two performativity questions
These questions came up during orgtheory training last week. I did not have good answers:
- A lot of performativity research focuses on stock options, less on futures. Why?
- Are there good studies of performativity of theory that aren’t about the economic profession?
My lame answers: 1. Everyone is taught Black-Scholes first, but no reason performativity theory couldn’t be applied in other types of markets, 2. economics is the most influential intellectual group that has a theory of social behavior that is inaccurate (which makes performativity possible) . Post your answers in the comments.
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I’ve been thinking a little bit about Foreign Policy and Intl. Relations Theory. The reason is that big-shot IR scholars go into government fairly often (Krasner, Rice, etc.). On the other hand, there are all kinds of constraints on the ability of IR scholars in government to set policy in the most “optimal” manner vis-a-vis foreign policy, but I do feel like IR Theory has had an effect on how governments behave – the example that comes most easily to mind for me is brinksmanship and “mutually assured destruction,” as influenced by Thomas Schelling and some of the people at RAND.
Does that sound like a possible instance of performativity, or am I misunderstanding the concept?
andy
April 17, 2012 at 12:12 am
In re 2: I can think of some excellent examples of work that I would fit into the performativity tradition that is not about economics as a discipline. For example, Espeland and Hirsch 1990 and Carruthers and Espeland 1991 look at how various accounting practices (re)constitute the corporation with significant effects resulting from technical decisions, e.g. an accounting rules change helping to end a merger boom. MacKenzie also looks at accountants in Material Markets.
Confusing the issue a bit, for Callon, accountants would still fit into the performativity of economics, because Callon’s definition of economics is broader than the narrow confines of the discipline with that name. For example, Cochoy’s work on marketing would fit here.
I think outside of economic contexts, folks might use different language for similar phenomenon. For example, Ian Hacking’s work on dynamic nominalism looks at how psychological diagnoses – “multiple personality disorder”, “autism”, etc. – constitute new kinds of people. Broadly speaking, the story here is the same as the performativity of economics.
Dan Hirschman
April 17, 2012 at 12:19 am
How about the huge number of papers on performativity of social network research? I don’t know of anything on the topic, but the performativity of IP law must have been written about – perhaps something from the world of fashion, where there is a lot of heterogeneity over time and across countries on what is protected and what can be freely copied. As an example, making a clothing company logo an important part of the design (think Louis Vuitton bags) is a deliberate choice that came out of laws which protect trademarks but which do not offer copyright to other design decisions.
Kevin Bryan
April 17, 2012 at 4:00 am
“2. economics is the most influential intellectual group that has a theory of social behavior that is inaccurate (which makes performativity possible)”
in contrast to sociology, which is the least influential intellectual group that has a theory of social behavior that is underspecified and intractable (which makes performativity impossible)
(but not really)
gabrielrossman
April 17, 2012 at 1:05 pm
In re 2.: public opinion research is a reasonable case: http://onlinelibrary.wiley.com/doi/10.1111/j.1468-4446.1999.00367.x/abstract
andrewperrin
April 17, 2012 at 2:44 pm
Because the formula for pricing futures is incredibly straightforward and there isn’t much room for performativity to occur?
Andy
April 17, 2012 at 9:15 pm
Andy, doesn’t that mean it’s a good place for performativity? If the Black-Scholes formula indicated a “correct” price and it’s not there, won’t market players then produce that price because it is easy to understand?
fabiorojas
April 17, 2012 at 9:17 pm
I am not quite sure that I understand your reply. My understanding of the performativity theory as applied to options is that prices were all over the map before Black and Scholes (1973) and then converged to the price in that paper. When markets discovered that volatility is not a normal distribution (e.g. 1987 market crash) then prices changed again. For stock futures, the formula is simply f = s e^(rt), i.e. the futures price equals the discounted current spot price. This is not an approximation like B-S, it is exactly correct since otherwise there is an arbitrage opportunity. There is no central paper showing this equivalent in stature or fame to 1973 Black/Scholes that I am aware of. Looking at my Rubinstein’s History of the Theory of Investments, he cites a 1923 paper by Keynes discussing futures prices.
The complications with futures occur with physical commodities where you incur storage costs when trying to arbitrage. But there is no formula about this with the centrality (or I assume performativity power) of Black-Scholes. I am not a futures trader so I could be wrong, though.
Andy
April 18, 2012 at 1:19 am
Fabio, the origin of performativity from ANT theory makes finance the starting point for this idea that economics is performative. Callon followed the rest of science and technology studies into finance and took Latour’s Actor-Network theory with him, developing the notion of agencements (the traditional ANT framework) as the subject and “defined” the concomitant success and failure of these cyborgs as “performative” success or “counter-performative” failures of the human-technological apparatuses. MacKenzie’s study of Black-Scholes is the central, and invaluable, empirical demonstration of this, unfortunately comic-strip-theory. definition of performance. As MacKenzie quotes Black, the prices followed Black-Scholes even when they never should have, like when an option was about to be retired. Specifically to your first question, Performativity theory in sociological studies of finance has really always been about futures, though this, I think, has always been a matter of who sociologists studying finance gained access to. But, MacKenzie’s research has made an incredibly strong case that Black-Scholes created options/futures prices.
