Posts filed under ‘Methods/Methodology/Theory of Science’
More on Tacit Knowledge
| Nicolai Foss |
O&M has featured a number of posts that are critical of the hugely influential notion of tacit knowledge (e.g., here and here). The latest issue of the Journal of Economic Methology has as nice paper by Jonathan Perrant and Iona Tarrant, ‘What Does Tacit Knowledge Actually Explain?” (more…)
Chicago School Blogging
| Peter Klein |
Ross Emmett, whose work on the Chicago school of economics we discussed here, has been blogging about a recent conference on Chicago economics. The first two posts are here and here. Stay tuned for more, including a post on Hayek coming in the next few days.
Menger the Empiricist
| Peter Klein |
Austrian economists eschew empirical analysis in favor of deductive, a priori reasoning. They don’t believe in prediction. Neoclassical economists, by contrast, endorse the “scientific method” of rigorous empirical testing. You know that, right?
Then you might be surprised to learn that Carl Menger (1840-1921), founder of the Austrian school, called his approach the “empirical method,” as distinguished from Léon Walras’s “rational method.” Menger was a prominent economic journalist before turning to scientific work and his primary interest, as a scholar, was to explain the actual pricing processes he observed in the marketplace, processes that did not at all resemble those described in contemporary textbooks. Menger’s purpose, writes Guido Hülsmann in Mises: Last Knight of Liberalism, was
to demonstrate that the properties and laws of economic phenomena result from these empirically ascertainable “elements of the human economy” such as individual human needs, individual human knowledge, ownership and acquisition of individual quantities of goods, time, and individual error. Menger’s great achievement in [Principles of Economics, 1871] consisted in identifying these elements for analysis and explaining how they cause more-complex market phenomena such as prices. He called this the “empirical method,” emphasizing that it was the same method that worked so well in the natural sciences. (more…)
EBM Reconsidered
| Peter Klein |
Joe Mahoney, whose opinions are highly valued around here, thinks we are unfair to evidence-based management (EBM) (1, 2). Joe encourages readers to study Denise Rousseau’s 2005 Academy of Management Presidential Address and make up their own minds. Writes Joe:
Some of the leading folks in the evidence based-management (EBM) research program include past Academy of Management Presidents such as Jean Bartunek (Boston College), Jone Pearce (University of California, Irvine) and Denise Rousseau (Carnegie Mellon University). In the Strategy field, Ravi Madhavan (University of Pittsburgh), Alfie Marcus (University of Minnesota) and myself have recently become involved. The real leader of the Evidence-Based Management program is Denise Rousseau, who offers much of substance.
Joe reports that he attended a June 2007 workshop at Carnegie Mellon on EBM and came away much impressed. EBM, Joe writes, “means translating principles based on best evidence into organizational practices. Thus, organizational decisions are informed by social science and organizational research, which aid in solving organizational problems.” It’s hard to disagree with that.
Instrumental Variables versus Randomized Controlled Trials
| Peter Klein |
Despite the popularity of instrumental-variables estimators some empirical social-science researchers suggest dumping structural models altogether in favor of randomized controlled trials (RCTs), as used in biomedical research. (Like evidence-based management, but with substance.) MIT’s Poverty Action Lab (J-PAL) is the home of this movement. Princeton’s Angus Deaton is intrigued, but reminds us that RCTs are no panacea.
The movement is not modest in its claims, and it has attracted a good deal of acclaim from outside the profession. [J-PAL’s Abhijit] Banerjee has argued that the World Bank should cease to fund any activity (including presumably macro policy advice) that has not been previously subject to evaluation by an appropriate RCT. . . . There is much to be excited about in this program. J-PAL and other experimental researchers have come up with several surprising results that upset previous beliefs. And by replicating similar experiments in different settings they are beginning to create an impressive and valuable body of evidence. As might be expected in the first flush of enthusiasm, there has to date been less attention to some of the problems that have bedeviled RCTs in medicine, such as their limited value to physicians in practice, nor to the extent to which RCTs really do solve the standard problems of econometric analysis. (Indeed, many RCT papers subject their experimental results to various econometric corrections and analyses.) And the jury is still out on whether RCTs are any better than large data sets as substitutes for theory.
Thanks to Marshall Jevons (this one, not this one) for the pointer.
