sorry, peter klein, social science is a fuzzy business

Evil twin conspirators Peter Klein and Nicolai Foss have been ragging on management scholars for using ill-defined concepts, like routines and leadership. When I read the post, I thought it was odd – aren’t all social science concepts a simplification of complex behaviors? What is democracy? What is a market? What is an organization? These are all broad, inherently fuzzy concepts, but it doesn’t mean it’s dumb to talk about them.

I was reminded of a valuable exercise that Don Levine once did in a graduate seminar. Thoroughly versed in the history of social thought, he could take nearly any concept offered by students and then give a long discussion of how many very smart people had argued over its definition, formalization, and operationalization. I even offered my own example: among mathematicians, it’s recognized that there are multiple and incompatible definitions of things like sets and numbers. True, it may not matter to a typical mathematician, but there’s a fundamental ambiguity about basic math that allows one to logically construct some pretty exotic version of the integers.

Back to social science, I’d argue that the underlying concepts of any social science are inherently vague. Formalizing them allows you to ignore the ill-defined nature of the process so you can make a clean academic model. It doesn’t address the underlying mess. Here’s an example to twink an economist like Peter Klein: price. If you define price as a real number (or function) then it’s pretty clear. Heck, economists even have the “law of one price,” which says if things are efficient, identical products cost the same.

But if you start with “what you have to give to get X,” then things get hairy pretty fast:

• in a barter system, there is not a single number, but a list of exchange rates with different commodities.
• in many tribal cultures, there are significant gift economies, where there is not an obvious, or stable, “price” or exchange ratio, just some generalized expectation of reciprocal obligation
• Many markets have haggling, the “price” depends not on information about supply and demand or other economic information, but on personal ability to argue. In other words, sticker price, or a single price, is sort of meaningless, at best you have a range of prices depending on how hard people push various personal interactions.
• Some markets are so differentiated that producers offers prices based on minute personal characteristics that leads to a vague price. Think car dealers – advertised price, dealer sticker price, haggled price, price conditional on subtle variations in the car, and price contingent on local markets conditions can be substantially different. In this case, price is a Jackson Pollock splatter, not a well defined number.
• there seems to be price dispersion in some markets, and this is the subject of research by many economists

We can define away the ambiguity of the situation by saying “there is a single price – if there is no friction, everyone has identical information, if we stick to intra-temporal comparisons, and equivalent abilities of buyers and sellers to bargain in identical ways.” Well, of course, but you’ve just defined aways alot of interesting things about prices! So, Peter amd Nicolai, I’ll stick with my fuzzy management concepts.