Interlocking economists

MIT healthcare economist Jonathan Gruber has been caught up in a scandal in recent weeks after it was reported that he received large, undisclosed payments from the Obama administration for healthcare-related work while purporting to be an “independent” analyst of the healthcare legislation snaking its way through the Senate. The apparent conflict of interest was first exposed by a commenter at mcjoan’s blog on the Daily Kos, amplified by Marcy Wheeler at FireDogLake, and has led to a number of corrections by media outlets like the Times.

Despite general consensus that Gruber should have disclosed the conflict, Paul Krugman stepped up to defend his fellow economist, writing that “the truth is that this is no big deal.” He then discounted Wheeler and FireDogLake as hot-headed scandal-mongers.

Krugman’s arguments are unconvincing — he distorts the claims of Gruber’s critics, makes non-issues the focus (eg, whether Gruber believes what he says), and misses key facts. For a full dismantling of his key points, see Glenn Greenwald’s latest post.

Krugman’s choice to defend Gruber is explained in part by the duo’s interlocks; they share some important institutional affiliations.

Krugman was a professor at MIT when Gruber got his first academic job there, in 1992. The duo were fellow MIT faculty members until 2000, when Krugman left for Princeton. Both economists were also researchers at National Bureau of Economics Research (NBER) during that time. And the institutions were absolutely central to each economists’ rise to prominence. Read more about Krugman’s time at MIT and NBER in this illuminating essay.

This is, perhaps, just the small world of prominent economists, who invariably rise through the ranks of NBER and universities like MIT, Harvard, or the University of Chicago. But it helps explain where Krugman is coming from in defending Gruber. Many an untenable argument has been mounted for the sole purpose of sticking up for one’s own. Krugman seems especially weak on this point, having repeatedly backed Ben Bernanke, his old boss at Princeton, over the past several years.

It’s a human impulse, but harmful to those outside the clique, in this case the bloggers Krugman criticizes for launching a destructive “crusade” against one of his colleagues (his words).

One more point — many “independent” health care studies cited by people like Krugman during the course of the health care reform process have been published by institutions that receive significant funding from the insurance or pharmaceutical industries, or are governed by representatives of these industries. See this post on a Massachusetts health care poll conducted by a health insurance company board member for a particularly clear example. Or check out who sits on the boards of the Robert Wood Johnson Foundation, RAND Health, or the Kaiser Family Foundation — some of the most active non-profits in the healthcare policy sector.

The Gruber conflict is particularly egregious, but conflict and capture are the norm within the healthcare policy community.