The revolution will be televised: A teaching moment.

As a parent I view the modern era of hyper-connection as an infinite opportunity for teaching moments. My children humor my pursuit, bless them. I do worry that they perceive their father’s aspirations as random outbursts of unconnected insights, barely distinguishable from the indecipherable utterings in Ezekiel’s visions, and vested with much less authority. Yet, I persist.

On a recent Saturday I became a taxi driver for my oldest son, and drove him home from the gym. Something by Gil-Scott Heron came up on the bop jazz channel on the car’s satellite radio. Heron’s rebellious expressions made him famous, but today the radio played themes of love. It was one of Heron’s earlier and milder pieces.

The jockeys experiment on this channel on the weekends, taking the music to the edges, though this hardly qualified as an edge. Though Heron is not regarded as a jazz pioneer in most circles, the beat poets influenced him, and he borrowed many of their rebellious forms for individualized expressions.

My son stared out the window, rendered silent by one of those adolescent moods in which sentences never exceed three words. Sometimes the mood can last for months.

Looking for an opening, I faked surprise. “Well, look at that.” I said with an upbeat tone, “It is Gil Scott-Heron.” This registered nothing from the passenger seat, not even a curious question, such as “Who is Gil Scott-Heron?” Was my son listening or descending into a month-long silence? He remained motionless.

A father has to be intellectual resourceful at these moments. I gambled, and issued an overstatement that I hoped might catch his attention. “Some people regard Gil Scott-Heron as the father of Hip-Hop and Rap.” If my son was at all paying attention, he would regard this sentence as a stretch, at best. The present song more closely resembled a male rendition of something acceptable to Ella Fiztgerald. Nothing about this love song would suggest such a radical interpretation. Still, the music contained enough rhythm to be catchy. My son stirred, and I sensed he was listening to me.

If the hook was in, then perhaps he would take the bait. “His most famous song was something called ‘The revolution will not be televised.’ Have you ever heard of that?”

“No.” My son shifted his weight while answering. Maybe I had him. This is what passes for a teaching moment in the suburbs.

“I will play it for you when we get home.” I promised, “You might like it.” No sound came from son, and we drove on.

Popping it at the Wisconsin Marathon

What would be the point of being human on this little earth unless we aspired to reach audacious goals from time to time? Of course, reaching for something far and high contains its risks. Sometimes the aspirations will not be realized.

I ran my second marathon on the morning of May 4th. It was the Wisconsin Marathon in Kenosha – official slogan: “The World’s Cheesiest Marathon.” The token meal at the end of the race includes beers and bratwurst. The race has a nice playful atmosphere. My first race had been the Chicago Marathon seven months earlier. Wisconsin had just under 3,400 participants. Chicago had just over 30,000. Both were a big party, but at a different scale. I liked them both.

I had been optimistic about this race and had compiled a special list of upbeat favorites designed to make the run more enjoyable by quickening the pace. The songs started with “Linus and Lucy” by Vince Guaraldi. I crossed mile 25 as the iPod played the last song in the compilation. It was Bruce Springsteen’s “Born to Run.” It made me smile. Though I did not need to quicken my pace at that point, I was rather content with the outcome, despite not realizing most of the goals. At least I had made a good spirited attempt trying.

There were six goals for this marathon, listed below in order of importance. These were:
1. Don’t die.
2. Finish.
3. Don’t throw up.
4. Beat the time from the Chicago Marathon (i.e., faster than 3:40:19).
5. Don’t walk (except for water).
6. Qualify for the Boston Marathon (i.e., faster than 3:30).

As it turned out, I only achieved two of these goals. You can probably figure out which two (Obviously, this post is not written from the grave). But focusing solely on the outcome does not really tell the story of how the goals came to be unrealized just after Mile 24. That is an amusing story worth telling.

Crowd-Sourcing and Crowd-Hunting and the Boston Marathon Bomb Brothers.

How did the Boston Marathon Bombing brothers get caught? The release of videos played a key role. This decision to release this video has been called many things – a risky decision, a calculated bet, a crucial turning point, and a fortunate use of crowd-sourcing.

Let’s not get sloppy with the use of modern lingo. The release of the video might have been risky and calculated, and it even might have been crucial, but let’s not get carried away.

