Archive for April, 2008
| Peter Klein |
As a student of Austrian economics, I hope to inherit not only the clarity of thought, insight, originality, and productive habits of the great Austrians, but also their longevity. Carl Menger, founder of the Austrian school, lived to be 81 (fathering a son, the mathematician Karl Menger, Jr., at age 62). Mises died at 92, having taught his graduate seminar at NYU well into his eighties. Hayek made it to 93. Böhm-Bawerk died relatively young, at 63, though Wieser lived to be 75. I also admire Ronald Coase, still going strong at 97, and Armen Alchian, who turned 94 this month (and is still serving on PhD dissertation committees). So hopefully I have many good years left (unlike some people).
This came to mind when reading Steve Levitt’s account of his attempt to get a referee report out of a former Chicago economist:
[W]hen I asked the octogenarian economist if he could referee a paper for me, here is the response I received:
Much as I would like to do a review of this paper, my schedule looking ahead for as much as a year is just too crowded. Maybe next time!!
I hope when I am in my eighties “too busy” is the reason I am turning things down!
| Peter Klein |
The University of Colorado invites law professors to a one-day workshop, 11 June 2008, on the new institutional economics. Speakers are Lee Alston, Lynne Kiesling, Gary Libecap, Henry Smith, and Tom Ulen. Contents include:
(1) an introduction to NIE and why it matters to legal scholarship, particularly for property and intellectual property law; (2) an introduction to behavioral economics and experimental economics, including a simulation exercise that will demonstrate how experimental economics can be used to examine institutions in practice; and (3) an interactive discussion where all participants examine some case studies to evaluate the payoffs of using NIE and experimental economics to evaluate the merits of different legal regimes.
Sounds like fun (but where’s the theory of the firm?). Thanks to Thom Lambert, one of the lucky attendees, for the heads-up.
| Peter Klein |
So I wake up about 2:30 this morning to the sounds and lights of emergency vehicles outside my house. I look out the front window and see my neighbor’s house, across the street and two houses down, engulfed in flames. Firefighters are already on the scene, hooking up their hoses. Flames are shooting 25 feet into the air. The occupants, a young couple without children, are outside already, and no one is hurt. The husband says they were asleep in the bedroom when smoke started pouring out of the ceiling vents. My next-door neighbor said he heard loud pops and cracks, like fireworks.
The wife is shaking and crying, asking if she can go in and look for her wedding photos. I begin to wonder, if this happened to me, once my wife and children were safely outside would I foolishly run back in to retrieve my laptop, or my signed first edition of Risk, Uncertainty, and Profit, or my CDs with old Compustat data? My Blackberry? (I wouldn’t want to miss an important email while standing outside watching my house burn down.) What would you do?
Mises, as many of you know, lost virtually his entire personal library, and most of his notes and research materials, when the Nazis entered Vienna in 1938. (The papers ended up in Moscow, where they were discovered in the early 1990s.) Mises arrived in the US in 1940, a refugee without an academic position, without substantial personal funds, and having lost most of a lifetime’s worth of accumulated books and materials. Can you imagine starting over, at age 59, under such circumstances?
| Randy Westgren |
One of the profoundly valuable benefits of recently giving up an administrator’s position is that I have time to read. I sat down with a stack of journals, biographies, fiction, and cookbooks that has grown since last summer. In the first pass through the stack, I found a couple pieces that echo one of the themes of this blog: how our training affects our perceptions of theory, facts, and phenomena.
