Posts filed under ‘Former Guest Bloggers’
The Religious Marketplace
| Cliff Grammich |
Many thanks to Peter for the kind invitation and introduction. A political science student whose dissertation research focused on ethnography of sectarian Baptists (good and, I confess, flattering summary here of its revision for those interested) is, I know, a bit out of place in blogging on “organizations and markets.” Nevertheless, given how much recent research on American religion has used the language of organizations and markets — indeed, one of the most influential works in sociology of religion of the past decade focuses on “winners and losers in our religious economy” — I’ve some reason to hope I can contribute something to the conversation here. I know I’ve learned plenty here, and am grateful for this opportunity to learn still more.
As Peter notes, one of my main interests is a decennial county-level enumeration of religious congregations and memberships in the United States. The most recent version of this work included 149 religious bodies. The data are generally self-reported by participants, and therefore vary from year-to-year. At present, one of my pet projects is cleaning and matching data by county for the 48 bodies with comparable data in 1980, 1990, and 2000. Multiplying that by the 3,000+ counties in the United States yields quite a few data points on religious “competitors” in literally thousands of local “markets” over time, often featuring organizational adaptations to reflect these.
What “marketplace” explanations have been offered for religious change, and what do recent data say about them? I’ve a broader discussion of this here, but offer some abbreviated insights below. (more…)
Introducing Guest Blogger Clifford Grammich
| Peter Klein |
We are pleased to introduce Clifford Grammich as our newest guest blogger. Cliff (PhD, Political Science, Chicago, 1996) conducts independent research on the demographics and sociology of religion. Among other projects, he is chairman of the Religious Congregations and Membership Study operations committee of the Association of Statisticians of American Religious Bodies, the compilers of the only decennial county-level enumeration of religious congregations and their members in the United States. He plans to post about some “market” issues and the “demand” for religion, as well other issues on religion he is currently researching. Welcome, Cliff!
CCSM: Reflections on Day One
| Lasse Lien |
Nicolai recently accused me of being overly positive, and he also committed me to providing real-time reports from the CCSM. So here goes my attempt to display my dark side.
We started out Tuesday with Jay Barney identifying Nicolai’s advantage as his sauce (a TCE sauce, presumably) and advising that the sauce should be bottled (see below). Next the CEO of Lego asked us what would be missed if we — or our organizations — died tomorrow. This produced some unorthodox facial expressions among a lot of the academics present, myself included. Next Peter Lorange of IMD advised businesses to keep things simple, followed by José Santos arguing that firms should become meta-national. I’m not going to take sides, but neither being or becoming meta-national strikes me as particularly simple. This was followed by an over lunch talk by the US Ambassador, a session I couldn’t attend due to neurosis about my own presentation.
We moved on to a discussion of the scientific progress in strategic management. The presentations here ranged from arguing that by way of analogy we are moving beyond the stage of the standard model of particle physics (the R2 of the standard model is so large that it would take a page or so to write down the number), to Peter Abel telling us that knowledge accumulation in strategic management is not significantly different from zero. We then went into paper sessions, were in my opinion we proved both of these assessments wrong. I cannot summarize all the papers presented in the session, but my feeling is that the average quality of the papers presented was at least as high as in the bigger conferences, such as AoM and SMS, but with a much lower variance. So there goes my attempt to come across as negative. . . .
How Long Is Long, and How Short Is Short?
| Lasse Lien |
Are spells of market leadership long or short? A Chandlerian will argue that they tend to be long, while a Schumpeterian will argue that they tend to be short. But what is long and what is short? This is a special case of a fairly frequent problem in empirical research, in which the ability to decide is limited by the lack of a clear benchmark. In a forthcoming AER paper John Sutton addresses this problem in a way that seems potentially useful in many situations with similar characteristics (testing the RBV is but one example).
What Sutton does is define a benchmark which is neither long or short. How? Essentially he compares the length of actual market leadership spells to what one would expect if market share changes followed a random walk (given the initial market share gap and a measure of the industry specific volatility in market shares). This benchmark is neither long or short in the (more…)
Volleyball and Equilibrium
| Lasse Lien |
What exactly is the role of equilibrium in the competitive process? Believe it or not, I have found the answer. It plays the same role as gravity does in a volleyball match.
