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    Harvard’s Francesca Gino, Dishonesty Expert, Is Accused of Fraud

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    Questions about a widely cited paper are the latest to be raised about methods used in behavioral research.Over the past two decades, dozens of behavioral scientists have risen to prominence pointing out the power of small interventions to improve well-being.The scientists said they had found that automatically enrolling people in organ donor programs would lead to higher rates of donation, and that moving healthy foods like fruit closer to the front of a buffet line would result in healthier eating.Many of these findings have attracted skepticism as other scholars showed that their effects were smaller than initially claimed, or that they had little impact at all. But in recent days, the field may have sustained its most serious blow yet: accusations that a prominent behavioral scientist fabricated results in multiple studies, including at least one purporting to show how to elicit honest behavior.The scholar, Francesca Gino of Harvard Business School, has been a co-author of dozens of papers in peer-reviewed journals on such topics as how rituals like silently counting to 10 before deciding what to eat can increase the likelihood of choosing healthier food, and how networking can make professionals feel dirty.Maurice Schweitzer, a behavioral scientist at the Wharton School of the University of Pennsylvania, said the accusations were having large “reverberations in the academic community” because Dr. Gino is someone who has “so many collaborators, so many articles, who is really a leading scholar in the field.”Dr. Schweitzer said that he was now going through the eight papers on which he collaborated with Dr. Gino for indications of fraud, and that many other scholars were doing so as well.Behavioral work is common in psychology, management and economics, and scholars can straddle these disciplines. According to her résumé, Dr. Gino has a Ph.D. in economics and management from an Italian university.Questions about her work surfaced in an article on June 16 in The Chronicle of Higher Education about a 2012 paper written by Dr. Gino and four colleagues. One of Dr. Gino’s co-authors — Max H. Bazerman, also of Harvard Business School — told The Chronicle that the university had informed him that a study overseen by Dr. Gino for the paper appeared to include fabricated results.The 2012 paper reported that asking people who fill out tax or insurance documents to attest to the truth of their responses at the top of the document rather than at the bottom significantly increased the accuracy of the information they provided. The paper has been cited hundreds of times by other scholars, but more recent work had cast serious doubt on its findings.Dr. Gino did not respond to a request for comment, and Harvard Business School declined to comment. Reached by phone, a man who identified himself as Dr. Gino’s husband said, “It’s obviously something that is very sensitive that we can’t speak to now.”Dr. Bazerman did not respond to a request for comment for this article, but told The Chronicle of Higher Education that he had had nothing to do with any fabrication.On June 17, a blog run by three behavioral scientists, called DataColada, posted a detailed discussion of evidence that the results of a study by Dr. Gino for the 2012 paper had been falsified. The post said that the bloggers contacted Harvard Business School in the fall of 2021 to raise concerns about Dr. Gino’s work, providing the university with a report that included evidence of fraud in the 2012 paper as well as in three other papers on which she collaborated.The blog — by Uri Simonsohn of ESADE Business School in Barcelona, Leif Nelson of the University of California, Berkeley, and Joseph Simmons of the University of Pennsylvania — focuses on the integrity and reliability of social science research. The post on Dr. Gino noted that Harvard had placed her on administrative leave, a fact that was reflected on her business school web page, though no reason was given. The Internet Archive, which catalogs web pages, shows that Dr. Gino was not on leave as recently as mid-May.The 2012 paper was based on three separate studies. One study overseen by Dr. Gino involved a lab experiment in which about 100 participants were asked to complete a worksheet featuring 20 puzzles and were promised $1 for every puzzle they solved.The study’s participants later filled out a form reporting how much money they had earned from solving the puzzles. The participants were led to believe that cheating would be undetected, when in fact the researchers could verify how many puzzles they had solved.The study found that participants were much more likely to report their puzzle income honestly if they attested to the accuracy of their responses at the top of the form rather than the bottom.But in their blog post, Dr. Simonsohn, Dr. Nelson and Dr. Simmons, analyzing data that Dr. Gino and her co-authors had posted online, cited a digital record contained within an Excel file to demonstrate that some of the data points had been tampered with, and that the tampering helped drive the result.Last week’s post was not the first time the DataColada watchdogs had found problems with the 2012 paper by Dr. Gino and her co-authors. In a blog post in August 2021, the same researchers found evidence that another study published in the same paper appeared to rely on manufactured data.That study relied on data provided by an insurance company, to which customers reported the mileage of cars covered by their policy. The study purported to find that customers who were asked at the top of the form to attest to the truthfulness of the information they would provide were significantly more honest than customers who were asked to attest to their truthfulness at the bottom of the form.But through analysis of the raw data, Dr. Simonsohn, Dr. Nelson and Dr. Simmons