Innovation,unemployment and subjective well-being

These days, everybody is talking about the losers of globalization and how they made Trump and Brexit happen. People in industrialized countries lose their jobs due to offshoring and international competition, which leads them to vote for right-wing populists, so the common narrative goes. That might not be the full story though. Continue reading Innovation,unemployment and subjective well-being

How important is social mobility for innovation and growth?

Raj Chetty is a rising star in economics. After graduating from Harvard at the age of 23, he became an assistant professor at Berkeley, where he got tenure only four years later. Since then he won the John Bates Clark Medal in 2013 and moved to Stanford in 2015. His latest research is concerned with the question of upward mobility in society and how it affects innovation and economic growth. Continue reading How important is social mobility for innovation and growth?

This isn’t a scientific revolution

Two weeks ago I’ve been at the Annual Meeting of the Academy of Management (see this post). And you might have guessed, big data was a huge topic. There is tremendous potential for the use of data science in the business world. Continue reading This isn’t a scientific revolution

Theory Horse Races

I just came back from the 76th Annual Meeting of the Academy of Management in Anaheim, California. The conference was great, not just because of the location. Lots of participants and lots of interesting sessions. Every year they have “professional development workshops”, which are a great opportunity to learn, not only for young scholars.

I attended one of those workshops called “Writing Better Theory”. We all know that the standards for how to develop theory are quite different in management science compared to economics. Therefore I was particularly interested in this session. The panel consisted of very distinguished speakers, e.g., Lorraine Eden from Texas A&M University, who is former Editor-in-Chief of JIBS. They gave good advice on how to make your arguments more concise and develop a real contribution to the theory.

But I lost some sleep over one remark by Alvaro Cuervo-Cazurra, reviewing editor of JIBS and AIB fellow (okay, I was also severely jet lagged). He urged people not to run what he called “horse races” between conflicting theories, but rather to stick to one paradigm and develop your arguments from there. I recall his point like this. If theory 1 predicts A and theory 2 predicts B, you might be inclined to conduct an empirical test, and if the data (clearly) show B you will discard theory 1 in favor of theory 2. According to Cuervo-Cazurra this is a bad idea because of two reasons:

  1. Either you encounter reviewer one who always thought that theory 1 was wrong to begin with and who will think your paper is obvious.
  2. Or, there will be reviewer two who strongly believes in theory 1 and who will find every single flaw in your study in order to reject your paper.

Take a moment to let that sink in… This strategy might actually increase your chances to publish, especially if you’re new in the profession. But running empirical tests in order to falsify theories and to discriminate between competing explanations, isn’t that exactly what science is about? What other way is there to “keep your house clean” and to prevent the accumulation of more and more theories with low predictive power?

I was too shocked to raise a question anymore. But I could have simply gotten something wrong here. After all it was early in the morning. Anyways, I would love to hear your thoughts on this!

Econ 101: The merits of a market economy

The efficiency of a market-based allocation of goods is something taught very early on to students of economics. But once in a while it’s good to remind ourselves of it, especially since it sounds like propaganda in the ear of some. Ask yourself, in which bus shelter would you rather prefer to wait for the bus. The new and shiny one on the picture above where you’re exposed to the latest fashion advertising. Or the neutral one below? Continue reading Econ 101: The merits of a market economy

The problem with classic texts

Over at Orgtheory.net Fabio Rojas expresses the common problems people (not only me, thank god) seem to have with reading the classic texts. They are mostly communication problems. Back in the days it was fashionable to write wordy treatises, much in the style of the classic philosophical texts. Today, short and concise papers that bring across one point at a time are much more appreciated. And if you have to write a thick book then better make it fun to read.
Another point is the difference in language use. It can change quite dramatically over time and sometimes it’s hard to grasp what people meant hundred years ago. That’s especially true when you’re a non-native but reading Kant in German is definitely no pleasure either to me.
However, there is probably too much half-knowledege out there about what the classic texts actually say. Because people are copying from people who haven’t read the texts either. Work on the history of economic thought is therefore much appreciated. In the meantime I should get off my lazy behind and at least start reading Schumpeter.

orgtheory.net

Marko Grdesic wrote an interesting post on why modern economists don’t read Polanyi. He surveyed economists at top programs and discovered that only 3% had read Polanyi. I am not shocked. This post explains why.

For a while, I taught an undergrad survey course in sociology with an economic sociology focus. The goal is to teach sociology in a way interesting to undergraduate business and policy students. I often teach a module that might be called “capitalism’s defenders and critics.” On defense, we had Smith and Hayek. On offense, we had Marx and Polanyi.

And, my gawd, it was painful. Polanyi is a poor writer, even compared to windbags like Hayek and Marx. The basic point of the whole text is hard to discern other than, maybe, “capitalism didn’t develop the way you think” or “people change.” It was easily the text that people understood the least and none…

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“Immigration and the Diffusion of Technology: The Huguenot Diaspora in Prussia,” E. Hornung (2014)

Initially I wanted to write about this interesting paper here. One part of my family descends from Huguenot immigrants to Königsberg/Prussia. So it has a very personal notion to me too. But then found out that Kevin Bryan already has a post about it to which I have not much to add.

A Fine Theorem

Is immigration good for natives of the recipient country? This is a tough question to answer, particularly once we think about the short versus long run. Large-scale immigration might have bad short-run effects simply because more L plus fixed K means lower average incomes in essentially any economic specification, but even given that fact, immigrants bring with them tacit knowledge of techniques, ideas, and plans which might be relatively uncommon in the recipient country. Indeed, world history is filled with wise leaders who imported foreigners, occasionally by force, in order to access their knowledge. As that knowledge spreads among the domestic population, productivity increases and immigrants are in the long-run a net positive for native incomes.

How substantial can those long-run benefits be? History provides a nice experiment, described by Erik Hornung in a just-published paper. The Huguenots, French protestants, were largely expelled from France after the Edict of Nantes…

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