Crowd-sourcing had little to do with what happened. Collective intelligence comes in many different sizes and flavors, but let’s not give it credit when it does not deserve it.

Crowd-hunting is a more appropriate term. This will take a minute to explain.

Look, this is partly a reaction to a lovely article in the Sunday New York Times, which contained a wonderful recounting of this decision (written by Michael S Schmidt and Erik Schmitt). “Manhunt’s Turning Point Came in the Decision to Release Suspect’s Images” said the headline.

Paragraph six contains one sentence. Here is a partial quote…”The decision….was one the most crucial turning points in a remarkable crowd-sourcing manhunt for the plotters of a bombing that killed three people and wounded more than 170.”

Remarkable? Yes. Crowd-sourcing? No.

According to the online version of Merriam and Webster’s Dictionary, Crowd Sourcing is “the practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people and especially from the online community rather than from traditional employees or suppliers.”

In practice it is also a cooperative activity. Usually a person or firm poses the problem, solicits and manages the help provided by the crowd, and takes care of the other details, such as making the contest rules, if any. Sometimes there are explicit awards and sometimes not.

Such as it was, the crowd was cooperative in Boston, to be sure. Everyone wanted to help if they could. Many sent in their videos of the finish line and tried to help the investigation.

But there were crucial differences between what happened after the Boston Marathon Bombing and crowd-sourcing.

• Most crucially, the cooperation only went so far. The suspects did not want to be found. The definition for crowd sourcing includes nothing about the “solution” putting up active resistance.

• Here is another difference. There also was (sort of) a leader soliciting ideas and managing the contributions, but it was hardly well  organized. To be sure, the feds and the state of Massachusetts and the city of Boston cooperated in some news conferences, and in the strategies to release video and photos. Every participant described this as chaotic. Not because anybody wanted it that way; that is just how things are in a major event.

• Also, more trivially, only a small part of this employed online methods and communications. The news media had a huge role, not just one web site releasing details and collecting suggestions. And it was not just CNN prattling away on every little detail. Some of the media was perfectly happy to amplify any little thing, even false rumors. For example, the New York Post ran a headline “Bag Men” with a circle around the picture of some poor guy who had nothing to do with the bombing. The competitive dynamic between the various news outlets played a key role in blowing many facts out of proportion, and setting the crowd off in the right and wrong direction.

• There is also this little problem: the actual facts don’t fit the label of successful crowd-sourcing. After all, the big break came when the brothers hijacked a car, and released the owner after driving with him for a while. Not killing the car-owner showed that the brothers still had some measure of humanity in them, but releasing him also shows they were not thinking clearly. They had talked about the bombing in front of the car-owner. Once he was released he called 911, and police put out an all-points-bulletin. The owner gave lots of details about his own car. The police spotted it a few minutes later, and that directly led to the death of the older brother.

• Facts get in the way again on the second big break. After the shooting on Thursday and the chase, the governor asked everyone to stay inside on Friday. This was supposed to help the police locate the second brother. This draconian measure was lifted after an entire day because law-enforcement concluded it failed. They had no clue emerged as to the second-brother’s whereabouts. Ten minutes later the owner of a boat in Watertown went outside to get a breather and found the injured brother in the boat in his backyard. In other words, this success was a byproduct of giving up on lock-down, not a strategic or deliberate use of crowds at all. The police were no longer using sourcing. Sourcing had not been allowed to work all day on Friday, since everyone stayed had been asked to stay inside, which is quite the opposite.

The most we can say is that there was an attempt to use sourcing to gather information in order to identify the suspects. The release of the photo did yield many useful clues, and set events in motion. It also probably played a role in the events at MIT, which led to the tragic death of a police officer. In other words, crowd-sourcing acted as a catalyst, but it did not play much of a role beyond that.

Crowd-hunting is a more appropriate term to describe what transpired in Boston. A working definition might be the following: “The practice of obtaining needed services, ideas, or content related to an unsolved crime by soliciting contributions from a large group of people, often involving one or more government actors, typically using a variety of media to communicate needs and relay updated information to the public.”

The On Line Honesty Box

Many vendors give away free services, but usually there is a catch. For example, while Google has given away search services for more
than a decade, no user has any illusions as to why. Advertising buys space and tries to reach readers. As another example, for many years US cellular carriers came close to giving away handsets to customers (until expensive smartphones reduced the practice). Buyers knew these subsidies came with two-year commitments, and buyers could anticipate giving the carrier high service fees.

