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.”

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.

A dumb compromise to save the ACS and Economic Census

Last week I commented in this space about the Tea Party’s desire to make a symbolic cut in government by eliminating the American Community Survey and the Economic Census at the US Census. This would change economic statistics in the US, upending a system that has been in place since the end of World War II. And it really makes no sense for pro-business Republicans to be leading the charge, since business is one of the primary beneficiary of all this data about the US population and business.

Over the weekend, the economic correspondent for the New York Times wrote an opinion piece. She pointed out how many businesses had come out against this change, including the United States Chamber of Commerce, the National Retail Federation and the National Association of Home Builders.

The article did give a hint about what might actually be going on. To quote the article:

“Republicans may hope that when the Senate and House bills go to a conference committee, a final compromise will keep the survey, but make participation in it voluntary. Under current law, participation is mandatory.”

That observation is rather amazing, since there is no mystery to the answer. That question has been studied. Let me quote from the summary of a report on the consequences from imposing voluntary participation:

* “A dramatic decrease occurred in mail response when the survey was voluntary. The mail cooperation rate fell by over 20 percentage points and the final response rate after all three modes of data collection was about four percentage points lower…
* The estimated annual cost of implementing the ACS would increase by at least 38 percent if the survey was voluntary and the survey maintained the current reliability levels.
* The use of voluntary collection methods had a negative impact on traditionally low response areas that will compromise our ability to produce reliable data for these areas and for small population groups such as Blacks, Hispanics, Asians, and American Indians and Alaska Natives.

Lower reliability and higher cost seem like a dumb thing to aspire to produce. Like I said last week, this proposal is just stupid.

Free Podcasts

Some folk like to read blogs. Some folk like to listen to podcasts. Why not give everyone the option to do what they prefer? Now it is possible to read or listen to many of the essays that appear in my IEEE Micro Economics column (and appear here as Essays).

The IEEE deserves credit for this initiative. They have started a program to record podcasts from their many columnists.  Kellogg’s Tim DeChant has helped me record more than a dozen (Thanks Tim!). There should be close to two dozen by the end of the year. Anyone can download them at IEEE’s Computing Now for free. Brandi Ortega manages the site (Thanks Brandi!). They also can be found on iTunes at no charge. Available so far are:

* Steve Jobs and the Economics of One Entrepreneur
* Direction of Broadband Spillover
* Digital Dark Matter
* Building Broadband Ahead of Digital Demand
* Gatekeeping Economics
* Digitization and Value Creation
* Standardization and Coordination
* Bleeding-Edge Mass Market Standards
* The Next Chapter at Google
* Network of Platforms
* Does Google Have Too Much Money?
* Soccer Mom Messaging Is the Poetry of Our Age
* Revolution in Spectrum Allocation

Please enjoy them!

The range of Linus’ Law

After more than a decade of successful growth, Wikipedia continues to defy easy characterization. It receives more than 400 million viewers per month. Close to four million articles grace its web pages in English alone. Volunteers built the entire corpus of text.

This experience suggests that Wikipedia has done something right, but begs the question: Which actions mattered, and which ones were merely incidental? Answering that question is the key to finding general lessons for countless other web sites that aggregate user-generated content.

Many Wikipedians believe that Linus’ Law is an important ingredient in their sauce. Coined by Eric Raymond, this law is less legal precept than slogan—namely, “Given enough eyeballs, all bugs are shallow.”

Few people know that it is actually a pert and terse restatement of a quote from Linus Torvalds, who originally said, “Given a large enough beta-tester and co-developer base, almost every problem will be characterized quickly and the fix obvious to someone.” Raymond’s restatement drops all the qualifiers, vesting the proposition with more certitude and making it more egalitarian by extending it to nonexperts.

Wikipedia’s experience suggests Raymond was onto something. Let’s consider when the Law works and why it sometimes fails at Wikipedia.

Richard Rosenbloom, in memory.

Richard Rosenbloom passed away on October 26^th. He was a gentle soul, a wonderful person, and a insightful scholar. He will be missed. I will miss him.

I had the great fortune to meet him several times. The first of these meetings occurred when I was a student. Those first meetings were informal because his son and I were friendly. He showed up on campus one day, because – as his son said – his father was on sabbatical. I did not appreciate that Rosenbloom was one of the preeminent scholars in the study of innovation. He was merely the father of the person with whom I had studied for comprehensive exams. We shared an office. This was his Dad. There was a family resemblance.

Richard Rosenbloom eventually gave a seminar during that year – it was research about the development of VCRs. I still remember it today. It influenced my views of competition between standards. It came at a formative moment.

I would like to honor his memory in this post.

The Neutrino Song

As Dave Barry used to say, I am not making this up: Somebody has written a song about neutrinos, and recorded a you-tube video. In an act of shameless self-promotion, the writers and performers of this song sent me an email after reading the neutrino jokes in the previous post. For your listening pleasure I am now sharing their song/video with you.

The name of the band is the Corrigan brothers. I must confess that I had never heard of this band before they sent me their email, though they appear to be established, and about as respectable as an Irish band can be (if they are not U2).  I also am impressed by how quickly they wrote their song and put together a YouTube video using so many Einstein images. I also have some grudging respect for someone who is trying to take advantage of a pop trend using YouTube. Part of their speed is due to their use of the same tune from a prior pop hit (about Barack Obama, no less), but why hold that against them?