concluded that many of the data points were created by someone connected to the study, not based on customer information. The journal that published the 2012 paper, the Proceedings of the National Academy of Sciences, retracted it the month after the blog post appeared.In that case, another of the paper’s co-authors, Dan Ariely of Duke University, was the scholar who procured the data from the insurance company. Dr. Ariely, one of the world’s best-known behavioral scientists, said in an email on Friday that he had been “stunned and surprised” to learn that some of the insurance data in the paper had been fabricated, “which led me to proactively retract it.”DataColada has since published blog posts laying out evidence that results were fabricated in two other papers of which Dr. Gino was a co-author. The bloggers have written that they plan to publish one more post laying out issues in an additional paper on which she collaborated.In interviews and comments on social media, some scholars said that findings in the genre of behavioral research that Dr. Gino specializes in, which is closer to psychology, often resemble findings generated by questionable research methods.One category of questionable methods, said Colin Camerer, a behavioral economist at the California Institute of Technology, is p-hacking — for example, testing a series of arbitrary data combinations until the researcher arrives at an inflated statistical correlation.In 2015, a team of scholars reported that they had tried to replicate the results of 100 studies published in prominent psychology journals and succeeded in fewer than half the cases. The behavioral studies proved especially hard to replicate. More

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    William E. Spriggs, Economist Who Pushed for Racial Justice, Dies at 68

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    An educator who served in the Obama administration, he championed workers, especially Black workers, and challenged his profession’s racial assumptions.William E. Spriggs, who in a four-decade career in economics sought to root out racial injustice in society and in his own profession, died on Tuesday in Reston, Va. He was 68.The A.F.L.-C.I.O., for which Dr. Spriggs had been chief economist for more than a decade, announced his death. His wife of 38 years, Jennifer Spriggs, said the cause was a stroke.One of the most prominent Black economists of his generation, Dr. Spriggs served as an assistant secretary of labor in the Obama administration and held other public-sector roles earlier in his career. But he was best known for his work outside of government as an outspoken and frequently quoted advocate for workers, especially Black workers.In addition to his role at the A.F.L.-C.I.O., based in Washington, he was a professor at Howard University, where he mentored a generation of Black economists while pushing for change within a field dominated by white men.“Bill was somebody who was deeply committed to the idea that we do economics because we have a social purpose,” William A. Darity Jr., a Duke University economist and longtime friend, said in a phone interview. “That this is not a discipline that should be deployed just for playing parlor games, and that we should use the ideas that we develop from economics for the design of social policy that will make the lives of most people far better.”Dr. Spriggs worked on varied issues, including trade, education, the minimum wage and Social Security. But the topic he came back to most frequently, and spoke most passionately about, was that of racial disparities in the labor market. Black Americans, he pointed out time and again, consistently experienced unemployment at double the rate of white people — a troubling fact that he argued got too little attention among economists.“Economists have tried to rationalize this disparity by saying it merely reflects differences in skill levels,” Dr. Spriggs wrote in an opinion article in The New York Times in 2021, before going on to dismiss that claim with a striking statistic: The unemployment rate for white high school dropouts is almost always below that of overall Black unemployment.During the nationwide racial reckoning after the death of George Floyd in 2020, Dr. Spriggs wrote an open letter to his fellow economists that was sharply critical of the field’s approach to race — not just in its failure to recruit and retain Black economists, which had been widely documented, but also in economic research.“Modern economics has a deep and painful set of roots that too few economists acknowledge,” Dr. Spriggs wrote. “In the hands of far too many economists, it remains with the assumption that African Americans are inferior until proven otherwise.”Biden administration officials said they had discussed appointing Dr. Spriggs to senior economic policy roles as recently as this year. In the end, he remained on the outside, nudging the administration in public and private not to back off its commitment to ensuring a strong economic recovery. In recent months he was a vocal critic of the Federal Reserve’s aggressive efforts to tame inflation, which Dr. Spriggs warned would disproportionately hurt Black workers.“Bill was a towering figure in his field, a trailblazer who challenged the field’s basic assumptions about racial discrimination in labor markets, pay equity and worker empowerment,” President Biden said in a statement on Wednesday.Mr. Spriggs speaking with Janet Yellen, then the chair of the Federal Reserve, at a conference in 2014. More recently he was a critic of the Federal Reserve’s aggressive efforts to tame inflation, which he said would disproportionately hurt Black workers.Jonathan Ernst/ReutersWilliam Edward Spriggs was born on April 8, 1955, in Washington to Thurman and Julienne (Henderson) Spriggs. He was reared there and in Virginia. His father had served during World War II as a fighter pilot with the Tuskegee Airmen and went on to become a physics professor at Norfolk State University in Virginia and at Howard, in Washington, both historically Black institutions.His mother was also a veteran and became a public-school teacher in Norfolk after earning her college degree while her son was in elementary school.