Thursday, September 24, 2015

Disruption Disrupted

The Chronicle of Higher Education examines challenges to Clay Christensen’s theory of disruption. His The Innovator’s Dilemma has become one of the bestselling and most influential books on business strategy.  The historian Jill Lepore wrote an interesting critique of Christensen’s work   for the New Yorker last year. Now, Andrew King  and Baljir Baatartogtokh have a new paper in MIT Sloan Management Review, asking “How Useful is the Theory of Disruptive Innovation?” King and Brent Goldlfarb also have evidence of broader problems in empirical research in management (the problem they examine is not unique to management research). The Chronicle article is interesting both on the specific issue of Christensen’s theory but also on the difficulty King faced in publishing  a challenge to Christensen’s work:

“King and Tucci presented their findings at a conference in 1999. King recalls sitting at a restaurant soon after and a well-known figure in the field approached, shook his hand, and said, "You’re the guy who burst Christensen’s bubble." But it didn’t turn out that way. "We wrote a couple of papers, which we had to tone down a little bit because of the referees," says Tucci. The paper — working title: "Wrong. Wrong. Wrong." — was too polemical, they were told. When it finally appeared in Management Science, in 2002, the article had been smothered in theory and jargon. The published title: "Incumbent Entry Into New Market Niches: The Role of Experience and Managerial Choice in the Creation of Dynamic Capabilities." As Brent Goldfarb, an associate professor of management at the University of Maryland business school and friend of King, says, "You have to look really hard to realize King and Tucci slaughtered Christensen." - See more at:

The historian's craft and economics

My paper (with Mary Eschelbach Hansen) “The historian’s craft and economics” is now available on First View at the Journal of Institutional Economics:

History refers both to the past and to the systematic study of the past. Attempts to make a case for history in economics generally emphasize the first definition. There are benefits from increased attention to the past. This paper argues that significant benefits can be gained from increased attention to the systematic study of the past, the historian's craft. The essence of the historian's craft is the critical evaluation of sources. Failure to critically evaluate sources has the potential to lead to erroneous conclusions, whether one is using historical documents or more recently created data.

Saturday, August 29, 2015

Economics really needs better critics

Per Byland recently complained that economists had killed economics

What we have seen over the course of the last eighty years is a systematic dismantling of the contribution of economics to our understanding of the social world. Whatever the cause, modern economics is now not much more than formal modeling using mathematics dressed up in economics-sounding lingo."
I’m not sure that Bylund and Michael Lind would agree on much, but Lind also has seen the destruction of economics

 Before World War II, economics — the field which had replaced the older “political economy” — was contested between neoclassical economics, which sought to model the economy with the methods of physics, and the much more sensible and empirically-oriented school of institutional economics. Another name for institutional economics was the Historical School. After 1945, the institutional economics associated in the U.S. with John Kenneth Galbraith was purged from American economics faculties, in favor of the “freshwater” (Chicago) and “saltwater” (MIT) versions of mathematical economics, which focused on trying to model the economy using equations as though it were a fluid or a gas.

Either Bylund and Lind are completely out of touch with what economists are doing now or I am. Their critique of economics is an old one. I’m not sure it ever really applied, but it does not now. The American Economic Review and other top journals are full of empirical research, not lots of new papers about General Equilibrium.   

What sort of work do economists admire? Here are the John Bates Clark medalists since 1990. How many are known as pure theorists and how many are known for the empirical research?

Bylund and Lind seem to think that economists all aspire to be Samuelson, Arrow or Debreu. Yes formal models with lots of imposing math are still to be found, but more often than not they lead in to empirical research.

Are there things that economist can do better? Yes. I, for instance wish that economists would give as much attention to the evidence that they use as they do to the formal model and the choice of econometric techniques. On the topic, Mary and I have a paper on “The Historian’s Craft and Economics” that I am happy to say was just accepted by Journal of Institutional Economics. I also wish they would give more attention to history generally, but I’m not really an unbiased source on that topic. 

Micro economic history and some digital history too

William Easterly, Laura Freschi and Steven Pennings argue for the benefits of micro economic history of development by examining the development of one block in lower Manhattan over more than three hundred years. They have produced a fascinating paper and website.

Round table on Edward Baptist's Half has Never Been Told

The September Journal of Economic History has a round table of reviews of Edward Baptist’s book The Half Has Never Been told, with reviews by Alan Olmstead, Jonathan Pritchett, Trevon Logan and Peter Rousseau. They each address different aspects of the way that Baptist misrepresents the historiography of American slavery and makes things up. Thanks to Alan Olmstead for mentioning one of my blog posts on the book. Many of the points noted in these reviews  are similar to ones that I and Pseudoerasmus made about the book shortly after it came out, around the same time it was getting glowing reviews in places like the New York Times Book Reviews. I found Logan’s review particularly interesting when it stepped away from what is typically thought of as economic history. He concludes

I think as an economic historian I was so offended by the books portrayal of economic historians I may have missed some of the bigger problems. 

