Archive for May, 2007
Bob Higgs on Peer Review
| Peter Klein |
Robert Higgs, an economic historian with a distinguished record of publication in mainstream journals, puts peer review in perspective:
Peer review, on which lay people place great weight, varies from important, where the editors and the referees are competent and responsible, to a complete farce, where they are not. As a rule, not surprisingly, the process operates somewhere in the middle, being more than a joke but less than the nearly flawless system of Olympian scrutiny that outsiders imagine it to be. Any journal editor who desires, for whatever reason, to knock down a submission can easily do so by choosing referees he knows full well will knock it down; likewise, he can easily obtain favorable referee reports. As I have always counseled young people whose work was rejected, seemingly on improper or insufficient grounds, the system is a crap shoot. Personal vendettas, ideological conflicts, professional jealousies, methodological disagreements, sheer self-promotion and a great deal of plain incompetence and irresponsibility are no strangers to the scientific world; indeed, that world is rife with these all-too-human attributes. In no event can peer review ensure that research is correct in its procedures or its conclusions. The history of every science is a chronicle of one mistake after another. In some sciences these mistakes are largely weeded out in the course of time; in others they persist for extended periods; and in some sciences, such as economics, actual scientific retrogression may continue for generations under the misguided belief that it is really progress.
This is from a piece on the role of peer review and scientific consensus in the global-warming debate. Notes Higgs: “Science is an odd undertaking: everybody strives to make the next breakthrough, yet when someone does, he is often greeted as if he were carrying the ebola virus. Too many people have too much invested in the reigning ideas; for those people an acknowledgment of their own idea’s bankruptcy is tantamount to an admission that they have wasted their lives.”
Of course, admitting these problems does not by itself suggest an alternative. As discussed here, the challenge is to design an institution that minimizes both Type I error and Type II error, taking into account the costs of each (presumably the costs of the former — missing an important breakthrough — are higher than the costs of the latter, which are largely wasted trees, electrons, and time, though the lower overall signal-to-noise ratio increases the chance that a published breakthrough will be overlooked).
Hayek-Klein Day
| Peter Klein |
It’s Hayek-Klein Day. How are you planning to celebrate? (One suggestion: browse old O&M posts on Hayek.)
The Hotelling Effect, Wi-Fi Edition
| Peter Klein |
A cafe without free wi-fi is as rare these days as, well, your neighborhood Starbucks. Indeed, in my town virtually every coffee shop where students, professors, and townspeople hang out provides free wireless to its patrons. The only exception is Starbucks, which offers pricey metered service through T-Mobile.
Strategic response by an upstart wireless provider? Give routers and access points to homes and businesses next to a Starbucks. This is the strategy employed by FON, an Argentine startup backed by Skype, Google, and other heavies.
The routers, which usually cost $40, split an Internet broadband connection into two wireless signals — one for personal Internet use and the second for public use, which can be accessed by anyone within range for $2 per day. The routers’ owners get to pocket half of the sign-on fee, and FON takes home the rest.
Read about it here. Thank goodness for Hotelling effects!
HBR Freebies
| Peter Klein |
Harvard Business Review’s “Forethought” essays are now free, one month at a time, to non-subscribers. Here’s one on open-source R&D by Nicolai’s CBS colleague Lars Bo Jeppesen.
Wittgenstein and the PoP System
| Nicolai Foss |
At the end of my stay in Columbia, MO where I was working with co-blogger Peter on our forthcoming book, “Organizing for Entrepreneurship: Opportunity Discovery and the Theory of the Firm” (Cambridge University Press), I borrowed Edmonds and Eidonow’s Wittgenstein’s Poker from him so as to have something to entertain me on the long flight back to Denmark. The book is a fun and light read, in fact, so light that I also had time to peruse another book borrowed from Peter (this one).
The book is an attempt to reconstruct the famous poker episode in 1946 where Wittgenstein allegedly threathened Popper with a poker during an Oxford University philosophy seminar, and a discussion of the inevitability of a clash between these two philosophers, given their extremely different philosophy, background, etc. At one point the authors observe that Wittgenstein would never have made it under the current tenure system; apart from the Tractatus, he apparently only published one minor paper. Still, he was promoted to Full Professor of Philosophy almost twenty years after the publication of this slim volume, and remained a Full Professor for almost a decade more. However, the philosopher who according to this (somewhat bizarre) poll was the third greatest philosopher ever wouldn’t have academically survived the present publish or perish system. (more…)
Taxis and Limos
| Peter Klein |
Murray Rothbard told a story about his first encounter with the terms taxis and cosmos, used by Hayek to distinguish “planned” from “spontaneous” orders. Upon seeing a lecture announcement Rothbard’s wife Joey exclaimed, “Look, Hayek’s giving a lecture on taxis!” As life-long New Yorkers they naturally assumed Hayek meant the yellow ones with lights on the roof.
