Posts filed under ‘Methods/Methodology/Theory of Science’
Jon Elster Site
| Nicolai Foss |
Here is a nice site dedicated to Norwegian sociologist, the Robert Merton Professor at Columbia University, Jon Elster, a champion of an interesting (modified) rational choice and clearly methodological individualist sociology. It lists all Elster’s works, including some unpublished papers. Some works are downloadable. Unfortunately, nothing seems to have been done on the site since appr. 2000.
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?
Schmoller and Pareto
| Peter Klein |
Tim Swanson reminds me of a funny Schmoller story told by Vilfredo Pareto:
Vilfredo Pareto, the influential Italian economist, while giving a talk in the early 1900s at an economics conference in Geneva, was repeatedly and noisily interrupted by his powerful colleague Gustav von Schmoller. Von Schmoller, who from his throne at the University of Berlin ruled the German academic world, apparently kept shouting in patronizing tone, “But are there laws in economics?” Despite his aristocratic upbringing Pareto had little respect for appearances, reportedly having written his monumental work Trattato di Sociologia Generale while owning a single pair of shoes and one suit. It was therefore easy for him to transform himself into a beggar the next day and approach von Schmoller on the street. “Please, sir,” Pareto said, “can you tell me where I can find a restaurant where you can eat for nothing?” “My dear man,” replied van Schmoller, “there are no such restaurants, but there is a place around the corner where you can have a good meal very cheaply.” “Ah,” said Pareto, laughing triumphantly, “so there are laws in economics!”
This version is in Albert-Laszlo Barabasi, Linked: The New Science of Networks (2002). The original source is Pareto’s The Mind and Society (1916).
Pareto, by the way, is an extremely interesting, and neglected, social theorist, whose contributions go far beyond the ubiquitous “Pareto optimality.”
Bill Starbuck’s New Book
| Nicolai Foss |
Omar at orgtheory.net dismisses critical discussions of the institutions of publishing social science research as “jeremiads” (see here), that is, “moralistic texts that denounce a society for its wickedness” (Wikipedia), typically written — but by no means always — by old, grumpy men. In contrast, Omar has great faith in the efficiency of these institutions (see the exchanges between my co-blogger and Omar here).
Although Bill Starbuck isn’t young any more, and there no doubt is a certain jeremiad-like quality to his misgivings about research practice in the social sciences, I submit that even Omar stands to benefit from reading Starbuck’s new opus, The Production of Knowledge: The Challenge of Social Science Research. Clearly, Omar has considerable experience with the institutions of publishing, and Bill Starbuck has only been the editor of Administrative Science Quarterly, but there may still be a thing or two to learn. Here is the book’s blurb: (more…)
Does Transaction Cost Economics Need Opportunism?
| Peter Klein |
During a recent discussion of transaction cost economics a commentator asked: “I am always puzzled by why we need opportunism when we have individuals pursuing their self-interests as a postulate.” Opportunism, of course, is Oliver Williamson’s concept of “self-interest seeking with guile.” In a world of opportunism individuals cannot be assumed to keep their promises, to fulfil their obligations, and to respect the interests of their trading partners unless “safeguards” are in place. The task of economic organization, in Williamson’s terms, is to “organize transactions so as to economize on bounded rationality while simultaneously safeguarding them against the hazards of opportunism.”
But is opportunism just another word for self-interest? Neither Klein, Crawford, and Alchian (1978) nor Grossman and Hart (1986) nor Baker, Gibbons, and Murphy (2002) nor other contemporary treatments of the economic theory of the firm invoke the concept of opportunism. Instead, they rely simply on the economists’ usual notion of self-interested, maximizing behavior. What, then, is the point of introducing opportunism? (more…)
Theorists Need History, But Historians Need Theory Too
| Peter Klein |
We have previously lamented the lack of interest in doctrinal history among contemporary social scientists (here and here). Wanting to be Real Scientists, economists and management theorists tend to focus on the latest trendy theories and empirical techniques, paying little attention to what prior generations of scholars might have thought. If this means occasionally re-inventing the wheel, well, that’s the price of being on the cutting edge.
It is often argued that the increasing marginalization of doctrinal history — and its transformation into a specialized field with its own associations, conferences, journals, etc. — may be harmful to current practice. I share this concern. At the same time, however, the emergence of doctrinal history as a self-contained field may also be harmful to doctrinal history. (more…)
Bounded Rationality and Paternalism Redux
| Peter Klein |
John Cassidy’s New Yorker article on neuroeconomics, and his (and Colin Camerer’s) use of behavioral anomalies to justify paternalistic social policy, has provoked many strong responses. The latest is “Neuro Wine in Old Bottles” by Will Wilkinson, which concludes:
New findings in brain science will certainly help us to improve the technologies of Reason. But our freedom is perhaps the most important of those technologies. So before we get carried away with exciting brain-based arguments for paternalism and regulation, we should remember that it’s not rational, in any sense of the word, to burn the ladder you’re climbing.