Free services without any apparent catches are rare, but it seems to happen with “honesty boxes.” It has always been so with street musicians. A listener can walk away or give any amount into an open hat—from nothing to any denomination of bill. Public campsites have relied on honesty boxes for years, letting campers fill out their permits, paying on their
honor. Office coffee pools frequently use honesty boxes as well.

What about the online world? There have been experiments with online honesty boxes. The lessons are quirky, but too interesting to ignore. Today’s column describes two—one from Radiohead, and another from Cards Against Humanity.

Consumer Surplus in the Online Economy

The Economist sponsors a blog called Free exchange. This week Free exchange solicited posts to complement an article in the magazine that discusses challenges measuring the consumer surplus generated by the internet. They invited experts in the field to comment on the piece and on related research. I made a contribution explaining the challenges in measuring consumer surplus of a free product.

Check it out.

 

 

A Legend in Economics Passes

By Professor Thomas N. Hubbard, Senior Associate Dean, Kellogg School of Management, Northwestern University

Armen Alchian died yesterday. He was 98.

Many economists of my generation did not know Armen personally.  However, signs of his work are pervasive in the field.  There are many good examples of this in the research and teaching of many faculty at Kellogg, particularly in the Management and Strategy department. 

Armen’s work on learning curves in aircraft production (from the late 1940s, though not published until 1963 because it relied on classified data) is credited as the first empirical investigation of learning curves – an important feature of many industries.  We sometimes take for granted the implications of learning curves on firms’ strategies and economic outcomes – for example, the strategy implications were popularized nearly forty years ago by Bruce Henderson and others at the Boston Consulting Group — but much of the large body of research on these issues builds from Armen’s work.  Economists and strategy professors implicitly appeal to Armen’s work on industry evolution – where he emphasizes that competitive outcomes need not depend on the assumption that firms can precisely profit-maximize – when students ask them whether the frameworks we teach depend on such strict assumptions.  And modern economic thinking on the productive efficiencies of vertical integration, and professors teach their students about such efficiencies, draws directly from Armen’s famous paper with Ben Klein and Robert Crawford (as well as from Oliver Williamson’s work which was done in parallel around the same time) in the late-1970s.

Armen’s most-cited paper is his work with Harold Demsetz, published in the American Economic Review in 1972.  This paper may be the most influential paper in the economics of organization, catalyzing the development of the field as we know it.  It is the most-cited paper published in the AER in the past 40 years.  (If one takes away finance and econometrics methods papers, it is the most-cited “economics” paper, period.)  It is truly a spectacular piece.  It is a theory not only of firms’ boundaries, but also the firm’s hierarchical and financial structure.  And it is a theory – like all of Armen’s work – that is grounded in real-world phenomena.  The back half of the paper is devoted toward explaining how the theory explains why various forms of organizations – from corporations to partnerships to employee ownership – are used in different circumstances.  Seminal work in the economics of organization by other great economists such as Bengt Holmstrom, Oliver Hart, Paul Milgrom and others can easily be traced to this paper.

Armen’s most-read work, however, is almost certainly his undergraduate textbook University Economics, first published in the early 1960s.  Ironically, most economists trained during the past thirty years have probably never seen it.  But it is a tour de force, and unquestionably the most entertaining economics textbook ever written.  It teaches economics by way of a series of illustrations of how economic thinking plays out in the real world.  It taught millions of students how to think like an economist.  It also provides a fairly accurate depiction of Armen as a person – an economist to the core, deeply engaged in the real world, and someone with more important concerns than political correctness.

I was lucky to know Armen reasonably well.  When I arrived at the UCLA economics department in 1995 as a rookie assistant professor, Armen was 80.  He was no longer teaching classes, but came into the office every morning (usually after hitting a bucket of golf balls at the local driving range).  Although he did not generally attend seminars, he generally did read the seminar speaker’s paper.  If you were lucky, which I sometimes was, Armen would stop by your office to discuss it.  Even at an advanced age, his economic insights were unique, on point, and valuable.  I found him tough on ideas, but a very generous and gracious man in general.

