Efficiency of Academia (was: Austrians and markets)
An all too common view is that most markets work well, and government should leave them mostly alone, except the social area I most care about needs special attention and subsidies to make sure my side prospers. I know people who act this way about health, art, privacy, sex, and much more. This seems a good reason to be suspicious of our own intuition that the social area we personally care about, academia, is unusually inefficient. Confirming this suspicion, most analysis of the economics of academia is remarkably shallow. For example, people who wouldn't dream of citing the failure of their favorite computer product twenty years ago as strong evidence of the inefficiency of the computer market nevertheless cite the failure of their favorite academic product as evidence of academic inefficiency. Academia seems to have little regulation, low entry costs, intense competition, and reasonable property rights. For example, people can mostly reliably show that they wrote the first published paper with a particular argument. While there are network effects of production, these are not especially strong compared to other reasonable efficient industries. Without more specific evidence or analysis to the contrary, I have to conclude that as an industry academia *is* relatively efficient at producing what its consumers demand. But the big question is: what exactly is it that academia consumers demand? If academic consumers demanded truth, then academia would be efficient at producing truth. But that's a big if. It seems to me that academic consumers primarily demand prestige. I.e., they want to associate with people with demonstrated high mental abilities. Students want employers to believe that they are smart by association with smart academics. Donors, even the ideologically motivated ones, primarily want to associate with smart people. There are several different styles of demonstrating smarts, including math, verbal eloquence, mastery of vast amounts of details, etc. Different academic disciplines emphasize of these mental abilities. Folks who use one style of showing smarts often complain that those other folks aren't getting real stuff done (like learning truth). But it is not clear to me that any approach more consistently gets real stuff done that other approaches to showing smarts. Pete wrote: >Economists as a group value "smarts" not necessarily being "good". >Cleverness wins over wisdom in the game we play. Most of the type of >questions which attract the interest of Austrians do not lend themselves to >the type of "smart" and "clever" analysis that so often impresses our peers. >Instead, sticking to one's knitting and getting the details correct in a >solid piece of economic history, or demonstrating a sense of judgement and >wisdom on policy relevant issues seems to be more the hallmark of the best >within the Austrian approach. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Efficiency of Academia (was: Austrians and markets)
Robin, I am shocked that you would claim that academics is an unregulated industry ... shocked. If I told that there was an organization that had the following characteristics what you say: 1. The owners do not manage the system 2. The workers make most of the managerial decisions 3. Consumer do not pay the full cost of the service Well, welcome to the modern public university. Outside of the role of public universities, there is also state funding of most private universities (at the research level). To be clear --- I am not whinning about the place of Austrians in the world of ideas --- some of it is because of "inefficiencies" other explanations are due to the incompentence of the leading exponents of the Austrian school. I am simply making a claim about the disciplinary devices within one set of institutional setting and another. Academic institutions, I claim (an empirical claim), do not penalize bad ideas as effectively as say a market economy would. At best it is a metaphor to say that the academic disciplines operate within a "market for ideas". And the metaphor is only partially correct. On the smarts issue --- I actually think we should value judgment and wisdom more than smarts, though smarts is easy to identify and judgement and wisdom are often only recongize ex post (in other words, cannot be recognized at the time it would need to be recognized for reward mechanisms to work). Prof. Peter J. Boettke, Deputy Director James M. Buchanan Center for Political Economy Department of Economics, MSN 3G4 George Mason University Fairfax, VA 22030 Phone: 703-993-1149 FAX: 703-993-1133 Email: [EMAIL PROTECTED] HomePage: http://www.gmu.edu/departments/economics/pboettke Editor, THE REVIEW OF AUSTRIAN ECONOMICS
Re: Efficiency of Academia
