Posts filed under ‘– Klein –’

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

14 December 2015 at 12:14 pm 2 comments

Can Junior Scholars Do Risky Research?

| Peter Klein |

The AOM’s Entrepreneurship Division listserv has been featuring an interesting discussion on the incentives facing junior (and senior) scholars for doing “high-risk” research. To be sure, most early-career scholars focus on making incremental contributions to well-established research programs; after securing tenure, the argument goes, they can be bolder and more experimental. The problem is that, in many academic fields, junior scholars have the greatest capacity for novelty and creativity (in mathematics, for example, you may be past your prime at 35). I’m not sure this true in the social sciences, which may place too much emphasis on clever technique over mature reasoning. But certainly many academics worry that the need to publish or perish makes it difficult for junior scholars to take chances, to the detriment of scientific progress.

I really liked Jeff McMullen‘s comments on the problem, reproduced here with permission:

Dean Shepherd and I wrote a paper about this issue several years ago, which grappled with some of these issues, especially what “risky research” means to tenure track researchers. Here’s the reference:

McMullen, J. S., & Shepherd, D. A. (2006). Encouraging Consensus‐Challenging Research in UniversitiesJournal of Management Studies43(8), 1643-1669.

I wanted to write that paper because I was starting off my career and wanted to do consensus-challenging research, but I also wanted to understand the consequences of employing such a career strategy. Much of what Dean and I discovered in that research has only intensified over the years as competitive pressures have made institutional incentives that much more uniform.

The challenge for me personally, however, is not the incentives and institutional pressures; instead, it is having the moral courage to conduct research that I believe is important and valuable even though I know the academy may not yet value it, at least not yet. Will I be able to meet the high productivity bar of my colleagues whose research or approach is more mainstream? Some of us are drawn to topics that are mainstream (count your blessings you lucky dogs), but some of us just have to let our freak flags fly. What is the cost of doing research we care about and do we have the courage to pay this price?

Like other innovations, consensus-challenging research is uncertain. Just like routine must be the norm for innovation to mean anything, incremental, consensus building research has to be the norm for any notion of uncertain, consensus-challenging research to make sense. Sometimes uncertainty bearing pays off economically, but more often it does not. Therefore, uncertain payoffs are likely to be motivated by incentives that are not economic — e.g., intrinsic motivation such as intellectual curiosity or feeling like we have said something original if that’s even possible. Perhaps, this is how it should be.

So, the real question for me is and has been through much of my career: how much is it worth to me in terms of institutional status, job security, promotion, or raises to forgo incremental publications and the accolades that come with those to write papers I care about? What is the optimal blend that I might stay employed yet truly care deeply about what I write? Can I live with socio-emotional costs of not being as productive as my colleagues?

For the most part, I have been blessed to be surrounded by colleagues who have valued me and what I do, but I also sought to work for institutions and with colleagues who I believed valued what I valued or at least had that capacity.

Can the system be better? Absolutely, it could be more forgiving. We could lower the institutional costs of innovative research.  But, the system only has as much power as you and I choose to give it over our hearts and minds.  Great leaders throughout history ranging from Jesus to Gandhi to King to Mandela have confronted a similar choice between compliance and civil disobedience and have had the moral courage to choose civil disobedience despite consequences that dwarf what you and I face. Changing the system starts first with having the moral courage to make peace with the worst possible outcome and yet still having the conviction to advance what we believe in.

So, let us ask what we might change “out there” to make science more inclusive, but let us not forget to ask what we need to change in ourselves. Like the entrepreneurs we study, meaningful work has a price, and may only be meaningful because it does.

4 December 2015 at 5:01 pm 2 comments

Incentives, Ideology, and Climate Change

| Peter Klein |

1484We’ve written before on the institutions of scientific research which, like other human activities, involves expenditures of scarce resources, has benefits and costs that can be evaluated on the margin, and is affected by the preferences, beliefs, and incentives of scientific personnel (1, 2, 3). This sounds trite, but the view persists, especially among mainstream journalists, that science is fundamentally different, that scientists are disinterested truth-seekers immune from institutional and organizational constraints. This is the default assumption about scientists working within the general consensus of their discipline. By contrast, critics of the consensus position, whether inside our outside the core discipline, are presumed to be motivated by ideology or private interest.

You don’t need to be Thomas Kuhn, Imre Lakatos, or any modern historian or philosopher of science to find this asymmetry puzzling. But it is the usual assumption in particular areas, most notably climate science. A good example is this recent New York Times piece by Justin Gillis, “Short Answers to Hard Questions About Climate Change.” In response to the question, “Why do people question climate change?” Gillis gives us ideology and private interests.

Most of the attacks on climate science are coming from libertarians and other political conservatives who do not like the policies that have been proposed to fight global warming. Instead of negotiating over those policies and trying to make them more subject to free-market principles, they have taken the approach of blocking them by trying to undermine the science.

This ideological position has been propped up by money from fossil-fuel interests, which have paid to create organizations, fund conferences and the like. The scientific arguments made by these groups usually involve cherry-picking data, such as focusing on short-term blips in the temperature record or in sea ice, while ignoring the long-term trends.

