Luigi Zingales - Economists' Capture

The October 19 Lab seminar was led by Luigi Zingales, Robert C. McCormack Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business. Zingales’ presentation focused on the prevention of academic economists’ capture, arguing that academics may be just as prone to capture as regulators, though few will admit it. Seminar participants offered their insights on his outline of the forces that lead to capture, as well as some proposed remedies.

Zingales opened the seminar by noting that in general, both academic economists and regulators are honest people who chose their career because they were motivated by noble goals. Even so, while academics are able to recognize the forces that lead to regulatory capture, they do not as easily recognize their own vulnerability to bias.

Zingales went on to detail the forces that can lead to economists’ capture. He noted how career prospects outside of academia might lead to biased views regarding executive compensation. Even more concerning are the number of academic economists who are paid to serve as expert witnesses for various firms. To avoid the danger of appearing inconsistent on a cross-examination, academics who regularly participate in these roles have an interest in maintaining rigid consistency of their views, in court and across their publications. 

Academic publishing is another area that is vulnerable to bias, with editors and reviewers playing a critical role. Zingales pointed out that the process for article submission (which does not allow for the same article to be submitted to multiple journals simultaneously) combined with a long review period, gives editors a great deal of influence over the final product. Any changes they may suggest for an article are likely to be accepted by the person who submitted the paper. If those preferences follow a particular pattern, they are likely to be apparent to others in the field, who may unconsciously tailor their own submissions so as to be in line with the editorial preferences of the publication. For example, Zingales cited a survey of major publications demonstrating that the majority of articles in economics journals are pro-business, whereas no such bias is found in finance journals or law reviews. In this case, some seminar participants questioned whether selection bias might be playing a role, as people who go into business or economics are perhaps more likely to hold favorable views towards business. Others pointed out that selection bias is not unique to the field of economics and is an unlikely explanation for the bias found in economics journals.

Zingales went on to offer a number of specific remedies for the problem of bias among academic economists. Among them was a proposal for a website that would “shame” economists who compromise their principles, or are not able to adequately back up their public policy statements with the necessary data. Another proposed remedy would reform the submission process for publication, allowing authors to submit articles to multiple journals simultaneously, thereby decreasing the power of individual editors. Additionally, Zingales suggested that authors be given the rights to make available their rejection letters from journals. Some participants noted the difficulty of that proposal, given that making an egregious rejection letter public may work to shame a reviewer once, but that author is unlikely to be selected to publish in that journal again. Others suggested that another journal review the rejections, to ensure that the rejection was genuine and unbiased.

--Summary by Jennifer Campbell