Author Archives: Diane Coyle

The economics of open access publishing

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Nature has a long and interesting article about the costs of open access scientific journals, exploring both the difference in publication costs between different journals, and the allocation of costs between funders/institutions employing scientists, researchers publishing papers, and subscribers. It’s well worth reading for the figures on costs and charges alone – I’d not seen them gathered together before. Coincidentally, I also met up this week with a friend who publishes journals for one of the big publishers (not Elsevier).

The open access case is intuitive: research is funded publicly by taxpayers, so it should be free to read. The Nature article shows that the charges open access science journals make to researchers vary widely, as do the cost bases and profit margins of the different journals. The publication fees are also the only revenue stream, in most cases. Not surprisingly, existing journal publishers see it differently, arguing that they provide other services – peer review, editorial judgement, curation, marketing and the delivery of attention to articles, hosting technology, and no doubt more. There are counter-arguments to some of these points. For example, peer review and editorial work is normally done by other researchers, who are not paid for these tasks – again, taxpayers fund the work via their financing of academic salaries.

It’s clear that journal publishers were, like other traditional media providers, slow to adapt their offer to the online world and one or two well-known ones have tried to hang on to excessive monopoly profits. But the average profit margins cited by Nature for the scientific journals don’t seem outlandish, and it is very likely that some traditional journals are hampered by a higher cost base than newer online journals, hence a partial reason for high subscription charges.

Still, there does seem to me to be a need for clarity about the bundle of services being discussed in this debate. It is not just a question of providing an online platform for researchers to report on their work, the bit that is taxpayer funded. If academics only needed to get their work out there, they could publish it on their own websites – as many do. But journals obviously do play an important role in organising peer review to give research a kite mark, in selecting and curating papers, and in marketing to draw attention to research. The importance of editorial objectivity in these services makes me tilt slightly towards preferring the old-fashioned subscription model, especially now non-academics like me can legitimately access research via JSTOR. If only the old model hadn’t been discredited by the greedy minority of publishers hiking subscription charges so much, or lumbered with its inherited high cost base.

It’s probably too late, even though there are, ironically, signs that the subscription model may be starting to function for other online publications. The new RCUK open access policy came into effect this month, & states: “Free and open access to publicly-funded research offers significant social and economic benefits. The Government, in line with its overarching commitment to transparency and open data, is committed to ensuring that such research should be freely accessible. As major bodies charged with investing public money in research, the Research Councils take very seriously their responsibilities in making the outputs from this research publicly available – not just to other researchers, but also to potential users in business, charitable and public sectors, and to the general public.” RCUK will in future fund eligible research institutes and universities to pay submission fees to open access journals.

My friend is bitter about the Government casually torpedoing the commercial business model, and predicts that academic journals of the future will increasingly be hosted and part-funded by universities, research funders and learned societies, as the business is becoming decreasingly attractive for commercial publishers. I’m not sure the future landscape for the publication of academic research is at all predictable.

Demography as destiny?

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There was an intriguing short letter in the Financial Times this morning, urging that more attention be paid to the problem of a low birth rate and the adverse demography of an ageing society.  The writer evidently believes the welfare system should be encouraging people to have more children, rather than penalising them for large families. He cites a 1947 book, [amazon_link id=”B00195GT00″ target=”_blank” ]The Population of Britain[/amazon_link] by Eva Hubback.

[amazon_image id=”B00195GT00″ link=”true” target=”_blank” size=”medium” ]The Population of Great Britain[/amazon_image]

Looking her up, Wikpipedia tells me Eva Hubback was a suffragist, head of economics at Newnham and Girton during the First World War, and advocate of birth control and eugenics. However, her book clearly advocates the national benefits of population growth. This is an intriguing combination of beliefs, very much of its time.

It has long seemed to me that economics doesn’t pay enough attention to demography. Obviously, people studying pensions and the fiscal implications do put the ageing trend at centre stage, and relative demographic trends crop up in work on international migration. But demography is surely fundamental for growth as well. One question is whether an older (on average) population will be as productive and innovative as a younger one. And if so, what does this imply for, say, predictions of Chinese economic power?

Another is simply the numbers game. Endogenous growth models imply that the growth rate is increasing in population, at an accelerating rate because of their increasing returns feature. Ideas live in people’s heads, and the combinatorial arithmetic makes more people generate many more ideas. This is something modern economists (although clearly not Eva Hubback) seem to gloss over with mild embarrassment.

The best book I’ve read including demography, although in a broader context than economic growth, was Emmanuel Todd’s 2001 [amazon_link id=”1845290585″ target=”_blank” ]After the Empire[/amazon_link]. He was looking ahead to the multipolar world. But I’d be interested to hear other recommendations.

[amazon_image id=”1845290585″ link=”true” target=”_blank” size=”medium” ]After the Empire[/amazon_image]

Machines and foreigners

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I’ve been reading in the area of overlap between labour market analysis, theory of the firm and trade theory. Well, to be strictly accurate, at the edges of those three areas of economics closest to each other, for their isn’t all that much overlap. David Autor comes closest in his recent work on inequality, technology and globalization. Richard Baldwin and others have come at it from the other side with their work on trade in tasks, bringing trade theory closer to theories of production. There’s more on the overlap between technology and the labour market of course. Standout books for me are Claudia Goldin and Ian Katz, [amazon_link id=”0674035305″ target=”_blank” ]The Race Between Education and Technology[/amazon_link], and Frank Levy and Richard Murnane, [amazon_link id=”0691124027″ target=”_blank” ]The New Division of Labour[/amazon_link].