“I remember studying history together,” Dr. Spriggs later recalled of his mother in a White House blog post written while he was at the Labor Department. “She would check out children’s books covering the topics she was learning about.”Dr. Spriggs earned a bachelor’s degree in economics and political science from Williams College in Massachusetts and attended graduate school at the University of Wisconsin, where he earned a master’s degree in 1979 and a doctorate in 1984, both in economics. While in graduate school, he served as co-president of the graduate student teachers union, helping to rebuild it after a largely unsuccessful strike the year before.Dr. Spriggs stood out at Wisconsin, and not only because he was the only Black graduate student in the economics department, recalled Lawrence Mishel, a classmate who was later president of the Economic Policy Institute in Washington, where Dr. Spriggs also worked for several years.Even as a graduate student, Dr. Mishel said, Mr. Spriggs was skeptical of the orthodox theories that his professors were teaching about how companies set workers’ wages — theories that left no room for discrimination or other forces beyond supply and demand. And unlike most students, Mr. Spriggs wasn’t interested in working for the top-ranked school where he could find a job; he wanted to work for a historically Black institution, as his father had.He got his wish, teaching first at North Carolina Agricultural and Technical State University in Greensboro and then at Norfolk State University — where his father also worked — before taking a series of jobs in government and left-leaning think tanks. He returned to academia in 2005, when he joined Howard. He was chairman of its economics department from 2005 to 2009.In addition to his wife, whom he met in graduate school, his survivors include their son, William; and two sisters, Patricia Spriggs and Karen Baldwin. Dr. Spriggs had a shaping hand in the careers of dozens of younger economists.“I would not be an economist today without Bill Spriggs,” said Valerie Wilson, director of the Program on Race, Ethnicity and the Economy at the Economic Policy Institute.Dr. Wilson was taking a break from graduate school and considering leaving the field altogether when one of her professors recommended her for a job working for Dr. Spriggs at the National Urban League. He helped restore her passion for economics by showing her an approach to the work that was less theoretical and more focused on the real world, she said. After two years at the Urban League, she told Dr. Spriggs that she was going back to graduate school.His response: “We need you in the profession.”Jim Tankersley More

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    Robert E. Lucas Jr., Nobel-Winning Conservative Economist, Dies at 85

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    Challenging the theories of John Maynard Keynes, he questioned the idea that government intervention could help steer the economy.Robert E. Lucas Jr., a contrarian Nobel laureate in economics who undergirded conservative arguments that government intervention in fiscal policy is often self-defeating, died on Monday in Chicago. He was 85.His death was announced by the University of Chicago, where he began teaching as a professor in 1975 and remained a professor emeritus until his death. The announcement did not cite a cause.In awarding the Nobel Memorial Prize in Economic Sciences in 1995 to Professor Lucas, the fifth winner in economics from the University of Chicago in six years, the Swedish Royal Academy of Sciences described him as “the economist who has had the greatest influence on macroeconomic research since 1970.”While he propounded a number of groundbreaking if sometimes controversial theories, Professor Lucas was best known for his hypothesis of “rational expectations,” advanced in the early 1970s in a critique of macroeconomics.In that critique, he challenged John Maynard Keynes’s long-established doctrine that government could manipulate the economy to achieve certain outcomes through reflexive interventionist policies, such as changing interest rates or taking other steps to increase or curb inflation or reduce unemployment.In the real world, Professor Lucas maintained, consumers and businesses make their decisions on the basis of rational expectations drawn from their own past experiences.“His idea was that macroeconomic models grounded in lots of equations are based primarily on past behavior,” said David R. Henderson, a research fellow with Stanford University’s Hoover Institution in California and an economics professor at the Naval Postgraduate School in Monterey. “But if people learn from what government does” and respond accordingly in their own self-interest, “those models will poorly predict future behavior.”As a result, Professor Lucas said, government economic policies can be self-defeating by failing to achieve their intended outcomes.As the economics columnist Leonard Silk wrote in The New York Times in 1983, “If people understand and anticipate what government is doing — for instance, in trying to accelerate economic growth by speeding up the increase in the money supply — workers will increase their wage demands and businesses will raise prices, to protect themselves against future inflation, thus negating the government’s intention of increasing real growth.”In an agenda with conservative implications for economic policy, Professor Lucas maintained that government spending that supplants private investment is counterproductive; that the money supply is what matters most; and that policies to reduce inequality by redistributing income, though “seductive,” are “in my opinion the most poisonous” to sound economics.He also favored eliminating taxes on capital gains, or on any income derived from capital. And he embraced supply-side economics, which calls for increasing the supply of goods and services while cutting taxes to promote job creation, business expansion and entrepreneurial activity.