Tuesday, August 18, 2015

Tariffs and the Civil War, or 95% of All Statistics Are Made Up

A recent letter to the editor of our local paper argued that secession and the Civil War were caused by high tariffs not slavery. The Confederate states were rebelling against high taxes and big government. Apparently, they were really just Reagan Republicans or maybe even libertarians (slaveholding libertarians). The author of the letter made the claim that the South paid 75 percent of the tariff revenue in 1859. I thought the claim was so outrageous  he must have just made it up. It turns out you can find this claim all over the internet. It turns out it even has academic credentials behind it. Some people attribute it to Walter Williams, but he appears to have gotten it from Thomas Di Lorenzo, who attributed it to Frank Taussig’s The Tariff History of the United States. Di Lorenzo, however, did not provide a page citation. I suspect that he did not provide a page citation because one does not exist. If someone can find this in Taussig please let me know.
In any case, it is not true that most revenue came from Southern ports. A small fraction of tariff revenue came from Southern ports. In 1860 the Secretary of the Treasury reported the amount of revenue collected in each collection district between 1854 and 1859. (Sen. Ex. Doc. No. 33 36th Congress 1st Session). Looking at 1857, for instance, one finds that total revenue was $64,171,034. Most of the revenue, $42,510,753, came as it did every year from a single port: New York. The most important port in the South was New Orleans, which brought in a little more than $3 million, less than half as much as Boston. Southern ports were not even close to being the most important source of revenue.
There is no mystery as to why Southern states seceded. They issued secession proclamations explaining their actions. South Carolina was the first to secede, and the state’s proclamation does not mention tariffs. It is entirely about the perceived threat to slavery. It declares that 

A geographical line has been drawn across the Union, and all the States north of that line have united in the election of a man to the high office of President of the United States, whose opinions and purposes are hostile to slavery. He is to be entrusted with the administration of the common Government, because he has declared that that "Government cannot endure permanently half slave, half free," and that the public mind must rest in the belief that slavery is in the course of ultimate extinction. 

Apparently we are to believe that they were simply hiding their true motivation, opposition to tariffs. I wish modern defenders of the Confederacy were as honest as its original defenders.

Thursday, August 13, 2015

History, Facts and Life Expectancy

Earlier this week on twitter Peter Bent mentioned Richard Yeselson’s review of Steve Fraser’s Age of Acquiescence: the Life and Death of American Resistance to Organized Wealth and Power in Dissent. One of the claims made by Fraser, and repeated by Yeselson, is that, although life expectancy increased during the Gilded Age, “it is also the fact that the life expectancy of white males born during or after the Civil War was ten years less than it had been a century earlier” (Fraser, 2015: 39). He provides a citation to Centers for Disease Control, National Center for Health Statistics. That is the entire citation. It is not clear whether it refers to a publication, a website, or personal correspondence. I checked the website for the Center. They do have statistics on life expectancy, but I only saw ones that went back to 1900. Historical Statistics of the United States has estimates of life expectancy, but they only go back to 1850. They show that life expectancy at birth increased from about 38 in 1850 to 40 in 1860 and 50 by 1900. If these estimates are reasonable and Fraser is correct, life expectancy at birth would have been between 50 and 60 years in the late 1700s.
There is one estimate that I know of life expectancy in the 1700 that is this large: Fogel, using family histories, estimated that life expectancy was greater than 55 years in the mid-1700s.(Robert William Fogel, "Nutrition and the Decline in Mortality since 1700: Some Preliminary Findings," in Engerman and Gallman Long Term Factors in American Economic Growth.

Fogel’s graph appears to indicate that life expectancy did not return to its mid 1700s level until the middle of the twentieth century. Personally, I’m skeptical of the accuracy of these estimates. They are much higher than other estimates. In the late 1700s, Wigglesworth estimated life expectancy in the mid 30s in Massachusetts in the late 1700s. Recently, Becker estimated life expectancy in the 1700s to be around 40, using data on people who attended Yale. In addition, Fogel notes that members of the British peerage had a life expectancy of only about 40 years in the late 1700s. It should also be noted that Fogel’s estimates of large decreases in life expectancy are consistent with estimates of large decreases average height, but there are good reasons to question the validity of that conclusion as well. If there were no large decreases in welfare reflected in average height, does it make sense that there would have been large decreases in life expectancy. In short, much of the available evidence seems hard to reconcile with very high life expectancy in 1700s America.

 I do find it plausible that there may have been a number of factors in the early nineteenth century that could have adversely affected health. Increased urbanization almost certainly increased the spread of disease. In addition, there were new diseases to spread, like cholera.

With some luck and a lot of work we will probably have more confidence in our knowledge of health and welfare in the eighteenth and nineteenth centuries. In the meantime, I am inclined to believe Becker’s estimates for the 1700s. That would mean that life expectancy increased very slowly during the nineteenth century, and then more rapidly after about 1900 as cities began to invest in sewage removal and water purification.  Chapter 3 of Higgs Transformation of the American Economy (still my favorite book on American economic history and now free from the Mises Institute) describes the impact of these improvements.

What is the point of all this rambling on about what we don’t know? The point is precisely that, we don’t know. I know it’s a lot to ask, but historians should take a critical approach to the evidence. Let people know when something is still up in the air. There is really nothing resembling a fact regarding mean life expectancy in the 1700s in America. There are a number of widely varying estimates. Don’t tell people we have “facts” that we don’t have. There are more, and more important, puzzles in history than what happened to the Roanoke Colony. Perhaps I’m getting old and cranky, but it seems to me that I have seen a lot of historians lately playing fast and loose with the evidence in order to make their point. And many of their reviewers do the same: they evaluate the book on how well it conforms to their preconceptions.