Posts filed under ‘– Klein –’

Measuring Tacit Knowledge

subject-knowledge-brain| Peter Klein |

The concept of tacit knowledge — knowledge that is difficult or impossible to parameterize, or to express in words or numbers — is central to organization theory, as well as philosophy (Polanyi) and social theory more generally (Hayek). Most of the research literature on tacit knowledge is conceptual and theoretical, such as Hayek’s famous “Use of Knowledge in Society” (1945) or more recent pieces like Jensen and Meckling’s “Specific and General Knowledge, and Organizational Structure” (1992). Empirical studies of tacit knowledge are rare, which is not surprising given the idiosyncratic, personal, subjective, and often ephemeral nature of such knowledge.

An interesting new NBER paper by David Chan estimates the effects of tacit knowledge using matched pairs of physician trainees with similar levels of explicit knowledge but different levels of experience and hence accumulated know-how. The hospital setting allows for some clever tricks, e.g., exogenous sorting into occupational roles by experience, rather than ability. Measuring outcomes via spending is problematic to me, though standard in the medical economics and management literatures. Check it out:

Uncertainty, Tacit Knowledge, and Practice Variation: Evidence from Physicians in Training
David C. Chan, Jr
NBER Working Paper No. 21855, January 2016

Studying physicians in training, I investigate how uncertainty and tacit knowledge may give rise to significant practice variation. Consistent with tacit knowledge accruing only with experience, and empirically exploiting a discontinuity in the formation of teams, experience relative to a peer substantially increases the size of variation attributable to the physician trainees. Among the same physician trainees, convergence occurs for patients on services driven by specialists, where there is arguably more explicit knowledge, but not on the general medicine service. This difference is unexplained by formally coded patient information. In contrast, rich physician characteristics correlated with preferences and ability, and quasi-random assignments to high- or low-spending supervising physicians explain little if any variation.

2 February 2016 at 5:21 pm 1 comment

Popular Economics Readings

| Peter Klein |

CDYFOCnUsAEllehThe Open Syllabus Project is a useful repository of course reading lists from almost every academic discipline. (Hey, we had the idea first!) A fun feature is the ability to browse by popularity, i.e., to see the most frequently assigned readings in a particular field. Of course, the sample consists of syllabi posted on public websites, so it may be biased toward particular kinds of courses or universities. Still, the findings are interesting. This article complains that The Communist Manifesto is near the top across all disciplines, but confusingly bounces back and forth between economics and other fields and doesn’t distinguish among textbooks, research monographs, and research articles.

I made my own list of most popular items under Economics, excluding textbooks and other non-research materials. The results are interesting:

  1. Coase, “The Problem of Social Cost”
  2. Smith, The Wealth of Nations
  3. Keyness, The General Theory
  4. Hardin, “The Tragedy of the Commons”
  5. Marx, Capital
  6. Pritchett, “Divergence, Big Time”
  7. Coase, “The Nature of the Firm”
  8. Tiebout, “A Pure Theory of Local Expenditures”
  9. Akerlof, “The Market for Lemons”
  10. Hayek, “The Use of Knowledge in Society”
  11. North, Institutions, Institutional Change, and Economic Performance
  12. Friedman, Capitalism and Freedom
  13. Stiglitz, Globalization and Its Discontents
  14. Friedman, “Monetary Policy”
  15. Solow, “A Contribution to the Theory of Economic Growth”
  16. David, “Clio and the Economics of QWERTY”
  17. Spence, “Job Market Signaling”
  18. Marx, Communist Manifesto
  19. Dornbusch, “Expectations and Exchange Rate Dynamics”
  20. Easterly, The Elusive Quest for Growth
  21. Friedman, “The Role of Monetary Policy”
  22. Grossman and Helpman, “Protection for Sale”
  23. Diamond, “Social Security”
  24. Kremer, “Population Growth and Technological Change: One Million B.C. to 1990”
  25. Stigler, “The Theory of Economic Regulation”
  26. Freeman, “Are Your Wages Set in China?”
  27. Duflo, “Schooling and Labor Market Consequences of School Construction in Indonesia”
  28. Arrow, “Uncertainty and the Welfare Effects of Medical Care”
  29. Rogoff, “The Purchasing Power Parity Puzzle”
  30. Barro, “Are Government Bonds Net Worth?”