“The supply-side economists,” he said in a 1993 interview, “have delivered the largest genuinely free lunch that I have seen in 25 years of this business, and I believe we would be a better society if we followed their advice.”In 1995, not long after eight years under President Ronald Reagan, a champion of supply-side, and four under another Republican, George H.W. Bush, Professor Lucas concluded that “the U.S. economy is in excellent shape,” in part because “the government is not trying to do things with economic policy that it isn’t capable of doing.”And, he said, the same principles that encouraged economic growth in rich countries could be applied to economic development in poorer ones.In a 1988 lecture titled “What Economists Do,” Professor Lucas explained: “We economists have to be storytellers. We do not find that the realm of imagination and ideas is an alternative to, or a retreat from, practical reality. On the contrary, it is the only way we have found to think seriously about reality.”Professor Lucas, right, with three other Nobel laureates in economics from the University of Chicago, from left: James Heckman, Roger Myerson and Gary Becker. Kamil Krzaczynski/European Pressphoto AgencyRobert Emerson Lucas Jr. was born in Yakima, Wash., on Sept. 15, 1937. His mother, Jane (Templeton) Lucas, was a fashion artist. His father ran an ice-cream parlor that went broke during the Depression, after which the family moved to Seattle, where Robert Sr. became a steamfitter in the shipyards and then, after World War II, a welder in a commercial refrigerator company. Years later, though lacking a college degree or any training in engineering, he rose to become the company’s president.Before his father’s fortunes changed, however, Robert Jr., hoping to become an engineer, needed a scholarship to attend college and was offered one by the University of Chicago, though it didn’t have an engineering school. Lacking the nerve to study physics, he said, he became a history major. He graduated in 1959.He then enrolled in a graduate program in economics at the University of California, Berkeley. But, again needing financial support, he returned to the University of Chicago, where he studied under the conservative economist Milton Friedman, who would receive the Nobel in economics in 1976. Professor Lucas earned his doctorate in economics in 1964.He taught at what is now Carnegie Mellon University from 1963 to 1974, then returned to the University of Chicago as a professor in 1975.In 1959 he married Rita Cohen, a fellow student at Chicago. They separated in 1982 and divorced several years later. Among his survivors are their sons, Stephen and Joseph; his partner, Prof. Nancy L. Stokey, with whom he collaborated on some of his research at the University of Chicago; a sister, Jenepher Spurr; a brother, Peter; and five grandchildren.Six years before Professor Lucas won his Nobel, his estranged wife expressed great faith in his future. Her lawyer inserted a clause in their divorce agreement stipulating that she would receive half of any Nobel money he might receive if the honor was awarded before Oct. 31, 1995. He received the prize barely three weeks before that deadline.Professor Lucas was philosophical about collecting $300,000 instead of the full $600,000. He might have balked during the divorce negotiations, he said, if he had had a greater rational expectation that he would become a Nobel laureate.“A deal is a deal,” he said at the time. “She got the whole house. Getting half of the prize was better than nothing.” More

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    Republican Economists Line Up Behind Biden Nominee

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    Jared Bernstein, the president’s choice for chair of the Council of Economic Advisers, won praise for his work that led to a provision in the Trump tax cuts in 2017.WASHINGTON — Nearly every living economist who led the White House Council of Economic Advisers in a Republican administration — including the three chairs under President Donald J. Trump — signed a letter urging Congress to confirm President Biden’s new nominee to lead the council, Jared Bernstein.The letter, obtained by The New York Times, praises Mr. Bernstein for engaging with economists across ideological lines and for his work drafting the original proposal for the opportunity zones program that was included in the 2017 tax package that Mr. Trump signed into law.The Senate Banking Committee is scheduled to hold a hearing on Mr. Bernstein’s nomination on Tuesday. Democrats had worried about his chances of clearing a committee vote after Senator John Fetterman, Democrat of Pennsylvania, was hospitalized in February for treatment of depression. They had stepped up efforts to court Republican senators to support Mr. Bernstein. Mr. Fetterman has since returned to work in the Senate.Mr. Bernstein has been a member of the council since the start of Mr. Biden’s administration. The president tapped him to succeed Cecilia Rouse, who stepped down at the end of last month to return to her post at Princeton University. Before then, Mr. Bernstein was an adviser to Mr. Biden when he was the vice president, a longtime fixture at liberal think tanks in Washington and a frequent sparring partner with conservative economists on cable news.He also worked with Kevin Hassett, a conservative economist who went on to head the council under Mr. Trump, to draft a white paper for the Economic Innovation Group think tank about a novel effort meant to steer investment to impoverished parts of the United States. Those were the so-called opportunity zones, which were included in the 2017 tax law.The program designates areas in every state where investors in real estate, operating businesses or other projects are