roles as experts and their frequent roles as consultants and agents of private firms. Epstein and Carrick-Hagenbarth have spearheaded an effort to remedy this issue with a letter to the the American Economic Association, which has garnered the support of close to 300 economists, and drawn the attention of the national media.  

Coverage includes: 
New York Times [Economix blog], 1/4/11
The Economist, 1/4/11
Cincinnati.com, 1/3/11
The Washington Post, 1/1/11
Bloomberg, 12/31/10
TheLedger.com, 12/31/10

Epstein advocates for code of ethics

Gerald Epstein

Gerald Epstein, economics professor and department chair, comments in recent news stories about how the American Economic Association, the world’s largest professional society for economists, is debating whether to adopt a code of ethical standards. The move is coming in response to criticism of many economists who comment in the media or give professional testimony about economic issues without disclosing their personal and financial ties to the industries they are discussing. Epstein and graduate student Jessica Carrick-Hagenbarth recently published a paper that found many of the financial economists who weighed in on new federal regulation of Wall Street didn’t disclose their potential conflicts of interest. (Reuters, 12/20/10; New York Times, 12/30/10; Bloomberg, 12/31/10)

Epstein comments on Wall Street bonuses

Gerald Epstein

Gerald Epstein, UMass Amherst economics professor and department chair, comments in an editorial about large bonuses for Wall Street executives and what impact such payments have on the larger economy. Epstein says, “These things don’t add to the pie. They redistribute it – often from the taxpayers to banks and other financial institutions.” (STLtoday.com, 12/10/10)