economics and deconstruction
So, last week, I presented at the Oliver Williamson seminar on institutional analysis, based in the Haas School of Business at UC-Berkeley. (This week, I presented for Labor Studies here at IU. How’s that for variety?) It was a great experience and a smart crowd–predominantly made up of economists, and playing by economists’ rules for talks. I was glad to make it through the bulk of the material I wanted to share, and thankful that the intellectual sparring (which I even mildly enjoyed) wasn’t hostile. I heard “we don’t usually get sociologists” several times. I was actually surprised that the worlds of “business and public policy” (primarily economists) and “management of organizations” (more psychologists and sociologists) don’t overlap so much, at least in this particular setting.
One side reflection….
…Economists are pretty damn quick and agile when it comes to using notions about signaling and agency theory to undercut arguments about cultural categories in markets.
Here, that occurred when I talked about Love and Kraatz’s interesting finding that corporate downsizing in the 1980s had negative effects on firms’ reputations (relative to their competitors). Love and Kraatz show that these effects are robust to controls for financial and market performance and argue that they represent an evaluation of firms’ “character” and trustworthiness. It’s a nice paper and interesting argument, which differs from neo-institutionalist lines about conformity with the dominant institutional logic (in this case, of shareholder value). The economist counter-argument was that downsizing is really a signal that the firm knows it will be in trouble in the future–and therefore provides valuable information about the firm’s market value. This isn’t picked up in measures of market performance because it’s really a forecast of performance to come, not a reflection of curent performance.
In a discussion a few years ago, something similar happened when I used Zuckerman’s ”categorical imperative” findings to demonstrate the effects of legitimacy. Then, the counter-argument, if I remember correctly, was that the real problem with firms that don’t fit the expected categories is that they are scattered in such a way that generates agency problems that ultimately devalue them.
My goal is not to argue about which interpretation is right. In my view, these two papers are super-high quality and go to great lengths to establish their findings. The point is that it’s amazing how quick one can be to undermine a rigorously developed argument with a wave of the hand. From one perspective, this could be an indication of the power of a strong paradigm. But I think it also reflects a tendency toward deconstruction in that paradigm…and I mean this in something not too terribly far from the Derrida/Foucault sense. All that is solid melts into thin air. Arguments become increasingly hard to operationalize, models become impossible to properly specify, and therefore more falls back on the paradigmatic assumptions. My sense is that sociologists are more pragmatist in their orientation: Build with what you have; talk, talk, talk to sort it out.
Just a scattered thought, which maybe has implications for Mark’s earlier post about org theory and institutional economics.
Next step, coming soon…a more substantive post….no more mentions of Williamson, I promise.
The point is that it’s amazing how quick one can be to undermine a rigorously developed argument with a wave of the hand. From one perspective, this could be an indication of the power of a strong paradigm. But I think it also reflects a tendency toward deconstruction in that paradigm … All that is solid melts into thin air. Arguments become increasingly hard to operationalize, models become impossible to properly specify, and therefore more falls back on the paradigmatic assumptions.
Or, as a prominent economist quoted in Marion Fourcade’s book puts it,
Kieran
February 26, 2010 at 12:51 am
From the (likely) horse’s mouth:
The reddest Red-Dyed Marxist Dogmatist and truest True-Blue Chicago Price Theorist are more or less indistinguishable when it comes to the perfect insulation of their core view of the world from any prospect of empirical refutation. (As an outsider you might think this a matter of sheer ideology, but from their respective points of view it flows more or less directly from pure scientific principle. This is a further point of similarity.) There is always some way, however hard it may be for the uninitiated to discern, that the needs of Capital or the workings of the Market are manifest in the ebb and flow of observed events. If you fail to see it, you’re just not looking hard enough. If you think I’m being unfair, consider Casey Mulligan engaged in just this task recently, as he strives to explain away the financial crash of 2008 as a rational anticipation of, and reaction to, the labor market distortions to be expected upon the future election of a Democratic president.