Pretty much all classics, and not surprising to see any on a reading list. But some surprising omissions. No Samuelson, Becker, Lucas, Krugman, Sargent, Kahneman, or Fama, just to mention a few Nobelists. No Shleifer, Tirole, Mankiw, Holmstrom, Simon, Jensen, Kreps, Alchian, Demsetz, and others with highly cited SSCI or RePEC papers. Of course, these are undergraduate as well as graduate syllabi, so highly technical articles assigned to PhD students are less likely to make the cut. Still, this might be a good “Books and Articles Every Economist Should Know” kind of list.

29 January 2016 at 3:41 pm Leave a comment

Is Terrorism a Disease?

| Peter Klein |

100628-D-9880W-113.JPG

US Defense Secretary Ash Carter is making the rounds with a speech about ISIL being a “cancer” that must be cured with aggressive treatment. “[L]ike all cancers, you can’t cure the disease just by cutting out the tumor. You have to eliminate it wherever it has spread, and stop it from coming back. . . . . [We have] three military objectives: One, destroy the ISIL parent tumor in Iraq and Syria by collapsing its two power centers in Mosul, Iraq and Raqqah, Syria. . . . Two, combat the emerging metastases of the ISIL tumor worldwide wherever it appears. . . .” Terrorism, in other words, is a cancer metastasizing from the underlying tumor of Islamic fundamentalism.

This language may rally the troops, but it is particularly unhelpful in understanding the nature, antecedents, consequences, and remedy for terrorism. As Robert Pape, David Card, and other social scientists have shown, terrorism is a tactic, a form of purposeful human action, and should be understood as such, not as a mindless, undirected biological phenomenon.

Edith Penrose warned more than sixty years ago about the limits of biological analogies in understanding social issues. “The chief danger of carrying sweeping analogies very far is that the problems they are designed to illuminate become framed in such a special way that significant matters are frequently inadvertently obscured. Biological analogies contribute little either to the theory of price or to the theory of growth and development of firms and in general tend to confuse the nature of the important issues.” I have written before about the problem of treating gun violence as a disease, rather than a legal, social, and criminological issue. To understand why people shoot guns, on purpose or accidentally, we need to focus on their preferences, beliefs, and actions. (This does not imply some kind of straw-man “rationality,” by the way.) Likewise, if we want to reduce terrorist acts, we should treat terrorism as a military tactic, designed to achieve specific ends, rather than a disease or epidemic whose “growth” we have to stop.

Update (27 Jan): From David Levine I learn of another example of a medical researcher trying to address a social science problem without apparently understanding the concept of selection bias (he samples on the dependent variable).

26 January 2016 at 12:06 pm Leave a comment

Baylor University PhD Program in Entrepreneurship

| Peter Klein |

bbusiness_green_w-1iyteaaMuch as I hate to use this blog for self-promotion, … Hahahahaha. OK, seriously. As many of you know I joined Baylor University this fall and will be heavily involved with Baylor’s new PhD program in Entrepreneurship. Prospective students interested in entrepreneurship, strategy, organizational economics, innovation, creativity, institutions, business history, governance, the theory of science, Austrian economics — i.e., the regular topics of this blog — should consider applying. Detailed information about the program, including application materials and instructions, are on the program website. The formal deadline for Fall 2016 admission is next Friday, January 15, so time is short! I’m happy to answer any questions.

