Academic and professional standards Many professions are governed by standards of impartiality, including
law,
public administration,
social work, and academia. Obligations of academic disclosure of may be covered in
style guides addressing
professional ethics.
Charity trustees Trustees are required to identify and manage any conflicts of interest which might impact on their
decision-making. In
England and Wales, the
Charity Commission notes that trustees must avoid allowing conflicts of interest to influence their decisions or even to "seem to" influence them.
Consulting firms When working for governments, consulting firms face potential conflicts of interest. We can identify four of them: personal connections and interests, working with conflicting clients and assignments, providing for-profit advice, and using personal connections within government to influence decisions.
Environmental hazards and human health Nena Baker summarized 176 studies of the potential impact of
Bisphenol A on human health as follows:
Lawrence Lessig noted that this does not mean that the funding source influenced the results. However, it does raise questions about the validity of the industry-funded studies specifically, because the researchers conducting those studies have a conflict of interest; they are subject at minimum to a natural human inclination to please the people who paid for their work. Lessig provided a similar summary of 326 studies of the potential harm from cell phone usage with results that were similar but not as stark.
Finance industry and economists Economists (unlike other professions such as sociologists) do not formally subscribe to a professional ethical code. Close to 300 economists have signed a letter urging the
American Economic Association (the discipline's foremost professional body), to adopt such a code. The signatories include
George Akerlof, a Nobel laureate, and
Christina Romer, who headed Barack Obama's Council of Economic Advisers. This call for a code of ethics was supported by the public attention the documentary
Inside Job (winner of an Academy Award) drew to the consulting relationships of several influential economists. This documentary focused on conflicts that may arise when economists publish results or provide public recommendations on topics that affect industries or companies with which they have financial links. Critics of the profession argue, for example, that it is no coincidence that financial economists, many of whom were engaged as consultants by Wall Street firms, were opposed to regulating the financial sector. In response to criticism that the profession not only failed to predict the
2008 financial crisis but may actually have helped create it, the American Economic Association has adopted new rules in 2012: economists will have to disclose financial ties and other potential conflicts of interest in papers published in
academic journals. Backers argue such disclosures will help restore faith in the profession by increasing transparency which will help in assessing economists' advice. Economist
Joseph Stiglitz argued that the Great Recession was partly created because, "Bankers acted greedily because they had incentives and opportunities to do so". They did this by making consumer financial products, like retail banking services and home mortgages, complex to enable charging higher fees. While more informed consumers may have been able to find better options than the major bank's primary offerings, many did not, which may have contributed to the financial industry's increased profits. Stiglitz has faced criticism over a conflict of interest and violating
Columbia University's transparency policies by not disclosing his status as a paid consultant to the
Argentinian government, while writing articles defending Argentina's planned default on over $1 billion in bond debt during the
1998–2002 Argentine great depression. He has also been criticized for failing to disclose his paid consultancy to the Greek government while downplaying the risk of Greece defaulting on its debt during the
Greek government-debt crisis of 2009. Some economists have argued that a major portion of this increase and a driving force behind the Great Recession was the influence of money in politics. Between 1998 and 2008, the finance industry contributed an estimated $1.7 billion to political campaigns and spent $3.4 billion on lobbying, totaling $5.1 billion. Some argue this financial influence created conflicts of interest for legislators and the U.S. President, who may have been disincentivized from enacting policies that would negatively impact the finance industry, rather than protecting the public. From 1934 to 1985, the finance industry's share of U.S. domestic corporate profit averaged 13.8%. This increased to 23.5% between 1986 and 1999, and further increased to 32.6% between 2000 and 2010. Part of this increase may be due to increased efficiency from banking consolidation and innovations in new financial products, which benefit consumers. However, if most consumers had refused to accept financial products they did not understand (e.g.
negative amortization loans), the finance industry would not have been as profitable as it has been, and the
Great Recession might have been avoided or postponed. If the finance industry's increased profit share from 23.5% to 32.6% is only attributed to governmental actions (subject to conflicts of interest created by campaign contributions), this suggests that the finance industry realized $270 billion in profit. This figure implies a return of over $50 for every $1 spent on political campaigns and finance industry lobbying. On a per capita basis, this would amount to almost $1,000 per U.S. resident. Few other investments have yielded such a high
return in such a short time.
