Best friends

As re-entry reading for the onset of the Autumn semester, I indulged in The Infidel and the Professor: David Hume, Adam Smith and the Friendship That Shaped Modern Thought, by Dennis Rasmussen, on the way home this weekend. This is a chatty account of the friendship between David Hume and the 12-years younger Adam Smith, discussing the extent to which Smith’s thought was influenced by Hume (a lot, Rasmussen argues) and analysing the differences between them (he identifies four areas of disagreement: the nature of sympathy, the role of utility, the foundation of justice, and the effects of religion). As a total Hume fan, I enjoyed reading it, and it’s a well-written book. You don’t need to be an expert on either to enjoy it, and get some flavour of the milieu of the Scottish Enlightenment.

Judging from Jesse Norman’s review of the book in Prospect, it might help not to be an expert on either, as he concluded it has little to say about the influence the two had on modern thought. As he points out, the problem Rasmussen faced is that the correspondence between the two men on which he based so much is rather small, and that mainly letters from Hume. Rasmussen fills out more in an interview in 3am Magazine with the stellar Richard Marshall.

I warmed to one comment Rasmussen makes here – a point also covered in the book: “Just as Smith’s contributions to moral philosophy have been unduly neglected in favor of Hume’s, Hume’s contributions to political economy have been unduly neglected in favor of Smith’s. As an economist Hume has long been regarded as a minor predecessor of Smith, insofar as he’s taken notice of at all, but in fact he argued for free trade and stressed the moral, social, and political benefits of commerce several decades before The Wealth of Nations appeared. Hume’s essay “Of Luxury” (later retitled “Of Refinement in the Arts”) is one of the most forceful, comprehensive, yet succinct defenses of the modern, liberal, commercial order ever written.”

As he notes here, Smith was in his turn an ethicist and analyst of human nature. We do like to pigeon hole people, but one of the joyous aspects of the Enlightenment is not only that knowledge was expanding so quickly but that it touched on so many different areas. We lose so much that falls into the gaps between disciplinary boundaries.

The thing I took away from The Infidel and the Professor was quite how scandalised so many people were by Hume’s skepticism about religion. The book has quite an extensive discussion about the differences between Hume and Smith on religion, and reckons Smith was just as sceptical but keener to observe social convention, though the evidence for this seems rather speculative. But, if public opinion did find Hume as outrageous as Rasmussen says, who could blame Smith for keeping that much quieter about his views. And Smith did honour Hume after death by insisting, in a letter written for publication, that Hume had died in good spirits and completely untroubled by the prospect of nothingness. When so many people hoped the infidel Hume would repent on his deathbed and embrace god, out of fear if nothing else, to make it clear this had not occurred was an act of true respect and friendship.

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How diversity pays off

Scott Page’s new book The Diversity Bonus: How Great Teams Pay Off In The Knowledge Economy looked timely, arriving as it did on my desk just before the Google memo furore. It’s a continuation of his previous book The Difference, putting logical detail and empirical evidence on the claim that when problems are hard and multidimensional, they are better addressed by cognitively diverse groups of people. This is a generalisation in a way of Philip Tetlock’s work described in Superforecasting, as his super-forecasters were people applying a range of models to their forecasting problems. Predicting is one kind of problem; Page considers the whole gamut – problem solving, truth seeking, creating – of non-routine cognitive tasks.

He emphasises that he is making a pragmatic case, although this does not mean the normative case for diversity is unimportant. He also stresses that random diversity will not do the trick. The character of the problem shapes the types of diversity required. But without it, the outcome is the madness, not the wisdom, of crowds.

Page categorises people’ cognitive repertoires in terms of five tools: information (data, facts); knowledge (expertise in a domain); heuristics (rules of them, techniques); representations (perspectives on the situation); and mental models (simplified, systematic descriptions). The group’s repertoire will be the union of the individual members’ repertoires. Diversity is emphatically not like portfolio diversification. Spreading risks, diversification, gives an average outcome. Diversity gives the outer envelope of the team’s combined various abilities.

Putting these together helps think about the link between cognitive and identity diversity, and there is a link. Some problems are more multi-dimensional than others, and have aspects that speak to group identities. Some parts of the cognitive reperoire depend more closely on group identity because they will be determined in part by individual experience. Take representations: there is a lovely example of how different the range of possibilities will seem – given that we start from where we are – to someone trained in the grid of Cartesian geometry and someone trained with a polar perspective: square versus wedge-shaped ‘adjacent possibilities’. Combining the square and the pie slice gives a bigger space of possibility.

As for the Google memo issue, Page notes that where organisations and societies are now is only partially informative about the value of diversity. Repeated acts of discrimination will inhibit people’s interest in pursuing certain paths they would do well in, so there will have been ample prior self-selection that sheds no light at all on how much better challenges could be met with more diverse teams. “The evidence we have of diversity bonuses understates the potential contribution of diversity because the evidence comes from the world as it is, not the world as it could be. A more inclusive world would produce larger bonuses.”

And the evidence is pretty compelling, although I was pre-disposed to believe it. As the book concludes, modern knowledge economies are complex. Team work is almost universal. Any organisation wanting to do better – in any of the ways listed above – will be committed to diversity. This very clear and compelling book will help people consider specifically what shape their challenges and problems take and what kind of diversity will help address them. So the moral is not that HR departments should seek to hire identity diverse people for the sake of it, but that they understand the needs of their organisations and the mapping from identities to cognitive repertoires. But in any case, the outcome will be more diverse in every sense than it is currently.