11 September 2007 at 12:03 am Peter G. Klein Leave a comment
Content Analysis Using Amazon.com
| Peter Klein |
Arthur Diamond uses Amazon.com’s “Search Inside” feature to find books discussing “creative destruction” or other Schumpeterian concepts. Conclusion: Book authors, writing for the general reader, love Schumpeter while academic journal authors, writing for their fellow specialists, tend to ignore Schumpeter because his ideas are too difficult to model formally.
See also my earlier attempt to use Amazon to quantify bad academic writing.
The Best Business Book I’ve Read This Year
| Peter Klein |
It’s Phil Rosenzweig’s The Halo Effect (mentioned previously here). Rosenzweig systematically, but politely, demolishes the pretensions of best-selling management books and projects such as In Search of Excellence, Built to Last, Good to Great, and the Evergreen Project. These studies, Rosenzweig patiently explains, engage not in serious research — despite their pseudo-scientific pretensions (what Rosenzweig calls “The Delusion of Rigorous Research”) — but in storytelling.
The most common problems are sampling on the dependent variable (i.e., choosing a sample of high-performing companies and explaining what their managers did, ignoring selection bias) and using independent variables based purely on respondents’ ex post subjective assessments of strategy, corporate culture, leadership, and other “soft” characteristics. The latter is the “Halo Effect” of the book’s title. When a company’s financial or operating performance is strong, managers, consultants, journalists, and management professors tend to rate strategy, culture, and leadership highly, while rating the same strategies, cultures, and leadership poorly when a company’s performance is weak. It’s as if the authors of “guru” books have never taken a first-year graduate course on empirical research design. Or, as Rosenzweig puts it (p. 128): “None of these studies is likely to win a blue ribbon at your local high school science fair.” Ouch. (more…)
Does Management Research Need to Become More Empirical?
| Nicolai Foss |
Or, to put it more precisely, does management research (i.e., the journals) need to become more empirical in the specific sense of allowing for research that is pre-theoretic, but addresses an issue of relevance or detects a pattern to organizational stakeholders, that is, identifies a potentially important stylized fact? (more…)
Austrian Economics at the AoM
| Peter Klein |
Last week’s Academy of Management meeting featured a pre-conference workshop, “The Austrian School of Economics: Applications to Organization, Strategy, and Entrepreneurship,” organized by Nicolai and myself. I began with an overview of the Austrian approach and reviewed some of the key figures in its development. Panelists Joe Mahoney, Yasemin Kor, Dick Langlois, Nicolai, and Elaine Mosakowski each gave some prepared remarks about aspects of the Austrian tradition that apply to their work, followed by general discussion among the panelists and the audience. Here are copies of the prepared remarks and here are some photos (courtesy of Peter Hofherr).
We weren’t sure what to expect — a dozen or so participants, perhaps? — and were delighted when over 100 people showed up, leaving standing room only. This and other indicators suggest growing interest in Austrian economics among management scholars. Of course, a belief in the relevance of the Austrian approach to business administration is a core value here at O&M.
Incoherence Is Bad For You but Good For Us
| Steven Postrel |
I just finished reading David Hull’s remarkable Science as a Process (1988), and was struck by one of his arguments. One of his claims (not his major thesis) is that while each scientist strives to make his own work coherent and internally consistent, overall progress only occurs because the views of every school of thought and every discipline are somewhat incoherent. (more…)
Geoff Hodgson on Methodological Individualism
| Nicolai Foss |
Geoff Hodgson is no doubt a very thoughtful economist. I admire much of his work. But I have always been disturbed by a sustained theme in his writings: His relentless criticism of methodological individualism. To me, MI is “trivially correct,” to paraphrase Jon Elster, and I have viewed Hodgson’s critiques as bizarre and idiosyncratic, particularly because I have not thought that he provided any good reasons to reject MI.
However, the Journal of Economic Methodology has just published a very interesting piece by Hodgson, “Meanings of Methodological Individualism,” in which he offers some serious reasons why MI is problematic (and perhaps more than that). Hodgson argues that MI are surrounded by a number of ambiguities: 1) It is unclear whether it is intended to be something that is specific to “pure economics” or to the social sciences in general; 2) it is unclear whether MI is about social ontology or about social explanation, and 3) it is unclear whether it refers to “explanation in terms of individuals, or indivuals alone.”