Pete Boettke wrote: >I am shocked that you would claim that academics is an unregulated >industry ... shocked. >If I told that there was an organization that had the following >characteristics what you say: >1. The owners do not manage the system >2. The workers make most of the managerial decisions >3. Consumer do not pay the full cost of the service >Well, welcome to the modern public university. >Outside of the role of public universities, there is also state funding >of most private universities (at the research level). There is very little regulation of the research activity that is our focus in this conversation. We can choose to write papers, review them, start journals, etc. with almost no interference from university officials or government regulators. Government funding agencies have even mostly been taken over by academics who run them pretty much the way they would no matter who paid the bills. >I am simply making a claim about the disciplinary devices within one >set of institutional setting and another. Academic institutions, I >claim (an empirical claim), do not penalize bad ideas as effectively as >say a market economy would. At best it is a metaphor to say that the >academic disciplines operate within a "market for ideas". And the >metaphor is only partially correct. I suggested that it isn't really a market for truth at all, it is more a market for prestige. To make an analogy, one might complain that the market for TV sitcoms is inefficient because TV shows do not show a realistic slice of life. But if realism isn't what TV consumers want there is no reason to expect TV markets to produce realism. Maybe you see what you think of as "bad" ideas in academia because the consumers of academia really don't care that much if ideas are "bad." >On the smarts issue --- I actually think we should value judgment and >wisdom more than smarts, though smarts is easy to identify and >judgement and wisdom are often only recongize ex post ... If the product academic consumers want is *identifiable* smarts, then of course they will prefer kinds of smarts that are more easily identifiable. You sound like someone who likes Japanese food complaining that there are too many Chinese restaurants in your area. Maybe you are really just unhappy with the preferences of the consumers around you. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Efficiency of Academia (was: Austrians and markets)
On Tuesday, November 27, 2001 2:13 PM Peter J. Boettke [EMAIL PROTECTED] wrote: > To be clear --- I am not whinning about the place of Austrians in the > world of ideas --- some of it is because of "inefficiencies" other > explanations are due to the incompentence of the leading exponents of > the Austrian school. A convuloted sentence, though I get the gist. On "the incompentence of the leading exponents of the Austrian school": Which exponents? What incompetencies? How do you think this should be corrected? Cheers! Daniel Ust http://uweb.superlink.net/neptune/
Re: Efficiency of Academia
Art is another area where people often say the market is inefficient. Some people say it is inefficient because it produces bad art others say it is inefficient because it does not produce enough art - often the two groups are talking about the same art. Although nominally about art, the brilliant and ingenious paper by Tyler Cowen and some other guy also applies to the market for economists and other scientists, An Economic Theory of Avant-Garde and Popular Art, or High and Low Culture. Southern Economic Journal (2000) 67(2): 232-253. The paper explains that when production involves self-satisfaction (as in art, research etc) economic growth and increased income can drive produced output away from the desires of consumers thus resulting in a seemingly inefficient market. Alex -- Dr. Alexander Tabarrok Vice President and Director of Research The Independent Institute 100 Swan Way Oakland, CA, 94621-1428 Tel. 510-632-1366, FAX: 510-568-6040 Email: [EMAIL PROTECTED]
Re: Efficiency of Academia
Robin Hanson wrote: You sound like someone who likes Japanese food complaining that there are too many Chinese restaurants in your area. Maybe you are really just unhappy with the preferences of the consumers around you. This is exactly the response that George Stigler had to Milton Friedman about the "market" for regulation and government intervention --- see his Economist as Preacher and Other Essays and his last essay Law or Economics. The logic of the position that you present is in the end one which says that whatever is, is efficient because if a lower cost alternative could be offered it would have already been offered. In other words, your version of the $20 lying on the sidewalk. But while I think the logic of economics tends to push us in this direction and in fact that this style of thought does a lot to advance clear thinking over alternative theories, in the end I side with Milton Friedman (and others) who believe that one of the most important roles of the economists is to point out paths for improvement in arrangements. Given that you write on the topic of improving the arrangements in activities, I am surprised to see you making an argument in favor of the presumption of efficiency. For example, why don't we see many of the sort of improvements you suggest on a wide-scale if they are indeed improvements in the arrangement of affairs? I don't believe we get the government we deserve I would argue that there is a chasm between preferences and outcomes that is caused by institutional restrictions which don't discipline opportunistic behavior in political affairs. There is, in short, a principal/agent problem in politics and the institutions to discipline this are restricted in arising to