As for the tradition of performativity, the best conception still comes from gender theory. No other subdiscipline in the social sciences has spent more time on how we learn to perform and how our performance affects our audience or ourselves than gender theorists. To understand where performance comes from and how it’s entrained in ourselves for others, gender theory is the best place to start. Following Goffman and Garfinkel, we know how to act in a way that makes sense to others, that plays by the rules and allows others to play by the rules too. The thing about performativity, for the scholars of gender and finance, is how we learn these rules (as young girls and boys or undergrads) and why these rules sustain themselves (how did Black-Scholes sustain the market for ~15 years until 1987)? Callon’s performativity theory is no where near these questions but, gender theory has been working on it since the first wave. Gender is a perfect example where an inaccurate, yet successful group of guys have proven themselves wrong, yet have made popular culture, media, and policy and continue to remake the world in their privileged system. My question is why has patriarchy performed so well for so long compared to finance’s measly two centuries?
Jason Radford
April 25, 2012 at 6:45 am
I recognize I should have supplied some sources for performativity research beyond derivatives and beyond economics.
Beyond Derivatives:
MacKenzie’s more recent article on the the credit crisis looks at the performativity and counter-performativity in the calculation of risk in securitization during the financial crisis.
http://www.sps.ed.ac.uk/__data/assets/pdf_file/0019/36082/CrisisRevised.pdf
Dobbin and Jung’s article on the role of Jenson’s agency theory in the 2008 collapse follows the performativity mold.
http://www.wjh.harvard.edu/~dobbin/cv/book_chapters/2010_Dobbin_Jung.pdf
Finally, Marion Fourcade’s new book Economists and Societies provides a comparative analysis of the co-construction of economics as a profession and practice in Germany, Britain, France, and the U.S.
http://press.princeton.edu/titles/8908.html
Beyond Economics:
There’s West and Zimmerman’s theory of performativity in the sociology of gender
1987 – http://blog.lib.umn.edu/clar0514/academic/west%20and%20zimmerman.pdf
2009 – http://files.adulteducation.at/uploads/accounting_doinggender__westZimmermann.pdf
Emily Martin’s article on how gendered theories of biology shaped research design and theories of germination is a great example of how theory performs and counter-performs in science.
http://www.visibleworld.net/cupajane/articles_people/martin.pdf
Claude Steele’s body of work on stereotype threat is another case where beliefs appear to be directly implicated in the performance of aptitude.
http://en.wikipedia.org/wiki/Stereotype_threat
I would also point to Kristen Schilt’s book “Just One of the Guys?” as a rich case of how changes in performance can fundamentally change the performances and beliefs of those around you.
http://www.press.uchicago.edu/ucp/books/book/chicago/J/bo9743256.html
Few of these authors engage the Actor-Network Theory/agencements side of Callon’s performativity argument, which I think is a shame, because it leaves us with less focus on the role technology and technological innovation plays. A major part of MacKenzie’s original analysis of options prices was the technological shift that allowed for more liquidity and more timely price calculations which allowed Black-Scholes price sheets to better reflect current prices and for traders to make more trades more often, making prices more reactive to arbitrage opportunities as they emerged. I think a part of the reason for this disconnect might be that Callon’s imagery in The Laws of Markets makes economists sound like cyborgs, closer to Iron Man or Doctor Octopus, as opposed to the Latourian image of scientists as leaders big labs performing increasingly sophisticated and controlled experiments. And, for reasons I don’t know, cyborg metaphors haven’t really been used since Donna Haraway.
Jason Radford
April 25, 2012 at 7:16 pm
Jan-Hendrik Passoth and I (Nicholas Rowland) have been working on some issues related to performativity in political sociology, political science, and STS related to state theory (RE: Jessop 1990). We’re working on a few papers regarding how trends in public administration contain elements of performativity drawn from state theory, in part, because states are often assumed to exist (but not just in theory) such that it is understandable for journalists, for example, to say things like “China just sent the US a clear message today …” Additionally, political theory has always been (RE: Bartelson 2001) a, as we often say, calamitous cocktail of both normative claims about what states should do and descriptive research about what states are/do. This blending of normative and descriptive elements makes state theory in political sociology and political science a potential well-spring for performativity research. We’ve made a few of these arguments in published work, most notably, our work on actor-network states: http://iss.sagepub.com/content/25/6/818.abstract , Personally, I like Andy’s first comment about Foreign Policy and IR … in fact, it nearly foreshadows an upcoming event at the London School of Economics this fall (shortly after 4S in Copenhagen): http://www.installingorder.org/promising-post-4s-conference-at-lse
nirowlan
April 26, 2012 at 1:29 pm