Kieran
February 26, 2010 at 1:12 am
Well, I don’t know if it’s specifically an economist thing. It’s more like “academicism”: to demand perfect data, with perfect inferences, with all possible controls, etc. Of course, economists suffer from this disease the worst because they have such a conceptual tool kit that makes it easy to spin out crazy stories that appear to impugn the main argument. But you can find it in most disciplines. Psychologists demand perfect experiments, sociologists demand more and more “meaning” and “context.” The mark of intellectual maturity, I’ve always thouhgt, is appreciating genuine scientific progress even when the work is flawed and imperfect.
fabiorojas
February 26, 2010 at 2:22 am
Casey Mulligan in a class by himself. This is the same fellow whom Milton Friedman, of all people, had to inform that there are indeed some some situations such as the academic “market” that are not a free market in the economic model sense.
OS
February 26, 2010 at 2:28 am
It’s more like “academicism”: to demand perfect data, with perfect inferences, with all possible controls, etc.
I know what you mean. But there’s more at work here than that, I think, because the relevant attitude often leads not to a desire for more data so much as a kind of principled indifference to the data as such, thanks to the permanent possibility of generating some auxiliary hypothesis that saves the theory.
Kieran
February 26, 2010 at 2:32 am
Agreed, Kieran. It’s really a form of mental closure. I think that’s why I’ve shifted a bit since I was a grad student. When I was in grad school, my main response to papers was “have you considered [crazy alternative/specification X]?” I’m pretty guilty of the game I’m criticizing.
I still do that somewhat, can’t shake the habit completely. But now I make a concerted effort to ask what have I learned, even if the data/theory isn’t perfect, or the person can’t disprove all possible crazy hypotheses. I now realize how incredibly hard proving anything is. Even getting a simple correlation is a major accomplishment with some research.
fabiorojas
February 26, 2010 at 3:27 am
A philosopher of science might say this is because you are so vested in your own model it’s hard to think about this issue from another point of view. Just because something is “rigorous” in one discipline doesn’t mean it will stack up in another.
Most of economics these days is anyway empirical, focusing exactly on the difficult issues of how to test these sorts of ideas. Frankly we come up against this same problem all of the time–economists are so smart they can rationalize any sort of behavior. Especially now that they have behavioral models to play with.
The advantage we have is that outsiders can accept quantitative results even if they don’t buy the theory. But it’s harder to accept qualitative research without also accepting the biases and intuitions of the insiders.
Thorfinn
February 26, 2010 at 3:34 am
“The advantage we have is that outsiders can accept quantitative results even if they don’t buy the theory. But it’s harder to accept qualitative research without also accepting the biases and intuitions of the insiders.”
Thorfinn, that ain’t true at all about how it’s easier to accept quantitative research. I’ve seen some model estimates that are so complex that I have no intuition at all about how they were done. Bascially, anything can be made so opaque that we have to take people’s word for it.
fabiorojas
February 26, 2010 at 5:03 am
Hmm…This discussion is a bit curious since it seems to be premised on a Popperian falsificationist model being the correct characterization of how science works. But the bulk of post 1960s Philosophy of science is all about how you to try to come up with normative epistemic standards while accepting the fact that models are under-determined by the evidence, there is no real demarcation line between theoretical terms and observational statements, etc. (for some Philosophers, this of course spells the end of normative Philosophy of Science). So the difference between economists, Marxists and sociologists cannot be that they have models that they refuse to confront to the “recalcitrant” facts of experience, and we (non-Marxist, non-rational choice sociologists) are the brave soldiers who stick our necks out.
In that respect, I believe it would be better to come up with a way to redeem the intuition that there is something deeply wrong with the way that economists go about doing science, within the parameters of a view of scientific practice that does not take a naive Popperian falsificationist standpoint as the underlying norm. Lakatos tried to do this by distinguishing between progressive and degenerative research programs. In fact (speaking of Marxists), Burawoy has an ASR article in which he tries to defend the view the Marxism is not a degenerative research program from a Lakatosian perspective (distinguishing core tenets from more peripheral commitments, etc.).