Think about it! The ball is continuously bounced in ways that direct it towards new states of rest (new equilibriums), but it hardly ever settles down in any of these, because it is subject to new bounces, sending it towards yet another equilibrium. Moreover, about half the time the ball is moving opposite of what gravity would dictate, i.e. it is moving upwards, but unless it is bounced again it will start falling downwards and settle in the position gravity dictates (operating on the last bounce). Of course, this never occurs because the ball is continuously bounced. So a theory of gravity alone would not provide a good prediction of where the ball is, nor where it is headed, or even how the game got started. But mind you, think about how absurd it would be to try to understand a game of volleyball without any notion of gravity!
Thanks to David Gordon
| Peter Klein |
Many thanks to guest blogger David Gordon for his fine posts on the philosophical and methodological underpinnings of economics and organizational analysis. We look forward to his continued participation as an occasional commenter and, if the urge strikes him, as a guest blogger once again.
Your Favorite Anomalies
| Lasse Lien |
Anomalies are a key engine of scientific progress, so say Kuhn and Clayton Christensen, among others. Anomalies should accordingly be celebrated and distributed. In this spirit I offer what I consider to be a great example of an anomaly (and please submit your own favorites, or comment on the one below). This one is lifted from a recent AER paper by DellaVigna and Malmendier.
How do consumers choose from a menu of contracts? We analyze a novel dataset from three U.S. health clubs with information on both the contractual choice and the day-to-day attendance decisions of 7,752 members over three years. The observed consumer behavior is difficult to reconcile with standard preferences and beliefs. First, members who choose a contract with a flat monthly fee of over $70 attend on average 4.3 times per month. They pay a price per expected visit of more than $17, even though they could pay $10 per visit using a 10-visit pass. On average, these users forgo savings of $600 during their membership. Second, consumers who choose a monthly contract are 17 percent more likely to stay enrolled beyond one year than users committing for a year.
So is this an anomaly, or is it just me?
The Dismal Science
| David Gordon |
Everyone knows that Thomas Carlyle called economics the “dismal science”, but the context in which he did so is surprising. Sandra Peart and David Levy point out in The “Vanity of the Philosopher”: From Equality to Hierarchy in Postclassical Economics (University of Michigan Press, 2005), that Carlyle thought economics was “dismal” because the classical economists opposed slavery. Adam Smith and his successors supported a broadly utilitarian philosophy in which everyone was taken to be equally capable of happiness. Carlyle and other defenders of hierarchy condemned the economists for what they regarded as dangerous nonsense.
The supporters of hierarchy appealed to the new science of evolutionary biology to support their position. Darwin himself favored the perfection of the race rather than happiness as the standard of ethics; and although he did not reject sympathy for the unfortunate, he feared its malign effects. (Peart and Levy do not mention, though, that Darwin was on the opposite side from Carlyle in the controversy over Governor Eyre’s brutal suppression of a black revolt in Jamaica.) Francis Galton and other supporters of eugenics criticized the classical economists for ignoring the differences in quality among people: the state, in their view, should make efforts to obtain a “better” population. (more…)
Tolerance and Subjectivism
| David Gordon |
Many people argue that because all value judgments are subjective, we shouldn’t impose our preferences on other people. Someone, e.g., who thinks that abortion is morally wrong should not try to prevent those who disagree with this view from having abortions. This argument strikes me as incoherent. The incoherence emerges clearly if we restate the argument in this way: Because all value judgments are subjective, here is a value judgment that isn’t subjective, namely, the value judgment that we shouldn’t impose our preferences on other people.
A defender of the argument might respond that he isn’t claiming that it is objectively true that we shouldn’t impose our preferences on others: he is rather stating, as a value judgment of his own, the view that we shouldn’t impose our preferences on others. A consequence of this way of taking the conclusion of the argument is that we shouldn’t impose this preference on others either. We shouldn’t forcibly interefere with those who are attempting to impose their value judgments on others, because to do this is to impose our value judgment, namely that one shouldn’t do such things, on them. But this is only a consequence of this subjectivist response that is probably unwelcome, not a refutation of it. (more…)
The Pareto Criterion and Ethics
| David Gordon |
Some economists defend use of the Pareto criterion in welfare economics in this way: Value judgments are subjective, so it would be unscientific for an economist to use them in recommending policy. But the Pareto criterion is a value-free statement. All it says is that if one person in society is made better off by a change, and no one is made worse off, then social welfare has increased. Of course, there is a problem with exclusive reliance on the criterion. Very few changes count as Pareto improvements, and thus situations that intuitively are unjust, such as a regime of slavery, count as Pareto optimal. Nevertheless, it is alleged, in the few cases where a Pareto superior change is possible, we have a value-free reason to support such changes.
