Article in the Register. Caution: snarky author, forgets to mention that the female economist he’s criticizing has three male coauthors, while he’s happy to trash her math abilities with the implication that they are a natural aspect of her being female. However, the topic is interesting, and I wish I had time to check the claims against this research (which made it to Science, though, so presumably the grievous errors that the Register is pointing out might not be quite so grievous, unless the review process at Science has gone to the dogs).
Update: the Economist also has an article on this. It seems to be as high-quality as the typical Economist article, which is high indeed. I may just stop reading the Reg, even if their articles are often amusing.
Prompted by a query from our friend Daphne, I got and started reading “The Mind of the Market” by Michael Shermer. While I love that he is the founding publisher of Skeptic magazine, I think in this book he wanders widely in topics related to evolutionary theorizing and economics, and sounds fairly strident while not really understanding the economics and game theory he talks about all that well. One particular jolt I received was to discover in a single paragraph Nash equilibrium and Pareto efficiency discussed as just two different equilibrium notions. This from someone who has written before a whole book about evolution and ethics, and certainly ought to know better.
So did I bring the book with me to NYC on our day trip two days ago to read on the train? Nope, I also had Tim Harford’s “The Logic of Life” on hand, in the trembly tall waiting-to-be-read pile. I took that with me and so far am loving it. Harford knows economics quite well and writes beautifully. He adopts a notion of rationality much weaker than the one standard economics assumed all these last few decades for homo economicus. He then proceeds to remind us that rats act rationally (in this sense) in laboratory experiments, mentally disturbed individuals do, teenagers do (even when considering sex!), and just about everyone else, especially when engaged in familiar activities, which is to say, most of the time. This idea of rationality is fine: maybe it will even be a palliative to the urge I have to wave quote signs around the word “rationality” when mentioning it in my university lectures. Strange to believe, economists and logicians have known the extreme concept of rationality, that supposedly is the main property of homo economicus, to be very difficult to keep away from logical contradictions and paradoxes (or to keep anywhere near applications of economics to real life), and yet have been slow to build formal theories embodying the various versions of this weaker rationality that might even work to characterize real behavior. But economists have certainly started doing so, and Harford’s book is an excellent one to show the general audience of curious minds a survey of the progress so far. I am looking forward to finishing the book quite soon.
I finished this great book and passed it on to M. She is planning to write an article on online resources for psychology teachers, and she certainly can use some of these ideas and incidentally steer her readers to Shirky for more. Last night she watched his online video with a lecture on this (which I had discovered some time ago in lifehacker.com) and really liked it.
So what’s so great, again? Following up on my previous post on this book, I’d say the apparent ease with which Shirky finds good nuggets to generalize into themes in the “Web 2.0” flux that’s happening all around us so very, very fast. The concluding chapter that talks about the “promise”, “tool”, and “bargain” made a lot of things I half-understood before quite clear in my mind.
I’m not telling much more: it’s worth reading it for yourself, o reader of mine!
Shirky has some good ideas and explains them so well that they seem obvious. The book is not written as a scholarly monograph, yet it has good argumentation. A brief encapsulation of Shirky’s thesis follows.
Ages ago (in 1937) Ronald Coase came up with a framework for thinking about firm formation by making transaction costs the focal point. Shirky says that the internet has made the transaction costs of organizing ad hoc groups of people so small that people can now achieve things that a few years ago required massive expenditures of resources by large, institutionalized, organizations. These days, even huge organizations such as Microsoft or the media companies find it impossible to compete with some open source efforts, because open source can easily afford making mistakes. Indeed, it prospers by exploring a tremendous number of ideas and simply ignoring the unproductive ones. (Those who have read the book can tell that I am currently completing chapter 10 from the emphasis here.) The ability of individuals to casually organize and use small contributions by many combines with the ability to tolerate errors into something very powerful, for good but also for evil.
I don’t think all the ideas he expounds are original with Shirky. Many seem to have been in the air for a while now. I wish I could follow through on a vague citation he makes in an endnote on page 317 to the Harvard Business Review, but my online searching has not found the article he credits there. It does appear that the formal modeling of some of these ideas in the fashion of economics could be carried out more than it has so far.