NB: Robert Fogel says that economists, too, suffer from cognitive bias — they are too pessimistic. Understandable, given that the economist’s usual role is to correct for foolish optimism, or what Sowell calls the “unconstrained vision.” (Thanks to Bryan Caplan and Russ Roberts for the links.)
The “Essay Tradition” in Economics
| Peter Klein |
On the triumph of formalism in economics (addressed here and here) — not to mention academic insults — I give you this passage in Fred Kaplan’s The Wizards of Armageddon, a history of the RAND Corporation. The subject is RAND mathematician Albert Wohlstetter, the chief theoretician behind the development of US nuclear strategy in the 1950s and 1960s. Writes Kaplan:
[T]he social science division was removed from the rest of RAND — literally, 2500 miles away, in Washington, D.C. Most [of the social scientists] were figuratively removed, too: quantitative analysis had triumphed at RAND, through the spread of systems analysis and game theory and — until the Wohlstetter studies, which put the economids division on top of the strategic business — through the domination over the rest of RAND by the mathematics division. [Wohlstetter, though a mathematician, was associated with the economics division.] These sorts of studies were scientific, so it was thought; there were numbers, calculations, rigorously checked, sometimes on a computer. maybe the numbers were questionable, but they were tangible, unlike the theorizing, the Kremlinology, the academic historical research and interpretation produced by social science. Wohlstetter snootily denigrated all such works as being in “the essay tradition.”
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…)
Friedman-Stigler Correspondence
| Peter Klein |
Historians of economic thought, social-science methodologists, and Chicago School junkies may enjoy J. Daniel Hammond and Claire H. Hammond’s edited volume Making Chicago Price Theory: Friedman-Stigler Correspondence, 1945-1957 (Routledge, 2006). (Friedman, of course, is respected, though not universally admired, here at O&M.) Reviewer Craig Freedman says the Friedman-Stigler correspondence
reflects the way in which the two attempted to transform economics. In particular, we can discern their attempts to reshape economic methodology, as well as their changing views on such issues as equality and income distribution. As we read these letters, the outline of what would form the bedrock of the Chicago School, a distinctive take on price theory, becomes progressively clearer.
Freedman also notes that while Friedman’s influence on monetary theory and policy and economic methodology is well known, Stigler’s defense of Marshallian partial-equilibrium analysis over Walrasian general-equilibrium theory is not as widely appreciated. (more…)
Economic Culture Wars
| Peter Klein |
Mark Thoma points us to an old Paul Krugman column on the “economic culture wars.” There Krugman laments the hostility towards economic analysis expressed by many “literary” or “humanist” intellectuals. Invoking C.P. Snow’s “two cultures” distinction, Krugman tries to explain why a magazine editor added (over Krugman’s strenuous objections) the subtitle “deconstructing the income distribution controversy” to one of Krugman’s articles:
[T]here is a continuing struggle between two ideas of what it means to be an intellectual. One culture is humanist and literary; the other mathematical and scientific. The editor of my article, I now believe, was perhaps unconsciously using the language of critical theory as a way of declaring his allegiance in that struggle; he was saying: “I may write about quantitative stuff like GDP and real wages, but my sensibility is literary.”
I think Krugman’s diagnosis is largely on target, with one important caveat. What Krugman describes as the essentially “mathematical” character of economic analysis I would instead call “logical” or “analytical.” The opposite of literary/humanist, in the cultural divide, is logical/analytical (of which mathematical is a subset). Contrary to Krugman, economics did not become a rigorous, technical subject only after World War II, when verbal economics was systematically replaced by mathematical economics; it had always been so.
Mises’s “Intolerance”
| Peter Klein |
Rafe Champion points out that Ludwig von Mises and Karl Popper, despite a shared commitment to classical liberalism and joint membership in the Mont Pelerin society, then the premier scholarly association of free-market intellectuals, didn’t get along. Mises and Popper were miles apart, epistemologically, and neither was enamored of the other’s work. Still, their relationship is interesting and worthy of further study. (Hayek of course was deeply influenced by both men.)