This contention seems to me incorrect. The criterion is neutral about the preferences of people in society: it doesn’t say that only certain preferences, and not others, count as increases in social welfare. But preference-neutrality does not make the criterion value-free. The claim that people’s preferences, other things being equal, should be satisfied, is itself a value judgment. Someone could consistently deny it; suppose, e.g., that one thinks it bad that people get what they want, or bad that certain classes of people get what they want. Some people might think it obvious that these opinions are mistaken, but their truth is not here at issue. The point rather is that they, and their denials, are value judgments. If so, the Pareto criterion is a value judgment as well.
The Envelope Paradox
| Lasse Lien |
Here’s something to annoy you over the weekend. If you already know the envelope paradox, don’t read on. If you do not, and you are a bit of a nerd, I guarantee you’ll be facinated. The following version of the paradox is cynically stolen from Amos Storkey’s homepage.
You are taking part in a game show. The host introduces you to two envelopes. He explains carefully that you will get to choose one of the envelopes, and keep the money that it contains. He makes sure you understand that each envelope contains a cheque for a different sum of money, and that in fact, one contains twice as much as the other. The only problem is that you don’t know which is which.
First-Mover (Dis) Advantage
| Lasse Lien |
Whether you are interested in competitive advantage, entrepreneurship, innovation, regulation, or several other issues, the concept of first-mover (dis)advantage will probably be of considerable importance. The literature has, of course, supplied a number of important insights on what might account for both advantages and disadvantages from moving early. Nevertheless, browsing through this literature, I get a sneaking feeling that it tends to produce somewhat loosely structured lists of possible mechanisms. A possible avenue of attack for adding more structure to these insights might be to reduce the problem to the basic asymmetries between the first and later movers, and from there gradually introduce the effects of resource heterogeneity, asymmetric motivation, strategic interaction, etc. But what, then, might count as the basic asymmetries? (more…)
Kuhn and Scientific Realism
| David Gordon |
As Peter noted, Thomas Kuhn made an important point about the history of science. Established scientists often reject revolutionary theories, and these theories become dominant only when a new generation of scientists replaces the old guard. The new theories, Kuhn also thought, were not necessarily better in all respects than the ones they replaced; rather, they asked different questions.
Kuhn’s views influenced Murray Rothbard’s An Austrian Perspective on the History of Economic Thought. (Incidentally, this is my favorite of Rothbard’s books — it’s enormously learned and insightful.) Like Kuhn, Rothbard rejected the Whig view of science as continually progressing by small advances. Rather, he thought that knowledge could be lost. In his view, this is exactly what happened in the nineteenth century when Ricardian economics eclipsed the discoveries of the Spanish Scholastics and other subjectivists. (more…)
Mises’s Bureaucracy
| David Gordon |
Mises’s Bureaucracy (1944) is seldom cited, at least by comparison with Human Action and Socialism; but it presents some of his key insights better than anywhere else. Mises contrasts profit-and-loss management with bureaucratic management.
A businessman can always tell how well a section of his enterprise is doing by looking at the profit-and-loss accounts. If a section shows a loss, this fact doesn’t by itself enable him to locate the problem; but at least he is aware that something needs to be done.
Government bureaucracies, by contrast, do not produce goods or services for profit. Lacking the tool of profit-and-loss accounts, they instead must operate according to fixed rules. The well-known failings of bureaucracies, according to Mises, do not primarily stem from deficiencies of character in the government personnel. Rather, resort to fixed rules makes bureaucracies much less flexible than profit-seeking businesses. (Mises’s views on bureaucracy were influenced by his friend Max Weber.)
Mises does not think that attempts to introduce business methods into government can succeed, and he deplores the bad effects of government regulations on private enterprise. These regulations interfere with profit-and-loss accounting.
Bureaucracy is available at the Mises Institute website.
Introducing Guest Blogger David Gordon
| Peter Klein |
It is a delight to welcome David Gordon, Senior Fellow of the Ludwig von Mises Institute and author of The Mises Review, as our newest guest blogger. David is a philospoher and intellectual historian whose expertise encompasses — well, pretty much everything. He has written extensively on methodology, epistemology, political philosophy, the history of economic thought, and other subjects. His bibliographic knowledge is immense. And he knows (and appreciates) more bad jokes than I do. (Did I mention that he’s also an authority on professional wrestling?)