Now, 1) doesn’t really seem to me to be an ambiguity. While indeed Schumpeter, the inventor of the term, thought of MI as something that applied to pure economics alone, it is quite clear that modern proponents of MI think of it as applying generally to the social sciences. 2) is a red herring, for while MI is about explanation it is rooted in the ontological argument that only individuals act. (more…)
Workshop in Economic Methodology
| Peter Klein |
The Stirling Centre for Economic Methodology (SCEME) is soliciting proposals for its 9th workshop on economic methodology, 13 October 2007 at the University of Stirling, UK. This year’s theme is “Knowledge, Information, and the Economy.” Proposals are due 27 July 2007. Here is the call for papers and here is additional information.
Michael Cohen on Routines
| Nicolai Foss |
In the field of organization studies, Michael Cohen is a towering figure. What he says is listened to. In a recent Essai in Organization Studies (yes, in case you didn’t know, Org Studies belongs to the same continent as Michel de Montaigne; pretentious, nous?), Cohen talks about the inspiration he has gained from American pragmatist philosopher John Dewey. He mentions that, somewhat to his surprise, he has found out that he is far from unique in his Dewey interest. Another Dewey-reader with interests similar to Cohen’s is Sid Winter; in his recent bashing of methodological individualism at the DRUID conference, Winter enlisted Dewey among the enemies of MI. (more…)
Those Radical Bayesians
| Peter Klein |
Statistics is apolitical, right? Maybe not.
I remember that in graduate school, Xiao-Li Meng, now editor of [Statistica Sinica], told me they didn’t teach Bayesian statistics in China because the idea of a prior distribution was contrary to Mao’s quotation, “truth comes out of empirical/practical evidence.” I have no idea how Thomas Bayes would feel about this, but Pierre-Simon Laplace, who is often regarded as the first applied Bayesian, was active in politics during and after the French Revolution.
In the twentieth-century Anglo-American statistical tradition, Bayesianism has certainly been seen as radical. As statisticians, we are generally trained to respect conservatism, which can sometimes be defined mathematically (for example, nominal 95% intervals that contain the true value more than 95% of the time) and sometimes with reference to tradition (for example, deferring to least-squares or maximum-likelihood estimates).
This is from Andrew Gelman’s introduction to a special issue of Statistica Sinica on Bayesian statistics. The China referencce reminds me of this LA Times story on the challenge of teaching Marxist theory in today’s China, where students couldn’t care less.
More on Journal Rankings
| Peter Klein |
The HES (History of Economics Society) listserv is buzzing over ERIH, the European Science Foundation’s ranking of journals in the history and philosophy of science. Writes Deirdre McCloskey, for example:
Among [the] many bad effects [of ranking journals] is to encourage people to rank another person not by reading and considering (a sample of) her work but by counting how many Grade A journals she has contributed to. It takes scientific and scholarly judgment out of the hands of actual readers of the actual work and puts it into the hands of the median voter in a beauty contest. It leads to mediocrity in science, such as the practice of using t tests as the sole criterion of importance in statistical studies. The beauty contest is based on rumor, not reading. When reputation rankings include a dummy journal with a plausible sounding name the respondents claim familiarity with the journal and firmly rank it. Don’t we need to stop this corrupt practice, not encourage it?
Other commentators largely agree. David Colander notes that productivity rankings of economists based on journal articles use proxies (journal articles) that “are only a small portion of economists’ total output (which includes teaching, other research, and service) (I estimate 20%) and that emphasis in one reduces emphasis in the others, so the probability of the rankings carrying through is exceedingly small, even if there is positive correlation with other activities.”
You can read the whole thread here (start with David Teira Serrano’s entry “European Reference Index for the Humanities (ERIH).” See also Leland Yeager’s work discussed here.