One piece is an article by two young, interesting colleagues, Brianna and Arran Caza, who write about “Positive Organizational Scholarship” (POS) in the March 2008 issue of the Journal of Management Inquiry . They argue that the bulk of research on organizations, as highlighted by the top-cited articles in three years of ASQ and AMJ, begin with negative framing of organizational issues — what Brianna and Arran call a deficit model approach. They propose the need for research based on positive framing — not exclusively — as necessary to advance theory and practice in the organizational sciences. The POS paradigm is unabashedly post-modern (up periscope!), but it serves us all when alternative lenses are trained on issues that we all observe from our particular perspectives. (more…)
| Peter Klein |
It’s a pleasure to welcome Randy Westgren as our newest guest blogger. Randy is Professor of Business Administration and Professor of Agricultural and Consumer Economics at the University of Illinois at Urbana-Champaign. A specialist in the economic organization of food sector, Randy’s interests span strategic management, strategic marketing, governance, Austrian and evolutionary economics, supply-chain management, and much more. Randy describes himself as someone who “switches from econ to management and back and forth” and “studies such peculiar things as agent-based modeling, cooperative member commitment, the foodie culture, and biotechnology supply chains.” In explaining his diverse set of interests, Randy quotes this passage from Ralph Waldo Emerson (“Self-Reliance,” from Essays: First Series, 1841):
There will be an agreement in whatever variety of actions, so they be each honest and natural in their hour. For of one will, the actions will be harmonious, however unlike they seem. These varieties are lost sight of at a little distance, at a little height of thought. One tendency unites them all. The voyage of the best ship is a zigzag line of a hundred tacks. See the line from a sufficient distance, and it straightens itself to the average tendency. Your genuine action will explain itself, and will explain your other genuine actions.
Randy has been one of our regular readers, and frequent commentators, from the beginning, showing that he is also a discriminating consumer of blogiana. Welcome, Randy!
| Peter Klein |
That’s the claim of this startling paper by Jeremy Edwards and Sheilagh Ogilvie, “Contract Enforcement, Institutions and Social Capital: The Maghribi Traders Reappraised.” Avner Greif’s influential papers (1989, 1993) and book argue, based on documentary evidence from the Cairo Geniza, that the medeival Maghribi traders developed an elaborate, informal network of trading relationships without central coordination or state enforcement. Close social ties, repeated interaction, and careful record-keeping allowed the Maghribi to overcome the prisoner’s dilemma — a perfect example of order without law.
Edwards and Ogilvie, returning to the primary sources, dispute this account. They claim that (1) the Maghribi relied primarily on the Jewish and Muslim state legal systems, not private enforcement, for settling disputes; (2) the Maghribi traded heavily with non-Maghribi; and (3) communications channels were too slow and unreliable to support the social-sanction mechanism proposed by Greif. In short, while reputation effects could be important for individual traders, there is no evidence of the broad Maghribi coalition described by Greif.
I don’t know the primary sources well enough to have an opinion on the merits of this critique, but it strikes me as a very serious critique indeed. Of course, we Hayekians have known about “spontaneous order” long before Greif set pen to paper (or fingers to keyboard), so losing this example wouldn’t be a devastating loss for the theory of decentralized social institutions, any more than losing the Fisher-GM example would wipe out the asset-specificity theory of vertical integration. But it’s important to get the details right.
| Peter Klein |
How can anyone doubt the value added of mainstream economics research:
- Jeffrey S. DeSimone, “Fraternity Membership and Drinking Behavior,” NBER Working Paper No. W13262, July 2007.
- Jay Pil Choi, “Up or Down? A Male Economist’s Manifesto on Toilet Seat Etiquette.” Working Paper, Department of Economics, Michigan State University, 2002.
- Robert Oxoby, “On the Efficiency of AC/DC: Bon Scott versus Brian Johnson,” Economic Inquiry, forthcoming (via Lasse). The abstract’s worth quoting in full:
We use tools from experimental economics to address the age-old debate regarding who was a better singer in the band AC/DC. Our results suggest that (using wealth maximization as a measure of “better”) listening to Brian Johnson (relative to listening to Bon Scott) resulted in “better” outcomes in an ultimatum game. These results may have important implications for settling drunken music debates and environmental design issues in organizations.
Note that I’m not completely innocent in this area either.
See also: “Economics: Puzzles or Problems?”