Government officials Regulating conflict of interest in government is an aim of
political ethics. Public officials are expected to put service to the public and their constituents ahead of their personal interests. Conflict of interest rules are intended to prevent officials from making decisions in circumstances that could reasonably be perceived as violating this duty of office. Limiting conflicts is vital to the success of a democracy. Rules in the executive branch tend to be stricter and easier to enforce than in the legislative branch. This is visible through one study that highlights how
members of Congress with specific stock investments may vote on regulatory and interventionist legislation. Two problems make legislative ethics of conflicts difficult and distinctive. First, as
James Madison wrote, legislators should share a "communion of interests" with their constituents. Legislators cannot adequately represent their constituents' interests without also representing some of their own. As Senator
Robert S. Kerr said, "I represent the farmers of Oklahoma, although I have large farm interests. I represent the oil business in Oklahoma...and I am in the oil business...They don't want to send a man here who has no community of interest with them, because he wouldn't be worth a nickel to them." The problem is distinguishing special interests from all constituents' general interests. Second, the "political interests" of legislatures include campaign contributions, which they need to get elected and which are generally not illegal and not the same as a bribe. But under many circumstances, they can have the same effect. The problem is how to keep the secondary interest in raising campaign funds from overwhelming what should be their primary interest—fulfilling the duties of office. Political campaign contributions dominate
politics in the United States in many ways. who provided the following summary of one part of how this happens: This $3 billion translates into $41 per household per year. This is, in essence, a
tax collected by a nongovernmental agency. It is a cost imposed on consumers by governmental decisions, but never considered in any standard
tax collection data. Stern notes that sugar interests contributed $2.6 million to political campaigns, representing well over a $1,000 return for each $1 contributed to political campaigns. This, however, does not include the cost of lobbying. Lessig cites six studies that consider the cost of
lobbying with campaign contributions on various issues considered in
Washington, D.C. These studies produced estimates of the anticipated return on each $1 invested in lobbying and political campaigns ranging from $6 to $220. Lessig notes that clients who pay tens of millions of dollars to lobbyists typically receive billions. Lessig insists that this does not mean any legislator has sold their vote. When such large sums become virtually essential to a politician's future, it generates a substantive conflict of interest, contributing to a fairly well-documented distortion of the nation's priorities and policies. Beyond this, whether elected or not, governmental officials often leave public service to work for companies affected by legislation they helped enact or companies they used to regulate. This practice is called the "
revolving door". Former legislators and regulators are accused of (a) using inside information for their new employers or (b) compromising laws and regulations in hopes of securing lucrative employment in the private sector. This possibility creates a conflict of interest for all public officials whose future may depend on the revolving door.
Healthcare The influence of the
pharmaceutical industry on medical research has been a major cause for concern. In 2009, a study found that "a significant number of academic institutions" do not have clear guidelines for relationships between Institutional Review Boards and industry. The
medical-industrial complex describes the interaction between physicians' conflict of interest with
for-profit healthcare,
continuing medical education, and patients' ethical considerations. In contrast to this viewpoint, an article and associated editorial in the
New England Journal of Medicine in May 2015 emphasized the importance of pharmaceutical industry-physician interactions for the development of novel treatments, and argued that moral outrage over industry malfeasance had unjustifiably led many to overemphasize the problems created by financial conflicts of interest. The article noted that major healthcare organizations such as the National Center for Advancing Translational Sciences of the National Institutes of Health, the
President's Council of Advisors on Science and Technology, the World Economic Forum, the Gates Foundation, the Wellcome Trust, and the Food and Drug Administration had encouraged greater interactions between physicians and industry to bring greater benefits to patients.
Insurance claims adjusters Insurance companies retain
claims adjusters to represent their interest in adjusting claims. It is in the best interest of the insurance companies that the very smallest settlement is reached with its claimants. Based on the adjuster's experience and knowledge of the insurance policy it is very easy for the adjuster to convince an unknowing claimant to settle for less than what they may otherwise be entitled which could be a larger settlement. There is always a very good chance for a conflict of interest existing when one adjuster tries to represent both sides of a financial transaction such as an insurance claim. This problem is exacerbated when the claimant is told or believes, the insurance company's claims adjuster is fair and impartial enough to satisfy both their and the insurance company's interests. These types of conflicts could easily be avoided by the use of a third-party platform, independent of the insurers, which is agreed to, and named in the policy.
