Sethi on Insights from Ecology

Economist Rajiv Sethi has a great blog.  In this post, Sethi, and Thoma, whom he quotes, seem to acknowledge that the financial crisis should lead them to consider new ideas for economic models.  Later on in the post, Sethi points out that behavioral economics has mined psychology for insights, but that economists would do well to look beyond the level of the individual:

If one is to look beyond economics for metaphors and models, why stop at psychology? For financial market behavior, a more appropriate discipline might be evolutionary ecology. This is not a new idea. Consider, for instance, this recent article in Nature. Or take a look at the chapter on “The Ecology of Markets” in Victor Niederhoffer’s extraordinary memoir. Or study Hyman Minsky’s financial instability hypothesis (discussed at some length in an earlier post), which depends explicitly on the assumption that aggressive financial practices are rapidly replicated during periods of stable growth, eventually becoming so widespread that systemic stability is put at risk. To my mind this reflects an ecological rather than psychological understanding of financial market behavior.

Reading people like Sethi, I’m confident economics will come around.  Sociologists have never overemphasized rational actors, but we too can learn from approaches in other disciplines like ecology.

Preparing the next generation.

If you’re a regular reader or contributor to this blog, you probably agree that mathematics have an indispensable role in the social sciences. Lately, however, I’ve been thinking a lot about something: what kind of mathematical tools do sociologists of the future require?

The reason I’ve been thinking about this is a talented undergraduate who is strongly considering going to grad school in sociology. Interestingly, part of what has moved him in that direction seems to have been two classes he’s taken with me. The first was the required undergraduate statistics class and the second a substantive class that includes a lot of network analysis, structural theory, and associated material. As it turns out, it’s entirely possible to teach Mayhew & Levinger to undergraduates. Who knew? In any case, in this second class he’s gotten a strong sense that sociology involves a lot of math and this excites him. I’m all for it, since this student is very smart and we need more mathematically-gifted grad students. Yesterday during a conversation, though, he asked me what sorts of math he should be thinking about taking as he prepares for graduate school. I gave him my answers- and an regression analysis textbook to work through during winter break- but I wonder what others think.

If you could somehow start over again in the field, what areas of mathematics would you make sure you learned right from the start?

What Protestant Ethic?

Davide Cantoni of Harvard Economics offers this job market paper:

The Economic Effects of the Protestant Reformation: Testing the Weber Hypothesis in the German Lands [pdf]

Many theories, most famously Max Weber’s essay on the ‘Protestant ethic,’ have hypothesized that Protestantism should have favored economic development. With their considerable religious heterogeneity and stability of denominational affiliations until the 19th century, the German Lands of the Holy Roman Empire present an ideal testing ground for this hypothesis. Using population figures in a dataset comprising 276 cities in the years 1300-1900, I find no effects of Protestantism on economic growth. The finding is robust to the inclusion of a variety of controls, and does not appear to depend on data selection or small sample size. In addition, Protestantism has no effect when interacted with other likely determinants of economic development. I also analyze the endogeneity of religious choice; instrumental variables estimates of the effects of Protestantism are similar to the OLS results.

Hat Tip to Tyler Cowen.

Does Class Exist?

In Dennis Condron’s new ASR article on academic achievement he writes:

“The second contribution [of this article] lies in conceptualizing and analyzing social class rather than socioeconomic status (SES).  This reflects the view that children growing up in different positions in the stratification hierarchy have categorically unequal and qualitatively different (rather than continuously graded) life and educational experiences.”

What evidence exists for this claim?  To me, this is the sort of claim that the paper should explore empirically, but let’s go ahead and see how he measures social class:

“I [Condron] code children as middle/upper class if either parent has a bachelor’s degree or higher or works in an executive, administrative, or managerial position and their household income is above the federal poverty line.  Children are coded working class if both parents have less than a bachelor’s degree and do not work in an executive, administrative, or managerial position and their household income is above the poverty line.  Finally, I code students as poor if their household income is below the poverty line, regardless of parents’ education levels and job positions.”

Then he examines the relationship between the class categories he created and academic achievement.

The standard objection to this approach is that it is throwing away data, the class categories hide important differences.  Whether you have one or two parents with a B.A. does not enter the analysis.  If your parents’ income is under the poverty line, their education is ignored.  Income differences above the poverty line are ignored, etc.

If I reanalyzed the data using parental income, education, and occupation, instead of class, I would be able to explain more variation in academic achievement.  There are times when I am more willing to “throw away” data, for example when I’m desperate for more degrees of freedom, but even then I feel bad about it.

This provocative blog post title: “Does class exist?” drew inspiration from Daniel Little.  I’m curious to see if it attracts more clicks.  It would probably be more to the point to ask whether the concept of discrete social classes is useful.  If it does not help one predict outcomes of interest, then I think not.

Are Social Networks Fundamental?

Are social networks fundamental?  That is how Daniel Little frames this interesting post.  At first, I wasn’t quite sure what he meant.  I thought, “No, social networks can’t be understood without understanding the people that comprise them, the society they exist within, etc.,” but then I actually started reading his post and realized he is asking whether the concept of a social network is central to most social explanation.  This is something I am more inclined to agree with.  Was I the only one briefly thrown for a loop by that title?

Jeremy Freese on Blogging and Public Intellectuals

From a short article in the journal Society by Jeremy Freese:

Blogs are distinct from their predecessors for the pervasiveness of quotation and the extent to which authors keep your attention by continually directing it elsewhere. If one thinks in terms of the services that public intellectuals contribute—new ideas, means of making sense of the events of our times, moral conscience—than the important question is whether the new model of decentralized collaboration provides these services better than a model in which a few erudite individuals are identified as the souls of the age.

The answer is yes.

Performativity and Models (barely scratching the surface)

Andrei Boutyline mentions something important in the comments to the Krugman on Modeling post.

“…another line of criticism of formal models should be mentioned too: the performativity thesis. I am not sure I can do it justice, but as far as I understand the performativity thesis, it claims that, if powerful enough actors adopt certain simplifying models of understanding the world, the modeled actors will modify their behavior to better fit the model. The clearest example of thesis I’ve encountered is with the introduction of rankings of law schools (here, I may be wrecking an argument of Wendy Espland’s). The rankings intended to capture the criteria of law schools that the schools valued, but had to make simplifying assumptions to focus on common quantifiable elements. This had the effect of creating a strong incentive for schools to focus on specifically those areas–eventually at the cost of the unquantified ones. So, the introduction of simplifying (in this case, not into policy but into incentive structures) had the effect of transforming the world. I think this may be a better depiction of what Krugman’s “humanists” actually fear about these models.

The concept of performativity is a can of worms, but it needed to be brought up, even if I can’t say everything that needs to be said about it in one blog post.  There is much to like about Espland’s article, academic rankings are fine example of how something “intended” to describe the world, can change it.  Interestingly, widespread knowledge or use of a mathematical model, or an individual’s overconfidence in a model, can make the model more accurate, or make it less accurate, or both in different ways depending on the context.  But all this is true of ideas that are less formal than mathematical models.  In fact, academic rankings are not a mathematical model in the sense that Krugman or I am talking about.  Perhaps people using mathematical or statistical models are more prone to overconfidence, but I’m not sure…

A discussion of this topic with economists requires mention of Keynesian beauty contests, and the Lucas Critique.  The former is used to help explain bubbles.  The latter is used to argue that macroeconomic models require microfoundations, in other words, more (not less) formal mathematical modeling, to complement and combine with statistical analysis.

Of course, sociologists have been thinking along these lines long before performativity became a popular buzzword.  As W.I. Thomas said, “If men define situations as real, they are real in their consequences.”