eligible for significant tax advantages, including potentially not having to pay capital gains taxes on profits from their investments in those areas.Republicans have championed the zones since the law was passed. Some critics, including in Washington think tanks, have criticized them for delivering investments to some areas that were already gentrifying rapidly. Recent research has shown a widening share of zones attracting investment in the years since they were established.Mr. Hassett, who spearheaded the letter to members of the Banking Committee on Mr. Bernstein’s behalf, and his fellow former heads of the council cited the idea for the zones as one example of Mr. Bernstein’s outside-the-box thinking on economics.Mr. Bernstein has “established a reputation for producing informative, data-driven analysis and developing creative policy ideas,” the former heads of the council wrote.Along with Mr. Hassett, two other acting heads of the council under Mr. Trump signed the letter: Tomas Phillipson and Tyler Goodspeed. Other signatories included Michael J. Boskin, who led the council under President George H.W. Bush, and three chairs under President George W. Bush: Ben S. Bernanke, N. Gregory Mankiw and R. Glenn Hubbard.Mr. Hassett said he had been unable to reach the only other living past chair of the council under a Republican, Alan Greenspan, to ask him to sign the letter.In an interview, Mr. Hassett praised Mr. Bernstein’s collegiality and suggested that he would continue a bipartisan tradition of council chairs seeking advice from their predecessors from both political parties.“I disagree with Jared about a lot, and Jared and I have been disagreeing about things for 20 years,” Mr. Hassett said. “But he really is a fundamentally good person who tries to figure things out with an open mind, and who changes his mind.” More

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    White House Aims to Reflect the Environment in Economic Data

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    The Biden administration has set out to measure the economic value of ecosystems, offering new statistics to weigh in policy decisions.Forests that keep hillsides from eroding and clean the air. Wetlands that protect coastal real estate from storm surges. Rivers and deep snows that attract tourists and create jobs in rural areas. All of those are natural assets of perhaps obvious value — but none are accounted for by traditional measurements of economic activity.On Thursday, the Biden administration unveiled an effort to change that by creating a system for assessing the worth of healthy ecosystems to humanity. The results could inform governmental decisions like which industries to support, which natural resources to preserve and which regulations to pass.The administration’s special envoy for climate change, John Kerry, announced the plan in a speech at the World Economic Forum, the annual gathering of political and business leaders in Davos, Switzerland. “With this plan, the U.S. will put nature on the national balance sheet,” he said.The initiative will require the help of many corners of the executive branch to integrate the new methods into policy. The private sector is likely to take note as well, given rising awareness that extreme weather can wreak havoc on assets — and demand investment in renewable energy and sustainable agriculture.In the past, such undertakings have been politically contentious, as conservatives and industry groups have fought data collection that they saw as an impetus to regulation.A White House report said the effort would take about 15 years. When the standards are fully developed and phased in, researchers will still be able to use gross domestic product as currently defined — but they will also have expanded statistics that take into account a broader sweep of nature’s economic contribution, both tangible and intangible.Those statistics will help more accurately measure the impact of a hurricane, for example. As currently measured, a huge storm can propel economic growth, even though it leaves behind muddied rivers and denuded coastlines — diminishing resources for fishing, transportation, tourism and other economic uses.“You can look at the TV and know that we’ve lost beaches, we’ve lost lots of stuff that we really care about, that makes our lives better,” said Eli Fenichel, an assistant director at the White House Office of Science and Technology Policy. “And you get an economist to go on and say, ‘G.D.P.’s going to go up this quarter because we’re going to spend a lot of money rebuilding.’ Being able to have these kinds of data about our natural assets, we can say, ‘That’s nice, but we’ve also lost here, so let’s have a more informed conversation going forward.’”John Kerry, the White House’s special envoy on climate, in Davos, Switzerland, this week. A Biden administration plan would incorporate the value of ecosystems into measurements of economic activity.Markus Schreiber/Associated PressTaking nature into economic calculations, known as natural capital accounting, is not a new concept. As early as the 1910s, economists began to think about how to put a number on the contribution of biodiversity, or the damage of air pollution. Prototype statistics emerged in the 1970s, and in 1994, the Commerce Department’s Bureau of Economic Analysis proposed a way to augment its accounting tools with measures of environmental health and output.But Congress ordered the bureau to halt its efforts until an independent review could be completed. States whose economies depend on drilling, mining and other forms of natural resource extraction were particularly worried that the data could be used for more stringent regulation.“They thought that anything that measured the question of productivity of natural resources was inherently an environmental trick,” a Commerce Department official said afterward. Five years later, that independent review was completed in a report for the National Academy of Sciences. The academy panel — led by the Yale economist William Nordhaus, who went on to win the Nobel Prize for his work on the economic impact of climate change — said the bureau should continue.