We look forward to David sharing his wit and wisdom over the next few weeks. Welcome, David!
Shifting or Rotating Demand?
| Lasse Lien |
For O&M readers interested in competitive strategy, I would like to recommend a recent paper in AER by Johnson and Myatt: “On the Simple Economics of Advertising, Marketing, and Product Design” (vol 96, no. 3). The authors analyze a weirdly understudied topic in economics, namely rotations of the demand curve. This means that firms by their choice of advertsing, marketing and product design can influence the dispersion of customers valuations for a product. Take for instance product design. A universally attractive new feature will simply shift the demand curve outward, while a new feature that pleases some customers and displeases others will lead to an increased dispersion of customers valuation, that is, to a rotation of the demand curve. (more…)
Thank You, Dick!
| Nicolai Foss |
Many thanks to Dick Langlois for guest blogging at O&M. Dick has contributed some excellent blog posts which are among the most viewed ones on the site. We hope Dick will continue to visit O&M in the future and post comments. Thanks, Dick, for allowing us to benefit from your fertile mind.
Announcing the New O&M Guest Blogger: Lasse Lien
| Nicolai Foss |
Peter and I are privileged to have been joined here at O&M by some magnificent guest bloggers, first Joe Mahoney and currently Dick Langlois. We will soon be joined by an additional guest blogger, namely Associate Professor Lasse Lien, PhD, Norwegian School of Economics and Business Administration, no doubt one of the smartest (and nicest) Norwegian business administration scholars
Lasse is a friend of Peter and I. Peter has written a series of fine papers with Lasse, all on aspects of diversification. These have their root in Lasse’s PhD thesis on which I was lucky to serve as a supervisor and which he defended in 2004. I am also a colleague with Lasse at the Norwegian School of Economics and Business Administration.
Lasse’s main interest is empirical research practice (don’t expect too many blog posts on cultural conservatism, Misesian praxeology or Lockian/Rothbardian self-ownership from him). He has already announced that he has something provocative in store. We look forward to it, and welcome him at O&M.
Scarcity without Prices
| Richard Langlois |
Yesterday’s New York Times carried an op-ed by Stephen L. Sass, a professor of materials science at Cornell. Writing in the context of high oil prices, Sass makes the point that scarcity of materials has long driven humans to find and make use of alternative materials. He argues that a scarcity of tin led denizens of the Bronze Age to figure out how to smelt iron, just as a scarcity of charcoal impelled the British to figure out how to use coal to make steel. I read the piece eagerly, thinking I might use it in my upcoming introductory economics course — until I got to the last paragraph. Here Sass draws the implication that we need a Manhattan Project to develop alternatives to oil. (more…)
Theories of the State
| Richard Langlois |
I was interested to see Peter’s post about the agency theory of the state — and glad to have the reference. I was actually just about to write about something related.
One of my favorite courses to teach is European Economic History. When I talk about the origin and development of the state, I rely on Meir Kohn’s distinction between territorial government and associational government. Territorial governments are the predatory states of Douglass North and Mancur Olson; associational governments arose in the interstices of territorial ones, typically as guilds of guilds in medieval cities, for the purpose of providing public (club) goods. Associational governments had existed in places like Athens and Rome, of course, again as clubs of wealthy merchants and land owners to provide public goods. But the interesting story is how territorial governments came to take on associational features — so that they could also be “owned” by their citizens — while, as we and Rozeff would agree, they retained a predatory dimension because of agency costs.
Meir Kohn is an interesting economist at Dartmouth whom I met a couple of years ago when we were involved in one of Axel Leijonhufvud’s summer schools in Trento. He is writing a textbook on European economic history, which is available online in manuscript. The aspect I was originally going to write about is Meir’s interesting claim that war was a far more important restraint on economic growth than Malthusian population factors in the pre-modern period. He proposes a cyclical account: the monarch taxes the population to finance war, which, along with the physical devastation of the war, reduces the population to subsistence; war eventually exhausts the treasury, forcing the monarch to wage peace for a while; this allows economic growth to spring up again, which leads to another round of taxation and war. Bob Higgs has written in the American context about the negative effects of war on growth. Does anyone know of anyone else who’s talked about this in the European context? This strikes me as a fertile area for cliometricians.
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