Archive for December, 2007

New Papers on the Economic Analysis of Religion

| Peter Klein |

The economic analysis of religion is a rapidly growing area of applied microeconomics. To some, it represents creative and clever applications of economic theory to social, cultural, and institutional phenomena. Others see it as a crude form of economic imperialism. Only economists could take the spirit out of spirituality!

The October 2007 issue of the American Journal of Economics and Sociology contains some examples of this genre:

John H. Beck, “The Pelagian Controversy: An Economic Analysis.” The present study analyzes the decision of church authorities in the early fifth century to reject the doctrine advanced by Pelagius in favor of the position taken by Augustine. Accounts of the controversy reveal two self-interested motives for the church hierarchy to reject the Pelagian doctrine: (1) the Pelagian view would have undermined the authority of the church hierarchy; and (2) by making greater demands for moral conduct, it would have raised the “cost” of being a Christian and thereby discouraged growth in church membership, particularly among the Roman upper class. (more…)

26 December 2007 at 1:19 pm 3 comments

Christmas Classics

| Peter Klein |

tree2.jpgIt’s that magical season, time to enjoy your favorite Christmas classics — not The Night Before Christmas or It’s a Wonderful Life, but “In Defense of Scrooge” and “Economics of Santa’s Workshop” by Michael Levin from the old Free Market newsletter. Steve Landsburg’s 2004 piece on Scrooge is not as penetrating as Levin’s, but who can disagree with his conclusion: “Its taxes, not misers, that need reforming.”

Warmest holiday wishes to you and yours from the O&M crew!

25 December 2007 at 10:52 am 3 comments

Performance-Enhancing Drugs and Competitive Advantage

| Peter Klein |

Once again, performance-enhancing drugs are in the news. In a highly competitive environment some people will do anything to gain an advantage, despite the potential long-term health risks. How widespread is the problem, and what should be done about it?

No, not baseball. I’m taking about professors popping “smart pills” to improve their cognitive performance. Two Cambridge researchers report in Nature that colleagues studying brain disorders are themselves using drugs like Modafinil “to counteract the effects of jetlag, to enhance productivity or mental energy, or to deal with demanding and important intellectual challenge.”

Is this acceptable? “Should the life of the mind be chemically enhanced,” asks the Chronicle, “when, say, a professor needs to crank out a tenure-worthy paper?” Many of us consume massive quantities of caffeine already; perhaps Modafinil isn’t really all that different. Others see the practice akin to Ritalin abuse by college students. “It smells to me a lot like taking steroids for physical prowess,” says one critic.

My questions: If we discover that particular scholars are using these substances, should we put asterisks by their publications in reference lists? Should we deny them places in the academic Hall of Fame?

22 December 2007 at 7:35 pm 7 comments

The Journal of Human Capital

| Nicolai Foss |

Although human capital theory goes back to at least the 1950s, and is a thriving area that has yielded at least two Nobels, the field hasn’t had a dedicated journal. That is, until two days ago when Chicago Journals announced the inaugural issue of the Journal of Human Capital. The papers look controversial and therefore interesting, such as Todd and Wolpin’s finding that the main determinant of differences in educational performance is the home environment, as measured by the mother’s score on the Armed Forces Qualification test. (more…)

22 December 2007 at 6:40 am Leave a comment

A False Dichotomy?

| Steve Phelan |

John Mathews recently sent me a conference paper on Kirznerian, Schumpeterian, and Ricardian approaches to entrepreneurial dynamics.

Aside from questioning the resource-based theory of entrepreneurship, the paper also attempts to resolve the Kirznerian/Schumpeterian schism in entrepreneurship — namely whether entrepreneurs drive the economy towards equilibrium (Kirzner) or disequilibrium (Schumpeter). (more…)

20 December 2007 at 9:10 pm 1 comment

Rent and Quasi-Rent

| Steve Phelan |

In a recent paper in the Journal of Business Venturing, Sharon Alvarez attempts to construct a theory of entrepreneurship and the firm. The central question is why new resource combinations are sometimes carried out by entrepreneurs starting new ventures rather than within established firms. (more…)

20 December 2007 at 3:22 pm 3 comments

EU Research Productivity

| Steve Phelan | 

Interesting post over at Vox EU on EU Research Productivity. Basically a recent study examines the ISI List of Highly Cited Researchers (HCRs) by country,

the United States gets the lion’s share with 66% of the total number of HCRs, while the EU17 (EU15 plus Norway and Switzerland) has 22.3%.

They then use an econometric model to estimate the effects of R&D expenditure as % of GDP, GDP per capita, Anglo-Saxon academic institutions, and the proportion of English speakers.

Raising R&D to 3% of GDP was predicted to increase EU share to only 28%. Interestingly, university governance reforms were predicted to increase performance the most (by an additional 9%).

The article is very vague about the supposed institutional benefits conferred by the US/UK academic system that generate the higher performance. If this result is true, then what is the reason? Is it more efficient incentives such as an up-or-out promotion based on top tier publications? Is it better PhD training? Is it higher rewards for top performers?

That being said, is the “the list of highly cited researchers on ISI” an appropriate dependent variable to measure comparative research performance?  Is it biased towards US researchers? Note that English proficiency only explained 3-4% of the performance gap.  

20 December 2007 at 12:55 pm 5 comments

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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).