“Natural resources such as petroleum, minerals, clean water and fertile soils are assets of the economy in much the same way as are computers, homes and trucks,” the report read. “An important part of the economic picture is therefore missing if natural assets are omitted in creating the national balance sheet.”While the United States lagged, other countries moved ahead with incorporating nature into their core accounting. The United Nations developed a framework for doing so over the last decade that supported decisions such as assessing the impact of shrinking peat land and protecting an endangered species of tree. Britain has been publishing environmental-economic statistics for several years as well. International groups like the Network for Greening the Financial System, which includes most of the world’s central banks, use some of these techniques for assessing systemic risk in the financial system.The proposed plan will take into account a broader sweep of nature’s economic contribution, both tangible and intangible.Chanell Stone for The New York TimesSkepticism about including environmental considerations in economic and financial decision-making remains in the United States, where conservatives have disparaged investing guidelines that put a priority on a company’s performance along environmental, social and governance lines. The social cost of carbon, another measurement tool for assessing the economic impact of regulations through their effect on carbon emissions, was set close to zero during the Trump administration and has been increased significantly under President Biden.Understand Inflation and How It Affects YouFederal Reserve: Federal Reserve officials kicked off 2023 by grappling with a thorny question: How should central bankers understand inflation after 18 months of repeatedly misjudging it?Social Security: The cost-of-living adjustment, which helps the benefit keep pace with inflation, is set for 8.7 percent in 2023. Here is what that means.Tax Rates: The I.R.S. has made inflation adjustments for 2023, which could push many people into a lower tax bracket and reduce tax bills.Your Paycheck: Inflation is taking a bigger and bigger bite out of your wallet. Now, it’s going to affect the size of your paycheck in 2023.Benjamin Zycher, a senior fellow at the right-leaning American Enterprise Institute, expressed concern Thursday that the new approach would introduce a degree of subjectivity.“I think there’s a real danger that if in fact they’re trying to put environmental quality values into the national accounts, there’s no straightforward way to do that, and it’s impossible that it wouldn’t be politicized,” Dr. Zycher said in an interview. “That’s going to be a process deeply fraught with problems and dubious interpretations.”Few economic statistics are a perfect representation of reality, however, and all of them have to be refined to make sure they are consistent and comparable over time. Measuring the value of nature is inherently tricky, since there is often no market price to consult, but other sources of information can be equally illuminating. The Bureau of Economic Analysis has undertaken other efforts to measure the value of services that are never sold, like household labor.“That’s exactly why we need this sort of strategy,” said Nathaniel Keohane, president of the Center for Climate and Energy Solutions, a research and advocacy group. “To really develop the data we need so that it’s not subjective, and make sure we are really devoting the same quality control and focus on integrity that we do to other areas of economic statistics.”The strategy does not pretend to cover every aspect of nature’s value, or solve problems of environmental justice simply by more fully incorporating nature’s contribution, particularly for Indigenous communities. Those concerns, said Rachelle Gould, an associate professor of environmental studies at the University of Vermont, will need to be prioritized separately.“There are a lot of other ways nature matters that can’t be accounted for in monetary terms,” Dr. Gould said. “It’s appropriately cautious about what might be possible.” More

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    Economists Nervously Eye the Bank of England’s Market Rescue

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    The Bank of England stepped in to save a critical market this week. Economists say it was necessary but also worry about the precedent.When the Bank of England announced last week that it would buy bonds in unlimited quantities in an effort to stabilize the market for U.K. government debt, economists agreed it was probably a necessary move to prevent a cataclysmic financial crisis.They also worried it could set a dangerous precedent.Central banks defend the financial stability of the nations in which they operate. In an era of highly leveraged and deeply interconnected markets, that means that they sometimes have to buy bonds or backstop lending to prevent a problem in one area from spiraling into a crisis that threatens the entire financial system.But that backstop role also means that if a government does something to generate a major shock, politicians can be fairly confident that the local central bank will step in to stem the fallout.Some economists say that is essentially what happened in the United Kingdom. Liz Truss, the new prime minister, proposed a huge package of tax cuts and spending during a period of already high inflation, when standard economic theory suggests governments should do the opposite. Markets reacted forcefully: Yields on long-term government debt shot up, and the value of the British pound fell sharply relative to the dollar and other major currencies.The Bank of England announced that it would buy long-term government debt “on whatever scale is necessary” to prevent a full-blown financial crisis. The move was particularly striking because the bank had been poised to begin selling its bond holdings — a plan that is now postponed — and has been raising interest rates in a bid to bring down inflation.Economists broadly agreed that the bank’s decision was the right one. The rapid rise in interest rates sent shock waves through financial markets and upended a typically sleepy corner of the pension fund industry, which, left unaddressed, could have carried severe consequences for millions of workers and retirees, destabilizing the country’s entire financial system.