News media Commercial
news media have a conflict of interest in discussing anything that may impact their ability to communicate with their audience. Most news outlets, when reporting a story that involves a
parent company or a
subsidiary, will explicitly report this fact as part of the story, to alert the audience that their reporting has the potential for bias due to the possible conflict of interest. The
business model of commercial media organizations (i.e., any that accept advertising) is selling behavior change in their audience to advertisers. However, few in their audience are aware of the conflict of interest between the
profit motive and the altruistic desire to serve the public and "give the audience what it wants". Many major advertisers
test their ads in various ways to measure the
return on investment in advertising. Advertising rates are set as a function of the size and spending habits of the
viewing audience as measured by the
Nielsen Ratings. Media action expressing this conflict of interest is illustrated in the reaction of
Rupert Murdoch, Chairman of
News Corporation (the owner of
Fox Broadcasting, to changes in
data collection methodology adopted by Nielsen in 2004 to measure viewing habits more accurately. The results corrected a previous overestimate of Fox's
market share. Murdoch reacted by getting leading politicians to denounce the Nielsen Ratings as "racist". Susan Whiting, president and CEO of
Nielsen Media Research, responded by quietly sharing Nielsen's data with her leading critics. The criticism disappeared, and Fox paid Nielsen's fees. Murdoch had a conflict of interest between the reality of his market and his finances. Commercial media organizations can lose money if they provide content that offends their audience or advertisers. The substantial
media consolidation that has occurred since the 1980s has reduced the alternatives available to the audience, thereby making it easier for the ever-larger companies in this increasingly
oligopolistic industry to hide news and entertainment potentially offensive to advertisers without losing audience. If the news media provide too much information on how Congress spends its time, a major advertiser could be offended and could reduce their advertising expenditures with the offending media company. This is one of the ways the
market system has determined which companies won and which either went out of business or were purchased by others during this period of media consolidation. (Advertisers do not like to feed the mouth that bites them, and often do not. Similarly, commercial media organizations are not eager to bite the hand that feeds them.) Advertisers have been known to fund media organizations with editorial policies they find offensive if that media outlet provides access to a sufficiently attractive audience segment they cannot efficiently reach otherwise. Election years are a major boon to commercial broadcasters because virtually all political advertising is purchased with minimal planning, therefore, paying the highest rates. The commercial media have a conflict of interest in anything that could make it easier for candidates to get elected with less money. This has further been tied to the fact that the United States has the
highest incarceration rate in the world. Beyond this, virtually all commercial media companies own substantial copyrighted material. This gives them an inherent conflict of interest in any public policy issue affecting copyrights. McChesney noted that the commercial media have lobbied successfully for changes in copyright law that have led "to higher prices and a shrinking of the marketplace of ideas", increasing the power and profits of the large media corporations at public expense. One result of this is that "the people cease to have a means of clarifying social priorities and organizing social reform". A free market has a mechanism for controlling abuses of power by media corporations: If their censorship becomes too egregious, they lose audience, which in turn reduces their advertising rates. However, the effectiveness of this mechanism has been substantially reduced over the past quarter century by "the changes in the concentration and integration of the media." Would the
Anti-Counterfeiting Trade Agreement have advanced to the point of generating substantial
protests without the secrecy behind which that agreement was negotiated—and would the government attempts to sustain that secrecy have been as successful if the commercial media had not been a primary beneficiary and had not had a conflict of interest in suppressing discussion thereof?
Purchasing agents and sales personnel A person working as the equipment
purchaser for a company may earn a bonus proportionate to the amount the company is under budget at year-end. However, this becomes an incentive for the employee to purchase inexpensive, substandard equipment. Therefore, this is counter to the interests of those in the company who must actually use the equipment.
W. Edwards Deming listed "purchasing on price alone" as number 4 of his famous
14 points, and he often said things to the effect that "He who purchases on price alone deserves to get rooked."
Real estate agents Real estate brokers have an inherent conflict of interest with the sellers they represent, because the usual commission structures of brokers motivate them to sell quickly rather than to sell at a higher price. However, a broker representing a buyer has a distinct disincentive to negotiate a lower price on behalf of their client, because they will simultaneously be negotiating their own commission lower.
Self-regulation Self-regulation of any group may also be a conflict of interest. If an entity, such as a corporation or government bureaucracy, is asked to eliminate unethical behavior within its own group, it may be in its interest in the short run to eliminate the appearance of unethical behavior, rather than the behavior itself, by keeping any ethical breaches hidden, instead of exposing and correcting them. An exception occurs when the ethical breach is already known by the public. In that case, it could be in the group's interest to end the ethical problem of which the public has knowledge, but keep the remaining breaches hidden.
Stockbrokers A conflict of interest is a manifestation of
moral hazard, particularly when a financial institution provides multiple services and the potentially competing interests of those services may lead to a concealment of information or dissemination of misleading information. A conflict of interest exists when a party to a transaction could potentially make a gain from taking actions that are detrimental to the other party in the transaction. There are many types of conflicts of interest such as a
pump and dump by stockbrokers. This is when a stockbroker who owns a security artificially inflates the price by upgrading it or spreading rumors, and then sells the security and adds short position. They will then downgrade the security or spread negative rumors to push the price back down. This is an example of stock fraud. It is a conflict of interest because the stockbrokers are concealing and manipulating information to make it misleading for the buyers. The broker may claim to have the "inside" information about impending news and will urge buyers to buy the stock quickly. Investors will buy the stock, which creates a high demand and raises the prices. This rise in prices can entice more people to believe the hype and then buy shares as well. The stockbrokers will then sell their shares and stop promoting, the price will drop, and other investors are left holding stock that is worth nothing compared to what they paid for it. In this way, brokers use their knowledge and position to gain personally at the expense of others. The
Enron scandal is a major example of pump and dump. Executives participated in an elaborate scheme, falsely reporting profits, thus inflating its stock prices, and covered up the real numbers with questionable
accounting; 29 executives sold overvalued stock for more than a billion dollars before the company went bankrupt. A financial institution with a conflict of interest may also be charged with market manipulation. Stockbrokers that act as market makers have a duty to establish bona fide. A conflict of interest serves against that regulation. Stockbrokers have to prove that their trading interests and transacting interests do not interfere with serving the interests of investors at brokerages. ==Mitigation==