correct it. Similarly, I don't believe we get the economics we deserve --- the reason again is that there are institutional restrictions which distort preferences and fail to accurately communicate those preferences to producers. So I don't think my argument simply turns on a preference issue -- I prefer verbal economics and historical argument and others prefer models and measurement. Instead, I would argue that there is a great demand for clear headed economics and illuminating economic history by other scholars, and an interested lay and policy community, but that the institutions of our profession tend to mute this demand and exault the demand for another type of economics --- what McCloskey calls Kelly Green Golf Shoes. In fact, I think McCloskey's essay -- Kelly Green Golf Shoes and the Intellectual Range for M to N --- is one of the best descriptions of what our profession is all about. I recently wrote a review of McCloskey's book How to Be Human, Though an Economist and I am attaching for those of you interested. McCloskey.doc Description: MS-Word document
Re: Efficiency of Academia
Robin Hanson wrote: > You sound like someone who likes Japanese food complaining that there > are too many Chinese restaurants in your area. Maybe you are really > just unhappy with the preferences of the consumers around you. That's most of the story, but you are missing a key difference. Most academics SAY they are seeking truth, not personal entertainment. Moreover, if this point were widely admitted, a lot of the funding would probably disappear. Perhaps Pete is more like someone who likes Japanese food complaining that the "Japanese" restaurants are really serving Chinese food. -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] "Familiar as the voice of the mind is to each, the highest merit we ascribe to Moses, Plato, and Milton is, that they set at naught books and traditions, and spoke not what men but what *they* thought. A man should learn to detect and watch that gleam of light which flashes across his mind from within, more than the lustre of the firmament of bards and sages." --Ralph Waldo Emerson, "Self-Reliance"
The "efficieny" of academia
I think Arthur Stinchcombe summarizes the interesting aspects of academia in his book "Information and Organizations": 1. Colleges convert prestige into tuition dollars, donations and grants. 2. Prestige is based on smarts/quality, which is hard to measure. 3. Thus, academic managers (deans, provosts, etc) exert control not by determining work output but controlling resources such as office and lab space and teaching loads and let the professors figure out who is the smartest/best. 4. Academic quality is measured by reputation because deans can't determine for themselves if a professor is doing good work. This creates the need for a stable academic community (the "discipline") which deans can survey when trying to see if a given person should be promoted. 5. This is a mechanism that emerged from the very unregulated environment of the late 19th centure/early 20th - which is when the American university was born. I should also add that American academia is fairly unregulated compared to every single other national system. The federal gov't involvement is concentrated mostly in subsidizing undergraduate education, some handouts to humanities/social science professors and developing a broad scientific base of researchers that can be tapped into in times of war. Fabio > Pete Boettke wrote: > >I am shocked that you would claim that academics is an unregulated > >industry ... shocked. > >If I told that there was an organization that had the following > >characteristics what you say: > >1. The owners do not manage the system > >2. The workers make most of the managerial decisions > >3. Consumer do not pay the full cost of the service > >Well, welcome to the modern public university. > >Outside of the role of public universities, there is also state funding > >of most private universities (at the research level).
Re: Austrians and markets
You also forgot to add that three weeks ago he was proposing that Argentina depreciate their currency. I wouldn't label that the brightest of ideas by a "leading" economist either given the situation. Mark Steckbeck On 11/26/01 8:50 PM, "Peter Boettke" <[EMAIL PROTECTED]> wrote: > Caplan) people don't have to pay for holding rather silly ideas. Paul > Krugman, who by any measure is a more successful economist than any free > market guy currently working in the academy, wrote after September 11th that > the attack might actually be good for the US economy. OK -- so much for > good economics winning the day. Krugman has taught where? --- MIT, > Stanford, Princeton, and he has won what? --- the JB Clark Award. OK --- > Joseph Stiglitz is the most important theorist of his generation (something > I actually think he deserves credit for), but nevertheless, he has argued > that the minimum wage does not present a problem (actually he argued that in > his position as a politician while in his textbook he presents the standard > argument), but he did seriously argue that capital controls would solve the > world financial problems. He has taught where? Yale, Princeton, Stanford, > Columbia. He has won what? JB Clark, and Nobel. >
