Voices in the Air

EconomicPrincipals.com began on March 17, 2002, with a view to providing sustained coverage of developments in the community of technical economics, for an audience of well-informed citizens who possess above-average curiosity about the subject. In its haste to be up and running, it just began.

Now it is time to take a breath and say something about it methods and goals. Its animating principle, as near as I can tell, is a mechanism called collaborative filtering. Of that, more in a minute.

A word first about what is filtered here, and filtered by the readers in their turn — that is, about the beat that EconomicPrincipals seeks to cover.

That something important goes on in universities has been a commonplace since Keynes’ memorable peroration near the end of The General Theory of Employment, Interest and Money in 1936.

“…The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are usually distilling their frenzy from some academic scribbler of a few years back.”

Often we think of these influences as emanating from a conversation among a few worldly philosophers engaged in lofty discourse over time about the tendencies of human history. And surely that is part of what economics is about.

But as Jurg Niehans notes, the flip side of the view that the past was an age of giants is the implication that the present is “an age of pygmies engaged in agitated babble.” This may not be the best way to think about what is going on today in economics.

Niehans is a retired theorist who wrote much the best history yet of post-war developments. In A History of Economic Theory: Classic Contributions 1720-1980, he places in perspective the contributions of major figures including John Hicks, John von Neumann, Paul Samuelson, Tjalling Koopmans, Milton Friedman, Kenneth Arrow and Robert Lucas, with dry wit and surgical precision.

It is true, as the University of Chicago’s Roger Myerson says, that Niehans gives short shrift to developments in game theory. Niehans spent his life thinking about interdependence, not strategy, and his book appeared in 1980, a few years before the gains in game theory became unmistakable to those outside the field. That means that we can look for another good history one of these days — by someone else.

It means, too, that there is room for continuing coverage of news about economics. That a great deal has happened since Keynes is now mostly a matter for historians. That a great deal has happened since Niehans — indeed, that Niehans happened at all — is news.

The task here is to keep track of people who daily are making economics happen — not all of them, nor even most of them, but perhaps the most interesting among them. Sometimes that means an account of a new monograph or book (Even though journal articles are the sine qua non of successful careers, books often sum up a skein of work or otherwise offer important benchmarks.)

Sometimes a novel policy proposal in a hot field itself is news. Sometimes a critic of the established order may be profiled. Sometimes a quick snapshot is offered of a complicated body of work. Always the emphasis is on the provisional. News, it has been said, is the best that can be said quickly.

Plenty of technology is involved in economics. Markets of all sorts contribute a continuous fount of new practices. Eric Von Hippel has shown that the sources of innovation vary widely among industries, and economics is no exception. The conventional linear model, in which established manufacturers of new ideas routinely perceive a need and then produce to order, is almost surely misleading.

New ideas spring from many sources, including (sometimes) those deemed to be outside the field, even crackpots. It was an engineer, Tustin Arnold, who first suggested in the early 1950s that economists might find control theory to be a useful tool. (Rocket science since has transformed the field.) The effect of the “supply-side” insurgency on economics’ mainstream has yet to be gauged. The policy here is to cast the net wide, to include consumers of economic ideas as well as producers of them.

In other words, this site functions like a newspaper column. Indeed, a newspaper column it used to be. The plan going forward is to stick to the newspaper model, to play by newspaper rules.

And that’s where collaborative filtering comes in. It’s a fancy name for the mechanics that underlay word-of-mouth advertising. Its application in practice is very old. Newspapers, scientific journals, markets in general all depend on it — any exchange in which reputation is a dominant consideration. But collaborative filtering made waves when it was formally “discovered” and named by economists, mathematicians, computer scientists and others in the mid-90s. These are “voices in the air” worth tuning in.

Since then, collaborative filtering has become the engine behind Google, the increasingly dominant Internet search engine that lists the most frequently-linked sites first. The new technology is beginning to shape e-commerce as well. Recommender systems are popping up here and there all over the Web (“This seller is rated: four stars). Collaborative filtering is even threatening to transform scientific publishing, by reducing or even eliminating that familiar figure, the overworked referee. Berkeley Economic Press is the early leader in law and economics.

The mechanism of collaborative filtering is especially clear in the recent emergence of the phenomenon of “blogging,” as web-log writing has come to be known. A form of self-publishing made possible by cheap computing and the World Wide Web, blogging has empowered anyone who wishes to post a more or less continuous stream of commentary on any conceivable subject. To start a blog of your own, right now, for free, no kidding, click here.

Finding an audience is something else again. Many are started, but only a relative handful of blogs is cited over and over again. Collaborative filtering is at work. In the case of the Blogosphere, the qualities that are evaluated are the elusive constellation of traits that, taken together, add up to good journalism. And when a new blog comes up — one of my favorites is a quantitative survey of partisanship among op-ed columnists called Lying in Ponds — it rises or fall on the strength of the links (the citations) it is able to attract from others. The Alphonse-Gaston effects here can be quite intricate — just the sort of thing that economists are good at figuring out.

Technically speaking, the field here can be described at “the market for evaluations.” That is the title of a famous paper in the American Economic Review by Chris Avery, Paul Resnick and Richard Zeckhauser that introduced collaborative filtering to economists in June of 1999.Academic and commercial research has been underway for years. For an example of collaborative filtering of jokes, try Jester. At the Reputations Research Network the idea is to put on-line information about past performance to work in order “to help people decide who to trust; to encourage people to be more trustworthy; and to discourage those who are not trustworthy from participating.”

Blogs come in all flavors. Thus KausFiles is mostly political. Man Without Qualities has a legal spin (and a typical set of links to other bloggers.) John Ellis writes about “business, technology, politics, golf, media, advertising, P2P, genomics and other subjects of interest.” A good survey of the Blogosphere by Catherine Seipp appears in the current American Journalism Review. None mention collaborative filtering. This sort of connection between theory and practice is what this column exists to report.

In that sense, EconomicPrincipals is a small part of a huge conversation about economics. It is more than a restaurant review. It is different from a newspaper column aimed at a geographic community. Do you have a friend who possesses above-average curiosity about technical economics? Hit the tools button on your browser taskbar and send this link. Collaborate!