Ignore the saucy rhetoric (critics of the consensus view don’t just question the theory or evidence, they “attack climate science”), and note that for Gillis, opposition to the mainstream view is a puzzle to be explained, and the most likely candidates are ideology and special interests. Honest disagreement is ruled out (though earlier in the piece he recognizes the vast uncertainties involved in climate research). Why so many scientists, private and public organizations, firms, etc. support the mainstream position is not, in Gillis’s opinion, worth exploring. It’s Because Science. The fact that billions of dollars are flowing into climate research — a flow that would slow to a trickle if policymakers believed that man-made carbon emissions are not contributing to global warming — apparently has no effect on scientific practice. The fact that many climate-change proponents are, in general, ideologically predisposed to policies that impose greater government control over markets, that reduce industrial activity, that favor particular technologies and products over others is, again irrelevant.

Of course, I’m not claiming that climate scientists in or outside the mainstream consensus are fanatics or money-grubbers. I’m saying you can’t have it both ways. If ideology and private interests are relevant on one side of a debate, they’re relevant on the other side as well. Perhaps the ideology and private interests of New York Times writers blind them to this simple point.

2 December 2015 at 5:45 pm 1 comment

Weingast on North

| Peter Klein |

Barry Weingast remembers Doug North at EH.Net (also at the SIOE blog):

His first book, The Economic Growth of the United States, 1790-1860 (1960), helped foster the revolution that came to be known as the “new economic history,” the application of frontier economics to the study problems of the past. He and Bob Fogel were awarded the Nobel Prize in Economics (1993) largely for their leadership in this new research program.

But Doug understood that the neoclassical economics on which he was raised was inadequate to address the problems he sought to answer, namely, why are a few countries rich while most remain poor, some in dire poverty? Much of his best work addressed this question.

Read the whole thing here.

29 November 2015 at 5:04 pm Leave a comment

Douglass C. North (1920-2015)

| Peter Klein |

north_postcardI’m sorry to report that Doug North passed away yesterday at the age of 95. North was a key figure in the “cliometrics revolution” which sought to apply neoclassical economic theory and quantitative methods to the study of economic history, for which he received a Nobel Prize. He was also a founder, along with Ronald Coase and Oliver Williamson, of the “New Institutional Economics.” His work on economic growth, the role of institutions on national and international economic performance, the relationship between economic and political institutions, and many other fields has been extremely influential.

I don’t yet see many obituaries online but they will appear soon in the usual places. Here are some previous O&M posts on North. Here’s his Wikipedia entry. We’ll add some detailed commentaries soon.

I met North at the inaugural ISNIE conference in St. Louis in 1997, and saw him occasionally after that. He was friendly and approachable and interested in the work of younger scholars. North was an interdisciplinary thinker but always considered himself an economist first and foremost. I remember a small-group dinner at which he revealed an interesting conversation among the founders of International Society for New Institutional Economics (now SIOE). Coase had proposed calling the new organization the “International Society for New Institutional Social Science.” North reported that he replied, “Ronald, if you call it that, I will wish you well, but I won’t ever attend!”

Here is a nice reminiscence from Mike Sykuta.

Update: Here are obits in the NYT and WaPo. The former describes North in a way that makes economic history sound pretty interesting: “a diminutive, effervescent bon vivant [who] indulged his interests in haute cuisine, photography, fast cars, flying his own plane, hunting, fishing, tennis, hiking and swimming, pursuing some of them into advanced age.” (There is a story, perhaps apocryphal, about Washington University agreeing to pay North’s moving expenses when he took a professorship in St. Louis, then finding out later that transporting his wine collection required a refrigerated truck costing tens of thousands of dollars.)

Update 2: Here is Barry Weingast’s reminiscence, which appeared originally at EH.Net.

24 November 2015 at 4:20 pm Leave a comment

Science, Technology, and Public Funding

| Peter Klein |

This piece by Matt Ridley builds on Terence Kealey’s critique of government science funding, and also echoes Nathan Rosenberg’s critique of the linear model of science and technology. We have pointed out similarly that arguments for public science funding are usually not very scientific.

When you examine the history of innovation, you find, again and again, that scientific breakthroughs are the effect, not the cause, of technological change. It is no accident that astronomy blossomed in the wake of the age of exploration. The steam engine owed almost nothing to the science of thermodynamics, but the science of thermodynamics owed almost everything to the steam engine. The discovery of the structure of DNA depended heavily on X-ray crystallography of biological molecules, a technique developed in the wool industry to try to improve textiles.

Technological advances are driven by practical men who tinkered until they had better machines; abstract scientific rumination is the last thing they do. As Adam Smith, looking around the factories of 18th-century Scotland, reported in “The Wealth of Nations”: “A great part of the machines made use in manufactures…were originally the inventions of common workmen,” and many improvements had been made “by the ingenuity of the makers of the machines.”

It follows that there is less need for government to fund science: Industry will do this itself. Having made innovations, it will then pay for research into the principles behind them. Having invented the steam engine, it will pay for thermodynamics.

I have argued repeatedly against the “laundry list” rationale for public funding, the listing of technologies and products that came out of government programs, as if that were justification for these programs. Ridley agrees:

Given that government has funded science munificently from its huge tax take, it would be odd if it had not found out something. This tells us nothing about what would have been discovered by alternative funding arrangements.

And we can never know what discoveries were not made because government funding crowded out philanthropic and commercial funding, which might have had different priorities.

24 October 2015 at 3:28 pm Leave a comment

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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).


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