“You saw very substantial market dislocation,” said Lawrence H. Summers, a former U.S. Treasury Secretary who is now at Harvard. “It’s a recognized role of central banks to respond to that.”To some economists, that was exactly the problem: By shielding the U.K. government from the full consequences of its actions — both preventing citizens from feeling the painful aftereffects and keeping government borrowing costs from shooting higher — the policy demonstrated that central bankers stand ready to clean up messy fallout. That could make it easier for elected leaders around the world to take similar risks in the future.Those concerns eased somewhat on Monday when Ms. Truss partly backed down, reversing plans to abolish the top income tax rate of 45 percent on high earners.But she appears poised to go forward with the rest of her proposed tax cuts and spending programs, putting the Bank of England in a delicate spot.Rising Inflation in BritainInflation Slows Slightly: Consumer prices are still rising at about the fastest pace in 40 years, despite a small drop to 9.9 percent in August.Interest Rates: On Sept. 22, the Bank of England raised its key rate by another half a percentage point, to 2.25 percent, as it tries to keep high inflation from becoming embedded in the nation’s economy.Mortgage Market: The uptick in interest rates roiled Britain’s mortgage market, leaving many homeowners calculating their potential future mortgage payments with alarm.Investor Worries: The financial markets have been grumbling with unease about Britain’s economic outlook. The government plan to freeze energy bills and cut taxes is not easing concerns.The “partial U-turn” from Ms. Truss “still leaves the Bank of England with a set of near-impossible choices,” analysts at Evercore ISI wrote in a note to clients. “The only way to alleviate this is for the government to take much bigger steps to restore credibility — but there is little sign this is imminent.”There’s a reason that the interplay between monetary policy and politics in the United Kingdom is garnering so much attention. Central banks have for decades closely guarded their independence from politics. They set their policies to either stoke the economy or to slow it down based on what was necessary to achieve their goals — in most cases, low and stable inflation — free from the control of elected officials.The logic behind that insulation is simple. If central bankers had to listen to politicians, they might let price increases get out of control in exchange for faster short-term growth that would help the party in power.Now, that independence is being tested, and not just in the United Kingdom. Central banks around the world are raising interest rates to try to fight inflation, resulting in slower growth and making it harder for governments to borrow and spend. That is likely to lead to tension — if not outright conflict — between central bankers and elected leaders.It is already beginning. A United Nations agency on Monday warned that the Federal Reserve risked a global recession and significant harm in developing countries, for instance. But the United Kingdom’s example is stark because the elected government is carrying out policy that works against what the nation’s central bank is trying to achieve.“One always worries that actions like these can affect incentives going forward,” said Karen Dynan, a Harvard economist who served as a top official in the Treasury Department under President Obama. “It’s basic economics: People respond to incentives, and fiscal policymakers are people.”Part of the issue is that it is hard for central bankers to single-mindedly focus on controlling inflation in an era when financial markets are fragile and susceptible to disruption — including disruptions caused by elected governments.Before 2008, the Fed had never used mass long-term bond purchases to calm markets in its modern era. It has now used them twice in the span of 12 years. In addition to last week’s moves, the Bank of England also turned to mass bond purchases to calm markets in 2020.Bank of England officials have stressed that the policies they announced last week are a temporary response to an immediate crisis. The bank plans to buy long-dated bonds for less than two weeks and says it will not hold them longer than necessary. The Treasury, not the bank, will be responsible for any financial losses. The bank said it remained committed to fighting inflation, and some economists have speculated that it could raise rates even more aggressively in light of the government’s growth-stoking policies.If the bank is able to hold to that plan, it could mitigate economists’ concerns about the longer-run risks of the program. If interest rates rise again and it gets more expensive for the government to borrow, Ms. Truss will still need to grapple with the costs of her proposed programs, just without facing an imminent financial crisis.But some economists warn that the Bank of England may find the situation harder to extricate itself from than it hopes. It may turn out that the bank needs to keep buying bonds longer than expected, or that it cannot sell them without threatening another crisis. That could have the unintentional side effect of giving the British government a helping hand — and it could demonstrate that it is hard for a big central bank to remove support from its economy when the elected government wants to do the opposite.Liz