To be sure, their chances of success are quite low, so only a foolish dreamer would try to start a viral campaign for their pop song this way. But who does not like foolish dreamers? There is a certain quixotic charm about bands who are trying to get ten percent of their fifteen minutes of fame writing songs about surprising results from a physics experiment.

Now, actually, as it turns out, there are several neutrino songs on YouTube. This idea has occurred to more than a few aspiring pop artists. <sarcasm alert> But none of the others sent me an email promoting their song. Sure, that is an arbitrary way to chose who to promote, but what did you expect, a critical review? This is just a blog about the online economy, after all. <end of sarcasm>

Anyway, back to the main point. This particular song is called “Einstein and the Neutrino.” Here is the video:

Here are the lyrics:

TOOR A LOO TOOR A LOO TOOR A LOO TOOR A LINO

IS LIGHT NOW SLOWER THAN A NEUTRINO

We can believe it

We weren’t prepared

Does E STILL EQUAL

MC SQUARED

NOW THAT THE NEUTRINO

HAS TAKEN FLIGHT

AND IS SEEMINLGY FASTER

THAN THE SPEED OF LIGHT

WAS OLD ALBERT WRONG

OH CAN IT BE

THAT FABOULOUS THEORY

RELATIVITY

IS BEING DEBUNKED

FOR THE FIRST TIME

BUT HE’S STILL MIGHT BE RIGHT

OLD ALBERT EINSTEIN

TOOR A LOO TOOR A LOO TOOR A LOO TOOR A LINO

IS LIGHT NOW SLOWER THAN A NEUTRINO

NOW PHYSICS FOREVER

MAY NOT BE THE SAME

AND BOFFINS ARE GONNA BE

DRIVEN INSANE

IF LIGHTS NOT THE FASTEST

WHAT CAN THIS MEANO

AND IS SOMETHING FASTER

THAN THE NEUTRINO

TOOR A LOO TOOR A LOO TOOR A LOO TOOR A LINO

IS SOMETHING ELSE FASTER THAN A NEUTRINO

Let’s not rush to conclusions let’s take our time

He still could be right old albert Einstein

TOOR A LOO TOOR A LOO TOOR A LOO TOOR A LINO

IS LIGHT NOW SLOWER THAN A NEUTRINO

Steve Jobs: In memoriam

There are no second acts in life, but there are many second acts in American business. It is, perhaps, one of the greatest strengths of American entrepreneurial business.

There is no greater recent example than the career of Steve Jobs. Fired from Apple, entrepreneurial failure at Next, long time in the wilderness at Pixar (before wild success), and final redemption back at Apple. What a second act.

There will be a time for longer reflection on Jobs, when the first initial wave of grief has passed. For now, here are two things to remember Jobs by.

First, go read this wonderful post about Job by my good buddy, Tim Bresnahan. I am not writing anything more for now because TBres already got the essence of everything that should be said at this moment.

Next, try remember the audacious guy, the person full of life and verve. There are many ways to do it, but my personal favorite is the 1984 commercial announcing the Macintosh, still one of the most wonderful commercials ever. I can still remember watching the Superbowl with my father when it came on. It was just the two of us, sitting in the family room. We both were transfixed, and we both looked at each other with quizzical expressions, and we both said “Wow.” This was back in the day when you could not go to YouTube and see a rerun right away, but the next day — heck, for the next week and more — my friends and I were talking about it more than the football game.

Go amuse yourself and watch it again.

Only 56. It is just too young. I feel for the family.

The Lexicon of Networking Economics

Economics rarely improves with reference to etymology, but an exception should be made for the economics of networks. Many valid but distinct definitions of “network economics” compete for attention. That causes confusion in academic writing and in public discourse.

There are many symptoms of this confusion. Consider this one. When the late Senator Ted Stevens inarticulately referred to the Internet as a “series of tubes” it earned him derision from younger denizens of the Internet. To many youngsters it was unthinkable that the ranking Senator on the committee for regulating Internet commerce conflated the physical network – local area networks, backbone lines, access lines – with its applications – email, web surfing, electronic commerce.

To be fair to Senator Stevens, however, such a conflation is rather understandable. Stevens used a habit of mind common in monopoly provision of local electricity and telephony. It came into conflict with another and newer habit of mind, one that lives online. Only recently have these twains begun to meet regularly.

How did this happen? In brief, public discourse typically uses three distinct economic meanings for the term “network” and, without making due distinction, applies these to the same situations.  Let’s  get straight on the meaning of words. This post explains the lexicon of networking economics.

The Open Internet Order

After a year of hearings and considerable public discussion, the Federal Communications Commission (FCC) adopted the Open Internet Order on December 21, 2010.

Fireworks flared on the blogosphere almost immediately. Net neutrality advocates cried that the order betrayed and sold-out sacred principles, while Tea Party supporters heaped scornful criticism at government activism. Both sides made intemperate and grim forecasts about the Internet’s future.

Levelheadedness left the political sphere as well. Pushed hard by Tea Party sympathizers, the House of Representatives passed House Joint Resolution 37 in April 2011, largely along party lines, disapproving of the order. As of this writing, the Senate hasn’t yet taken up the measure. President Obama promises to veto it.

Frankly, this conversation needs a calm and considered middle ground, not utopian visions abutting practical considerations. The Internet has never lacked government oversight, and Internet participants have occasionally compromised on neutrality to function. There are subtle economic issues to debate here, and simplistic absolutes don’t contribute much to finding reasonable economic solutions.