In any case, I think that there is indeed a difference between the willingness of sociology to entertain weak models and mess around with research and the a priorism of economics. I also think that we could characterize this difference in a way that accepts that everybody is trying to surround their core theoretical tenets with a protective belt of ad hoc hypotheses, but some epistemic communities are actually able to do this is a way that results in the long-run production of novel insights more effectively than others.
Omar
February 26, 2010 at 12:39 pm
[...] In Uncategorized on February 26, 2010 by randwest http://orgtheory.wordpress.com/2010/02/26/economics-and-deconstruction/#comments [...]
When sociologists invoke philosophy of science to prove they are not economists… « Thoughts on Philosophy of Science
February 26, 2010 at 3:03 pm
since it seems to be premised on a Popperian falsificationist model being the correct characterization of how science works
Well, that’s certainly not my view. I guess I was motivated to present it in that framework in part because of the complementarity of Tim’s observation (from the outside) with Akerlof’s (from the inside), and the latter was couched in terms of falsifying the null, etc. Which is to say that even from the inside this practice can look a rather odd, and wasn’t meant to suggest that people on the sociology side were the ones bravely confronting recalcitrant facts. As we know, in sociology the parallel bad habit is to load your theoretical framework with a plenitude of variables connected to one another by so many relations of co-constitution, feedback, and overdetermination that you can say literally anything you like.
Kieran
February 26, 2010 at 4:03 pm
This is a typical thread from a group of young organizational sociologists who do a great deal of qualitative research and whose normal unit of analysis is a population. They are smart, engaged, and have economics envy that manifests itself in different ways.
Funny not because I don’t have the faintest clue as to how to do qualitative research, but because I just don’t feel very young lately.
Economics Envy can however, indeed manifest itself in different ways. For instance, we can take Anna Freud’s formalization of the various “defense mechanisms”:
(1) Repression: “What’s Economics again?”
(2) Reaction Formation: “I just looove Economics.”
(3) Displacement: “I don’t have Economics envy. That’s Fabio’s problem.”
(4) Projection: “I dont’ envy economics. Clearly economists are jealous of me.”
Omar
February 26, 2010 at 5:29 pm
Don’t forget (5) Pique: “If you love economics so much, why don’t you marry it?”
Kieran
February 26, 2010 at 5:52 pm
(1) Repression: “Who’s Omar again?”
(2) Reaction Formation: “I just looove Omar.”
(3) Displacement: “I don’t have Omar envy. That’s Teppo’s problem.”
(4) Projection: “I dont’ envy Omar. Clearly Omar is jealous of me because of my hard work.”
fabiorojas
February 26, 2010 at 6:45 pm
(5) Pique: “If you love Omar so much, why don’t you marry him?”
I tried, but he’s taken!
fabiorojas
February 26, 2010 at 7:05 pm
[...] in favor of your null hypothesis Another great post on orgtheory. I think the takeaway is that when it is really hard to prove something conclusively people fall [...]
Biased in favor of your null hypothesis « Permutations
February 27, 2010 at 8:22 pm
There’s a tradeoff to be observed in here somewhere. As some kind of a pragmatist (still figuring that out), it seems to me almost a matter of definition that blinders come with having a clear focus and definite point of view. Paradoxically, we tend to think of having blinders as bad, but having a clear focus and a definite point of view is often viewed as good, especially by academics. Speaking personally, I don’t really want to wear blinders (at least not all the time), but I don’t want to lack focus or a point of view either. Doing work that’s geared for journals will does that to one, don’t you think? Anyway, from this perspective, it’s not just that one school wears blinders but another doesn’t.
So, whenever we find two disciplines that exhibit difference in field of vision, there’s probably an opposite difference in focus and clarity of perspective. Thus, it seems to me that one has to judge these things by asking, what does this combination of focus (narrow versus wide) and point of view (mostly one or several) allow in terms of doing something that’s interesting.
Personally, I see exciting possibilities for doing new things by following up the focus and point(s) of view that I find in org theory.
mtkennedy
February 28, 2010 at 12:11 am
Why aren’t both interpretations correct?
Troy Camplin
March 1, 2010 at 9:36 am