Unfortunately, in the comments to Rafe’s post the subject of Mises’s alleged “intolerance” rares its ugly head. A commentator refers to the story, repeated ad nauseam by Milton Friedman, that Mises once stormed out of a session of the Mont Pelerin society, shouting “You’re all a bunch of socialists!” The inference is that anyone making such a statement in a room full of distinguished non-socialists (Friedman, Stigler, Robbins, Knight) must be an extremist, a crank, or both. (more…)
Albert Fishlow and the New Economic History
| Peter Klein |
Previous posts have touched on cliometrics or the “new economic history” (not quite so new anymore). For interesting reflections on the cliometric revolution see John Majewski’s recent commentary on Albert Fishlow’s 1965 book American Railroads and the Transformation of the Ante-bellum Economy (part of a clever “Classic Reviews in Economic History” series; I’d love to see similar series for management, industrial organization, etc.). As Majewski notes, the “book’s forty-year career is a window from which one can glimpse the transition from the ‘Old Economic History’ to the ‘New Economic History.'” (more…)
25 September 2006 at 11:25 am Peter G. Klein Leave a comment
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.
Should Universities Do Research?
| Peter Klein |
It is usually taken for granted that scientific research is a public good, is undersupplied by the market, and must therefore be provided by government. I think the argument for public funding is actually much weaker than is typically assumed. (More on that in a subsequent post.) Regardless of the funding source, however, what is the optimal delivery vehicle? Should universities be the main centers of scientific research?
For over two-thirds of the 370 year history of Harvard University, that institution was considered to be predominantly an undergraduate teaching institution. Only at the end of the 19th century did the German research university model find its way to the U.S., first at Johns Hopkins University, and then rapidly at other schools throughout the land.
There are other places at which research is performed, and the relative importance of these other research venues is substantial. . . . Yet universities have been considered the dominant provider of basic research — discovering new insights into the human condition and physical phenomena. In 2003, about 55 percent of basic research was university conducted.
The great advantage of university funded basic research is that there are sometimes economies of scale and cross-fertilization of ideas by having research conducted in a learning community where students mingle with faculty. The students transition to becoming mature researchers by assisting the senior researchers while studying. Yet there are other research models that work well — private firm research centers, government research labs, and in the social sciences, think tanks. More research is needed into the relative costs and benefits of these alternative forms of research delivery.
This is from Richard Vedder, whose blog offers excellent, provocative commentary on the problems facing contemporary higher education.
Conference on Social Science Statistics
| Peter Klein |
Attention, _______ometricians (econ, psych, soci, cli . . . ). The University of Missouri is hosting the Winemiller 2006 Conference on Methodological Developments of Statistics in the Social Sciences, October 11-14. Topics include structural equations modeling, multilevel models, cluster analysis, social networks, measurement theory, Bayesian methods, survey data analysis, computational issues, and missing data.
If you don’t do quantitative research come anyway and join me for a protest rally outside the conference facility, where we’ll chant “Case Studies Forever!” and burn a stack of SAS manuals. (Not really.)
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…)
Are Economists Realists About Equilibrium?
| Nicolai Foss |
Economists are not always entirely forthcoming about how economic models connect to economic reality. My own perspective is that good economic models are simplified redescriptions of reality that capture those mechanisms that are essential for understanding a certain phenomenon. A crucial part of most economic models is that of equilibrium. Do economists think of equilibrium as a “simplified redescription of reality”? Or to put it somewhat differently, do they think that equilibrium is a possible (albeit perhaps highly unlikely) property of economic reality? Or is equilibrium a strictly analytical concept, and any association with economic reality a fallacy of conceptual realism? (more…)
Outliving Your Enemies
| Peter Klein |
Most of us know the quip “science progresses one funeral at a time.” The reference is to Thomas Kuhn’s Structure of Scientific Revolutions, and this passage in particular: “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.” (A line Kuhn borrows from Max Planck.)
I recently heard an amusing illustration. J. Harlen Bretz was a geologist who studied a large area called the Channeled Scablands in eastern Washington, Idaho, and western Montana in the early 1920s. He concluded that this area had suffered a massive, ancient flood during the melting of the glaciers during the last ice age. For decades no one believed him, but finally his findings became generally accepted in the 1970s, when Bretz was in his 90s. Asked how it felt to be vindicated after so many years; he reportedly said “All my enemies are dead, so I have no one to gloat over.”
Structure and Agency: A Response to Felin and Foss
| Nicolai Foss |
In 2005 Strategic Organization published a paper by Teppo Felin and me, “Strategic Organization: A Field in Search of Micro-foundations.” The paper has caused quite a stir, and the editor of SO! told me at the recent Academy Meetings that he had been contacted by several authors and author teams who wanted to write responses. Our argument? The — apparently provocative — one that notions of capabilities, routines, etc. are collective-level constructs that do not have any clear (and clean) micro-foundations (as well as definitions, measures, etc.). (more…)
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