I regret that I am too young to have known him in his prime, but there are many admiring stories that you can hear from those who had him as a student.  Kevin Murphy – indeed, both Kevin Murphys – Bob Topel, and David Levine are among the many ex-students that are sources for such stories.  His Ph.D. microeconomics class was legendary at UCLA for teaching students how to think like an economist and apply these insights to explaining the real world.  It was also legendary for its toughness.

Armen Alchian never won the Nobel Prize.  However, his influence on the field was at least as large as many economists who are laureates – and this influence can be seen not only in the direct influence of his best-known papers, but also in how we ourselves think like economists and teach others how to do so.  He had a profound effect on the field, and will be greatly missed by those who he and his work have touched.

Gaming Structure

For several years, commentators have forecast that the rise in smartphones and tablets, as well as Facebook, would upend the structure of the gaming market. A variety of novel adroit aliens and irascible animals symbolically represent the new order, while new companies from new genres alter the identities of suppliers. 

Methinks that all the talk of restructuring is exaggerated. The names have changed, but the same factors still matter for market leadership. The old structure had a number of economic determinants that haven’t gone away. For example, ongoing product development by independent firms continues apace, and all parties must manage the unknowable. Today, as in the past, independent firms cooperate with established publishers when it suits both parties.

If you ask me, we’re transitioning to the same structure with (at most) a new set of players. That’s because two factors used to matter most in gaming—uncertainty and market frictions—and they still do.

Postdoctoral Fellow in Infrastructure Studies

The University of Michigan announces an eleven-month postdoctoral fellowship position. The position will start September 1, 2013.

Position Description

The Department of Communication Studies (in the College of Literature, Science, and the Arts) and the School of Information are jointly offering a postdoctoral fellow position in the multidisciplinary area of “infrastructure studies.”

The addition of information technology is transforming the way society provides important infrastructures, including those that support media, telecommunications, power, and transport, but also those that support  knowledge, culture, and scientific data. Thanks to new capabilities in computing and control, every year our infrastructures claim to be “smarter,” with new capacities for distributed processing, analysis, sensing, adapting, and autonomous self-improvement. This radical transformation is well underway, but the assessment of its consequences is still in its infancy. For example, infrastructure unevenly distributes benefits and capabilities, with complex and sometimes unforeseen implications for politics, economics, knowledge, and social justice (to name just a few domains). This position will fund a researcher who will have the opportunity to work alongside senior collaborators to define and shape this new area of scholarship.

Salary: $50-60,000 per year (depending on negotiated duties), plus a competitive benefits package, $5,000 in discretionary funding, and the opportunity to appoint and supervise one or more paid undergraduate research assistants to work on projects of your choice.

This position is made possible by an MCubed grant.

Review of applications will begin immediately and continue until the position is filled.

Download the complete position description, requirements, and application process here.

The FTC and Google: Did Larry Learn his Lesson?

The FTC and Google settled their differences last week, putting the final touches on an agreement. Commentators began carping from all sides as soon as the announcement came. The most biting criticisms have accused the FTC of going too easy on Google. Frankly, I think the commentators are only half right. Yes, it appears as if Google got off easy, but, IMHO, the FTC settled at about the right place.

More to the point, it is too soon to throw a harsh judgment at Google. This settlement might work just fine, and if it does, then society is better off than it would have been had some grandstanding prosecutor decided to go to trial.

Why? First, public confrontation is often a BIG expense for society. Second, as an organization Google is young and it occupies a market that also is young. The first big antitrust case for such a company in such a situation should substitute education for severe judgment.

Ah, this will take an explanation.

Technology Awards for 2012

It is time to end this year by giving out technology awards! This post contains a baker’s dozen. They go to firms and managers who took notable actions in technology markets in 2012.

There are no fixed categories of awards. Some categories are recycled from last year’s awards, but some are new. Just like last year’s awards, there are three criteria. The winner had to do something in 2012. The action had to involve information and communications technology. It had to be notable.

The awards come with plenty of sarcasm and it does not come with a statue. The prize is a virtual badge called a “Sally,” affectionately named for Sally Field, famous for her flying nun and her cry at the Oscars, “You like me, you really like me!”

If you do not like this year’s awards, please use the commentary section to make additional suggestions.

Also, one last note: None of this should be taken seriously. Most of these awards are given with tongue firmly in cheek. The exceptions come near the end, in awards 11 and 12, which contain a preachy tone. Sorry, but not all of life is fun.