Even Rawley, a PhD Candidate in strategy at Berkeley, is doing interesting work on taxis (the yellow ones). I recently read his paper “Diversification and Adaptation: How Organization Drives Taxi Firm Performance,” which exploits a change in taxicab regulation to perform a natural experiment on the effects of related diversification on firm performance. Until the mid-1990s US taxi firms were prohibited from entering the market for limousines (the airport kind, not the stretch kind). As those restrictions were relaxed, taxi firms began to diversify into the limo market. Rawley uses Census data to show that diversifying taxi firms were less efficient and less likely to adopt computerized dispatching systems than non-diversifiers, which he interprets as a story of costly organizational adaptation. (more…)
Nerd Practical Jokes
| Peter Klein |
We nerds appreciate practical jokes. OK, mine are not quite at the level of an MIT hack. Unlike the gearheads, however, we economists appreciate opportunity cost and strive for the best results with the least effort. For example, from a pharmacist friend I obtained some “Caution: May Cause Drowsiness” stickers which I bring to seminars and discreetly affix to hard copies of papers that are being distributed — always good for a chuckle.
How about you? What are your favorite nerd practical jokes?
More on Legal Origin
| Peter Klein |
Back to the debate over the role of legal origin in economic performance (see here and here). Stefan Voigt proposes an interesting natural experiment: In many international transactions parties can choose the contract-law regime governing their relationship by designating a particular national legal system in a mandatory arbitration clause. As expected, English common law is most frequently chosen. Surprisingly, however, Swiss (German civil law) and French civil law are chosen almost as much. Unfortunately the data do not permit an econometric analysis of legal-regime choice that controls for other possible influences. Still, the fact that civil-law codes are chosen so often raises questions about the view of LLSV (not to mention Hayek, Leoni, and many others) that common law is fundamentally superior to civil law.
Econometricians versus Applied Statisticians
| Peter Klein |
Econometricians, the joke goes, are people good with numbers but lacking the personality to be engineers. How about applied statisticians? James Greiner offers this comparison:
[W]hat is the difference between an empirical, data-centered economist and an applied statistician? The stereotypes I’ve internalized from hanging out in an East Coast statistics department are that economists tend to focus more on parameter estimation, asymptotics, unbiasedness, and paper-and-pencil solutions to problems (which can then be implemented via canned software like STATA), whereas applied statisticians are leaning more towards imputation and predictive inference, Bayesian thinking, and computational solutions to problems (which require programming in packages such as R).
I imagine the former characterization would apply, a fortiori, to quantitative researchers in strategic management, marketing, accounting, and the like.
Podcast Interview with Nassim Taleb
| Peter Klein |
Mathematician, investor, and polymath Nassim Taleb’s books Fooled by Randomness and The Black Swan are attracting increasing attention among social scientists. (See previous O&M blog entries here and here.) Indeed, during the opportunity discovery workshop described by Nicolai Rich Makadok plugged The Black Swan so many times I figured he and Taleb must have a kickback arrangement. Anyway, here is an interview with Taleb by Russ Roberts on the EconTalk site for those of you into the podcast thing.
History of Best Practices Bleg
| Peter Klein |
A friend asks for help tracing the history of management thought on best practices:
I believe I can separate out two schools: the incrementalists (incremental improvement) and the revolutionists (redo your firm, industry). . . . Is there a journal article categorizing the big names (Drucker, Deming, Hamel, Collins) in a history of thought manner? That would really help me.
Any suggestions?
Opportunity Discovery Conference in St. Louis
| Nicolai Foss |
The past two days, three of the four O&M bloggers (Steve, Peter, and I) participated in a Washington University conference on opportunity discovery. Opportunity discovery is (in my interpretation) the outcome of actions initiated by individuals or teams directed at identifying hitherto neglected market needs and wants. Needless to say, OD is fundamentally what entrepreneurship is about. (Here are earlier O&M posts on eship).
The conference was a small gathering with the participation of about twenty-five people from entrepreneurship, strategic management, sociology, organizational behavior, psychology, and marketing (it included Jay Barney, Rich Makadok, Todd Zenger, Anne Marie Knott, David Meyer, and others). One possible interpretation is that scholars from diverse fields consider the entry barriers to the eship field to be low. Perhaps they are. . . . (more…)
Inside the Economist’s Mind
| Peter Klein |
No, not a dark, scary place, but a book of interviews by Paul Samuelson and William Barnett: Inside the Economist’s Mind: Conversations with Eminent Economists (Blackwell, 2006). The subjects are Wassily Leontief, David Cass, Robert Lucas, János Kornai, Franco Modigliani, Milton Friedman, Paul Samuelson, Paul Volcker, Martin Feldstein, Chris Sims, Robert Shiller, Stanley Fishcher, Jacques Drèze, Thomas Sargent, Robert Aumann, James Tobin, and Robert Shiller. Here is the Amazon link. Here is the authors’ blog. Here is a review by Mike Szenberg and Lall Ramrattan.
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