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Economics for a moral end

I’ve read Pigou’s Economics of Welfare, and I talk to students about Pigouvian taxes and subsidies, but never known anything about the man. So I enjoyed The First Serious Optimist by Ian Kumekawa. The author is a Harvard PhD history student (so kudos to him for having a book published so early in his career!), and this is definitely a historical biography rather than an economics book.

As an economist, and one getting specifically interested in welfare economics, I’d have preferred more about the economic ideas. But for less nerdy readers, there is plenty here on the intellectual trends. And the wider intellectual and political context of Edwardian England, the terrible decades of war, depression and war in the early 20th century, and the post-war swing to Labour and the welfare state, is portrayed very well.

At the end of the book, I decided Pigou the man was still a bit of an enigma, but perhaps someone from a privileged Edwardian milieu, who spent his entire adult life at Cambridge, is just a bit too alien. But the arc of his thinking from classical liberalism to active sympathy for the Labour government of 1945 is fascinating. And the tale is quite sad in the end, Pigou seen as a surly recluse, his star not only waning but utterly shot out of the sky by Keynesianism (and, as so often, Keynes comes across here as a brilliant but not very nice man).

(One is also left wondering how scholars of the future will ever write biographies now we don’t write letters to each other any more? Email exchanges, with their more telegraphic form, or skype conversations – these are how we discuss ideas with colleagues. I suppose conferences are recorded so the video of those formal occasions will be available. That, and the Twitter record? )

I like very much the way the book ends: ” His justification for his career, maybe for his very existence, was to serve a moral end. Perhaps it is this part of Pigou’s systematic framework – its self-conscious motivation – that present-day economists would do best to revisit.. …. It would mean accepting what Pigou had declared in 1908 that, ‘Ethics and economics are mutually dependent’ and that ‘Economics cannot stand alone’.”

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The responsibility of the public

It isn’t an economics book but it is about technology: I’ve just finished A Crack in Creation: The New Power to Control Evolution by Jennifer Doudna and Samuel Sternberg. It’s a terrific book, really well-written and compelling. Despite knowing nothing at all about biology or genetics, and finding some of the more technical bits quite hard going, I could follow the tale: every point is illustrated with illuminating metaphors and diagrams. And this – CRISPR and associated techniques – is such an important and far-reaching technology, I do think we should all be eager to understand it and think about the consequences. Indeed, we have a responsibility to do so.

By the time you get to the end of the book, it’s clear that this is Doudna’s aim (although co-authored, the book is written as if in her voice): she wants a public debate about CRISPR before it starts to be used to edit the human germline. She would like the debate to avoid the chasm between scientists and public opinion that afflicted GMOs, which became ‘Frankenfoods’ before the public understood that technology at all. But also to acknowledge the significance of CRISPR, with all its potential benefits to tackle diseases.

So I recommend this as a summer read. One final thought: if only Robert Gordon had appreciated that there is more to new technology than playing Angry Birds on smartphones (I exaggerate a little, but he does say the new tech frontier is all about digital entertainment), he might have seen some potential for social welfare in the future as well as in the past.

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Mobile contradictions

It’s surprising that there are not more books about mobile communications in general and smartphones in particular. Having been involved since 12 years ago on a strand of work on the economic and social impact of mobiles in low-income economies, when there was already evidence that the effects of the technology were going to be profound, you’d have thought researchers and authors would be all over the territory. Of course, the literature has grown substantially since, but is dwarfed by the work looking at digital in general, or net neutrality, for instance. It’s similar to the strange analytical gap concerning another very powerful technology with huge social effects, the spread of satellite TV in low-income countries from the mid-1990s. And while there is a burgeoning literature looking at social media, I hunger for a big picture synthesis of the social and economic impacts of the set of technologies it relies on, the smartphone and mobile broadband.

Anyway, Anindya Ghose’s Tap: Unlocking the Mobile Economy makes a welcome appearance in this somewhat sparse landscape. It’s a well-written introduction to the various ways US, European and Asian businesses are making use of mobile in developing their services. The book sets up a nice series of contradictions in consumer preferences:

  • people want spontaneity but are predictable and value certainty
  • people are annoyed by ads but don’t want to miss opportunities
  • people want choice but are also overwhelmed by it
  • people value their privacy, and also give away personal data for access to services

After an introductory descriptive section, the book turns to nine forces Ghose (a Professor at NYU’s Stern School of Business) argues are driving the mobile economy. This, the bulk of the book, is really aimed at business readers who want to think through the implications of pervasive smartphone use for their business model. There are lots of examples here of what others are already doing, and the book aregues that in many respects Asian businesses are ahead of US and European counterparts in the ways they have innovated.

The subtext throughout is essentially that too many businesses are sacrificing the long term creation of value – which would require navigating carefully through consumers’ contradictory attitudes – in favour of short-term profit or market share, for example by treating consumer data in a cavalier and exploitative manner. Businesses need to take data security far, far more seriously than they have to date, and also make sure that the service they deliver in return for data is truly of value to their customers.

In short, an accessible book with lots of colour, though definitely aimed at the business audience rather than economists.

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