6 January 2016 at 1:41 pm 8 comments

SMACK-down of Evidence-Based Medicine

| Peter Klein |

Mother-Child-300x199As a skeptic of the evidence-based management movement (championed by Pfeffer, Sutton, et al.) I was amused by a recent spoof article in the Journal of Evaluation in Clinical Practice, “Maternal Kisses Are Not Effective in Alleviating Minor Childhood Injuries (Boo-Boos): A Randomized, Controlled, and Blinded Study,” authored by the Study of Maternal and Child Kissing (SMACK) Working Group. Maternal kisses were associated with a positive and statistically significant increase in the Toddler Discomfort Index (TDI):

Maternal kissing of boo-boos confers no benefit on children with minor traumatic injuries compared to both no intervention and sham kissing. In fact, children in the maternal kissing group were significantly more distressed at 5 minutes than were children in the no intervention group. The practice of maternal kissing of boo-boos is not supported by the evidence and we recommend a moratorium on the practice.

The actual author, Mark Tonelli, is a prominent critic of evidence-based medicine, described by the journal’s editor as a “collapsing” movement and in a recent British Journal of Medicine editorial as a “movement in crisis.” Most of the criticisms of evidence-based medicine will sound familiar to Austrian economists: overreliance on statistically significant, but clinically irrelevant, findings in large samples; failure to appreciate context and interpretation; lack of attention to underlying mechanisms rather than unexplained correlations; and a general disdain for tacit knowledge and understanding.

My guess is that evidence-based management, which is modeled after evidence-based medicine, is in for a similarly rocky ride. Teppo had some interesting orgtheory posts on this a few years ago (e.g., here and here). Evidence-based management has been criticized, as you might expect, by critical theorists and other postmodernists who don’t like the concept of “evidence” per se but the real problems are more mundane: what counts as evidence, and what conclusions can legitimately be drawn from this evidence, are far from obvious in most cases. Particularly in entrepreneurial settings, as we’ve written often on these pages, intuition, Verstehen, or judgment may be more reliable guides than quantitative, analytical reasoning.

Update: Thanks to Ivan Zupic for pointing me to a review and critique of EBM in the current issue of AMLE. 

2 January 2016 at 5:06 pm Leave a comment

Top Posts for 2015

| Peter Klein |

Here are our most popular posts published in the last year. In 2015 we had 149,323 page views from 97,396 unique visitors. As noted last year, blog server stats are increasingly unreliable as more and more people read blog content via social media, Feedly, Flipboard, etc.; if you read an O&M post on Facebook or LinkedIn, our server doesn’t pick it up. Speaking of which, you can like us on Facebook, follow us on Twitter, add us to your RSS reader, or receive our carrier pigeon notices. Moreover, while Dick and Lasse are old-school hipsters, Nicolai and I have public Facebook pages here and here with additional content.

Thanks to all authors, readers, commenters, and sharers for a great 2015.

30 December 2015 at 10:32 am Leave a comment

Azoulay on Star Scientists

| Peter Klein |

dd5a855b9c3941b0336b647acdb35582Pierre Azoulay has written a number of important and interesting papers on the economics and sociology of science: How does teamwork effect science? What are the relationships among scientists and students, collaborators, and rivals? A new paper with Christian Fons-Rosen, Joshua S. Graff Zivin looks at the unexpected death of a “star” scientist to identify the (exogenous) impact of the star’s research on her field. The main result — that stars matter — is perhaps not surprising, but the magnitude of the effect is remarkable.

Consistent with previous research, the flow of articles by collaborators into affected fields decreases precipitously after the death of a star scientist (relative to control fields). In contrast, we find that the flow of articles by non-collaborators increases by 8% on average. These additional contributions are disproportionately likely to be highly cited. They are also more likely to be authored by scientists who were not previously active in the deceased superstar’s field. Overall, these results suggest that outsiders are reluctant to challenge leadership within a field when the star is alive and that a number of barriers may constrain entry even after she is gone.

Read the whole thing, as well as related work by Toby StuartJoshua Graff Zivin, and others.

Update: Here is a non-technical summary on Vox.com.

14 December 2015 at 12:14 pm 2 comments

Older Posts


Authors

Nicolai J. Foss | home | posts
Peter G. Klein | home | posts
Richard Langlois | home | posts
Lasse B. Lien | home | posts

Guests

Former Guests | posts

Networking

Recent Posts

Categories

Feeds

Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).

Follow

Get every new post delivered to your Inbox.

Join 560 other followers