Against Holism: The Boudon-Montaigne Farting Example
| Nicolai Foss |
Sophisticated attacks by methodological holists on methodological individualism often take the form of admitting that while, strictly speaking, only individuals act, individuals are so strongly influenced and constrained by institutions (in a broad sense) that we might as well disregard those individuals and instead reason directly from institutions to social outcomes. Individuals are effectively malleable by social forces. “There is no such thing as a human nature independent of culture,” Clifford Geertz famously argued, tying the holist argument to cultural relativism. (more…)
Philosophy of Social Science 101
| Nicolai Foss |
As I recently informed the O&M readership (here), I was in a debate last week at the DRUID conference in Copenhagen on the issue of methodological individualism. The debate took place in the afternoon, and at lunch I overheard one professor asking another (both were tenured full professors at highly prestigious US universities), “Do you have any idea about the stuff that Sid and Nicolai will be debating later today?” The other person shook his head and said he had “no idea.” I tried to talk to as many people before and after the debate as I could. I was surprised at how many basically did not have a clue concerning the meaning of methodological individualism (including a fair amount of those who had been listening to the debate!). Some of the questions that were raised during the debate also revealed considerable ignorance. For example, a young lady in the audience took Peter Abell and I to task for defending a notion (i.e., MI) that is not falsifiable! (more…)
The Sociology of Heterodox Economics
| Peter Klein |
Tiago Mata’s dissertation, “Dissent in Economics: Making Radical Political Economics and Post Keynesian Economics, 1960-1980” (LSE, 2005) has received the Joseph Dorfman Best Dissertation award from the History of Economics Society. From the abstract:
The history of dissent in economics has thus far been subject to scant interest. The existing scholarship, authored by dissenters probing their own past, has failed to address the crucial questions of how dissent emerged and rooted itself.
This study is about two dissenting communities, Radical Political Economics and Post Keynesian Economics. I review the circumstances that led to their emergence in the late 1960s and early 1970s. I draw from the histories of religious and scientific dissent to explore the making of the dissenters’ challenge to the economics orthodoxy. Notably, I use the concept of boundary work to analyse the debates between dissenters and mainstream.
Here is Mata’s home page. Here are some previous posts about heterodox economics.
Methodological Individualism at the DRUID Conference
| Nicolai Foss |
Today is the second day of the annual conference of the Danish Research Unit for Industrial Economics. In order to stimulate controversy, and entertain conference delegates between less interesting paper sessions, DRUID organizes debates on motions.
I participated along with Sid Winter of the Wharton School, Peter Abell of the London School of Economics, and Thorbjørn Knudsen of Southern Denmark University in today’s “DRUID Debate on Methodological Individualism versus Scientific Progress” (sic!!!!!) which involved the following motion:
Let it be resolved that this conference believes that the lack of methodological individualism applied in strategy research seriously limits scientific progress in the field.
Speaking for the motion were Peter and I, speaking against were Sid and Thorbjorn. A vote was taken before the debate. There were about as many pro as contra votes. After the debate, which had its rather heated moments, another vote was taken. And again there about as many pro as contra votes. Apparently, the debate had — perhaps not surprisingly — not managed to change any beliefs. The debate was streamed, and should be available on the DRUID site within a couple of weeks.
Accountics
| Peter Klein |
Accounting research, like that in other social sciences, has become increasingly quantitative. Mainstream empirical research in accounting is mostly “accountics” — accounting plus econometrics. Not everyone is convinced this is a good idea:
In her Presidential Message to the American Accounting Association (AAA) in August, 2005, Judy Rayburn discussed the issue of the relatively low citation rate of accounting research compared to citation rates for research in finance, management, and marketing. Rayburn concluded that the low citation rate for accounting research was due to a lack of diversity in topics and research methods. In this paper, we provide a review of the AAA’s flagship journal, The Accounting Review (TAR), following its 80 years of publication and describe why some recent AAA leaders believe that significant changes should be made to the journal’s publication and editorial policies. At issue is whether scholarly accounting research is overly focused on mathematical analysis and empirical research, or “accountics” as it has sometimes been called, at the expense of research that benefits the general practice of accountancy and discovery research on more interesting topics. We conclude from our review of TAR that after mostly publishing research about accounting practices for the first 40 years, a sweeping change in editorial policy occurred in the 1960s and 1970s that narrowly defined scholarly research in accounting as that which employs accountics.
This is from a working paper by Jean Heck and Robert Jensen. One consequence of the focus on accountics, they argue, is that accounting researchers know less and less about accounting (e.g., accounting standards, practices, history, policy). Of course, the same criticism is often directed against contemporary research in business economics, management, and other disciplines. Scholars know much about formal modeling and quantitative methods, but little about the economy or the firm. (more…)
Organizations and Markets 
Recent Comments