[amazon_image id=”0674035305″ link=”true” target=”_blank” size=”medium” ]Race between Education and Technology[/amazon_image]

In addition there has been the whole recent ‘the robots are eating our jobs‘ riff – but I’m more convinced than ever that this is over-simplified. For one thing, you just can’t think properly about the robots without adding offshoring and trade into the mix. Just as a shift in the ease of trade is similar to an advance in technology in its economic effects, a big increase in the potential for using foreign workers for some functions is similar to using more technology.

I’ll be writing something up eventually and will post it when I do.

Reading about Thatcherism

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Charles Moore’s forthcoming [amazon_link id=”0140279563″ target=”_blank” ]The Life of Margaret Thatcher[/amazon_link] will no doubt be fascinating. I’m not an avid reader political biographies and memoirs, although there are a few absolutely outstanding ones – such as Alan Clarke’s [amazon_link id=”1857991427″ target=”_blank” ]Diaries[/amazon_link], Chris Mullins’ first volume about life as a junior minister, [amazon_link id=”1846682304″ target=”_blank” ]A View From the Foothills[/amazon_link]. But so many dull ones too, such as the [amazon_link id=”0224016830″ target=”_blank” ]Crossman Diaries[/amazon_link] I had to read at university.

When it comes to reading about the Iron Lady, the earlier biography I did read and admire was Hugo Young’s [amazon_link id=”0330328417″ target=”_blank” ]One of Us[/amazon_link] – published in 1989 so before the end of her political career. It’s a brilliant book that makes credible the (often implausible) claim that journalism can be the first draft of history. Looking through it again this morning, my first thought was that the great achievement of Thatcherism was actually getting something – anything – to happen: sclerosis and ungovernability are two sides of the same coin.

[amazon_image id=”0330328417″ link=”true” target=”_blank” size=”medium” ]One of Us: Life of Margaret Thatcher[/amazon_image]

But the outstanding book about the Thatcher government is Nigel Lawson’s [amazon_link id=”0552137278″ target=”_blank” ]The View From Number 11[/amazon_link], which sets out the economic thinking of Thatcherism (its essence), discusses how Westminster and Whitehall worked at the time & the tactics of bringing about change, and is completely gripping about the disastrous tensions that set in between Prime Minister and Chancellor.

[amazon_image id=”0593022181″ link=”true” target=”_blank” size=”medium” ]The View from No.11: Memoirs of a Tory Radical[/amazon_image]

Humans, not agents

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In my early morning browsing, I read a paper called ‘Time to Abandon Group Thinking in Economics’ by Sergio Da Silva (pdf). It isn’t as clear as it might be, but the line of argument concerns the unscientific status of the representative agent approach to macroeconomics. In conventional macro, he writes: “The whole is viewed as merely the sum of the parts. Of course, this would be so if the constituent individuals were homogeneous. But they are not. Despite that, macroeconomics assumes homogeneity of individuals and focuses on a “representative individual.” Rather than explaining collective behavior from the interactions between the constituent individuals, macroeconomics studies the behavior of the average individual.”

This is not justified, he continues, because the macroeconomy does not empirically exhibit the property of “self-averaging,” such that as more and more individuals were aggregated, a central limit theorem holds – or, in a Poisson distribution, the model coefficient of variation approaches zero. To put it another way, what benefits an individual need not always benefit the group – there are losers as well as gainers.

The paper goes on to advocate applying the aggregation tools of statistical physics and biology to macroeconomics. This was one of the alternatives discussed at an international macro symposium the ESRC organised in Oxford last October, presented by J.P.Bouchaud & summed up in his essayEconomics Needs a Scientific Revolution. I think almost anything would be better than conventional macro, addicted to representative agent DSGE models despite their non-compatibility with any evidence. However, there’s no consensus (not surprisingly) about the alternative, and three were presented at the ESRC symposium. The other two were network approaches and complexity approaches.

The lesson macroeconomists should take – the point of this ramble – is that the social sciences need to be consistent with the biological and human sciences. This is essential for economics to move from being “applied logic” as Da Silva describes it in the paper to an empirical science.

There are two domains of knowledge to be incorporated. One is cognitive science and neuroscience, and there has been some progress here in microeconomics, with behavioural economics and neuroeconomics. Last year I attended a fascinating workshop at the Toulouse School of Economics that asked what cognitive science could tell economists about attention and therefore economic decisions – it resulted in my conference report The Invisible Hand Meets the Invisible Gorilla (pdf).

The other is evolutionary biology and ecology –  and macroeconomists display no interest in what these domains can teach us about aggregation and group behaviour. Business economists have long used evolutionary metaphors in an intuitive way, and evolutionary economists such as Geoffrey Hodgson in, for example, [amazon_link id=”0472084232″ target=”_blank” ]Economics and Evolution[/amazon_link] have tried to formalise models of behaviour at the level of markets. But – as I found when writing about these areas for [amazon_link id=”0691143161″ target=”_blank” ]The Soulful Science[/amazon_link] – there has been scant mainstream interest.

[amazon_image id=”0472084232″ link=”true” target=”_blank” size=”medium” ]Economics and Evolution: Bringing Life Back into Economics (Economics, Cognition, & Society)[/amazon_image]

Da Silva’s paper cites plenty of natural scientists but next to no economists. This must be a mistake by our profession.