Truss, Britain’s prime minister, will still need to grapple with the costs of her proposed programs, but she won’t be facing an imminent financial crisis because of the Bank of England’s actions.Alberto Pezzali/Associated PressMs. Truss’s policies — particularly before her partial reversal on Monday — would work directly against the bank’s efforts to cool growth, stoking demand through lower taxes and increased spending. The rapid rise in bond yields last week suggested that investors expected inflation to rise even further.Under ordinary circumstances, these conditions would lead the Bank of England to do even more to bring down the inflation it had already been fighting, raising interest rates more quickly or selling more of its bond holdings. Some analysts early last week expected the bank to announce an emergency rate increase. Instead, the brewing financial crisis forced the bank to do, in effect, the opposite, lowering borrowing costs by buying bonds.While lowering rates and stoking the economy was not the point — just a side effect — some economists warn that those actions risk setting a dangerous precedent in which central banks can only tighten policy to control inflation if their national governments cooperate and do not roil markets in a way that threatens financial stability. That situation puts politicians more in the driver’s seat when it comes to making economic policy.Guillaume Plantin, a French economist who has studied the interplay between central banks and governments, likened the dynamic to a game of chicken: To avoid a financial crisis, either Ms. Truss had to abandon her tax-cut plans, or the Bank of England had to set aside, at least temporarily, its efforts to raise borrowing costs. The result: “The Bank of England had to chicken out,” he said.Policymakers have known for decades that when the government steps in to rescue private companies or individuals, it can encourage them to repeat the same risky behavior in the future, a situation known as “moral hazard.” But in the private sector, there are steps governments can take to offset those risks — regulating banks to reduce the risk of collapse, for example, or wiping out shareholders if the government does need to step in to help.It is less clear what monetary policymakers can do to prevent the government itself from taking advantage of the safety net a central bank provides.“There is a moral hazard here: You are protecting some people from the full consequences of their actions,” said Donald Kohn, a former Fed vice chair and a former member of the Bank of England’s Financial Policy Committee, who agreed that it is necessary to intervene to prevent market dysfunction. “If you think about the entities that benefited from this, one was the chancellor of the Exchequer, the government.”Some forecasters have warned that other central banks might have to pull back on their own efforts to fight inflation to avoid destabilizing financial markets. Some investors are speculating that the Fed will have to end its policy of shrinking government bond holdings early or risk stirring market turmoil, for instance.Not all of those scenarios would necessarily raise the same concerns. In the United States, the Biden administration and the Fed are both focused on fighting inflation, so any reversal by the central bank would probably not look like bowing to pressure from the elected government.Still, the common thread is that financial stability issues could become a hurdle in the fight against inflation — especially where governments do not decide to go along with the push to rein in prices. And how worrying the British precedent proves will depend on whether the Bank of England is capable of backing away from bond buying quickly.“Is this just an exigent moment that they needed to respond to, or does it give the fiscal authority room to be irresponsible?” said Paul McCulley, an economist and the former managing director at the investment firm PIMCO. “The question is who blinks.”Joe Rennison More

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    Biden’s Student Loan Plan Sets Off Fierce Debate Among Economists

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    Liberals and more moderate Democrats are arguing over the impact on inflation, the federal budget deficit and high earners.WASHINGTON — President Biden’s plan to forgive some student debt has sharply divided liberal economists and pitted the White House economic team against both independent analysts and veterans of past Democratic administrations.The areas of disagreement include how much the package of debt relief and other changes to student loans will cost taxpayers and whether the plan is “paid for” in budgetary terms. The plan’s impact on inflation, which is rising at a rapid clip, and the degree to which it will help those most in need are also matters of contention.The plan, announced last week, includes forgiving up to $10,000 in loans for individuals earning $125,000 or less and an additional $10,000 for borrowers from low-income backgrounds who received Pell Grants in college. Mr. Biden also proposed changes to loan repayment plans going forward that will reduce monthly costs and eliminate interest accumulation for potentially millions of lower-earning borrowers who maintain payments.White House officials have offered partial estimates of who will benefit most from those moves, and how much they might reduce federal revenue. The officials have made a case for why the package will not add to inflation. And they have claimed it will be “paid for,” though not in any way that budget experts agree fits that term.Conservative economists have attacked the plan, claiming it would stoke higher inflation and burden taxpayers with hundreds of billions of dollars in new debt. Some liberal economists have defended it as a lifeline for graduates who have been harmed by the soaring costs of higher education.What to Know About Student Loan Debt ReliefCard 1 of 5What to Know About Student Loan Debt ReliefMany will benefit. More