Archive for 29 March 2007
More on Prematurity
| Peter Klein |
We noted before some work on prematurity, the phenomenon in which scientific discoveries are initially resisted because they lie too far outside the mainstream consensus.
Here is a paper — appropriately enough, not yet published — listing discoveries resisted, and scientific papers rejected, even though their authors would go on to win Nobel prizes for these same discoveries. (HT: Bayesian Heresy.) All the examples are from the hard sciences, but I was reminded of Joshua Gans and George Shepherd’s “How Are the Mighty Fallen: Rejected Classic Articles by Leading Economists” (Journal of Economic Perspectives, Winter, 1994). Akerlof’s “Market for Lemons” was rejected by three journals before the QJE agreed to publish it in 1970. Robert Lucas’s “Expecations and the Neutrality of Money” (1972) was dismissed by the AER as too technical. William Sharpe’s 1964 paper introducing the CAPM model was rejected by the Journal of Finance because of its “preposterous” assumption that investors share common beliefs (a new set of editors subsequently accepted a revised version). There are many other examples.
These stories are interesting, but I’m not sure they tell us much about the journal publication process, or scientific discovery, more generally. After all, there are surely many more examples of Type II error than these examples of Type I error — pick up the current issue of your favorite academic journal if you don’t believe me! Would a different system of peer review, or an alternative sociology of science, produce a better overall result?
See, We Can Study Religion Too
| Peter Klein |
Dan Hammond shows how economists approach religion with this cheeky summary of Ekelund, Hébert, and Tollison’s Marketplace of Christianity (MIT, 2006).
The Roman Catholic Church had an enviable monopoly for centuries, so powerful that it was able to engage in first degree price discrimination. Like all monopolists, though, it struggled with technical inefficiency and potential entry. The former manifested itself in excess capital investment in beautiful cathedrals and paintings. To forestall entry it practiced usual monopolistic techniques such as limit pricing, but also tortured and killed competitors. By the end of the fifteenth century the Vatican’s pursuit of ever larger monopoly rents against the background of technological progress (the printing press) set the stage for successful entry by an entrepreneurial monk named Martin Luther. Once Luther’s firm got a foothold, all hell broke loose. Actually, it was not all hell; it was all heaven. For as every student of economics learns, when monopoly gives way to competition consumer surplus expands. There were direct gains for consumers as the price fell from the breakup of the Catholic monopoly and, in addition, the entrants lowered real production costs.
The latter welfare gains warrant explanation. What happened is that the entry of Protestant firms reduced the real cost of itch relief by doing away with ornate churches, daily masses, pilgrimages, sacraments, and middlemen confessors. This is a classic case of efficiency gains from entrepreneurial innovation, not unlike the more recent case of Wal-Mart.
And you wonder why people worry about economic imperialism?
Organizations and Markets 
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