Nicholas Christakis is a leading researcher focusing on the ways in which the social networks that we are embedded in (friends, family, work, etc) directly influence our behavior, health, and happiness.  Christakis recently presented at TED in February and the video was just made available this month:

Full disclosure: I have not read Christakis’ work–books, articles or otherwise (although his book Connected is on my list).  However, that won’t stop me from commenting on it.  Conceptually, I think this is fascinating research, particularly because modern technology allows for our social networks to be much larger and for us to have even greater exposure and interaction with first-degree members of our network, potentially amplifying the larger network’s influence on our behavior.  Granted, if you reduce the hypothesis to its simplest form–that people are influenced by those in their social circle–it seems somewhat obvious.  However, as with many things that we assume to be true the real revelation here is understanding the specific dynamics and mechanisms that make it so.  A few questions/comments come to mind:

• Self-selection and causality: Determining which direction the causality arrow points in this area strikes me as very difficult.  In general, Christakis seems to be arguing that social networks are causing behavior in individuals.  However, he does note that self-selection (or what he refers to as homophily) could also be at play–e.g. people tend to select themselves into particular groups because they feel comfortable surrounding themselves with like-minded.  I don’t see why there couldn’t be multiple causal stories here where the direction may be different at different times or for different issues.  Understanding which direction causality flows is critical, though, if one is thinking of implementing public policies to deal with, say, public health issues.  Are you targeting individuals or the social networks?
• Free will versus environmental determinism: The research also brings up an interesting philosophical question–what is the balance, then, between an individual’s ability to exercise free will and the deterministic influence of their environment (in this case, their social network)?  Christakis’ research points to a probabilistic relationship versus pure determinism (e.g. you are 47% more likely to be obese if members of your social network are, rather than guaranteed to be), but the question is still a tricky one.
• Business relevance: It certainly isn’t a revelation that, for example, consumers’ buying decisions can be influenced by their friends and social crowd.  Much ink has been spilled touting the need to create social proofs of one’s product or targeting influencers who can spread the desire for a product like a virus through their social network.  However, as mentioned earlier, Christakis’s research could open up new avenues if it is successful in identifying the specific mechanisms (and causal direction) through which social networks affect individual behavior and vice-versa.  Marketers would have  a field day.

The crowdsourcing of problems could accelerate the time it takes businesses to identify gaps in current product or service offerings and spend more time developing better solutions to those problems for businesses and/or consumers. Of course, the danger is that we don’t just want innovators focusing on immediate problems as it may lead to unexplored paths (which, often times are the most interesting and groundbreaking). However, I would think that certain types of innovators and firms would select themselves into a more direct problem-solving approach to innovation versus a more open, exploratory exercise.

The same could easily be said about academia.  Often times the hardest part of research is determining what it is we need to solve for and which problems are (or, should be) a priority.

Related to this idea, a colleague of mine, Charlie Carpenter, points to a really interesting initiative by the Division of the Social Sciences at Harvard–determining the “hard problems” in the social sciences.  On April 10th, a number of heavy hitters from the social sciences met to discuss what these knotty problems were and how to address them.  The site collects all the discussions by the speakers (be sure to check them out).  It also asks visitors to take a poll, the purpose of which is to help determine what problems are the hardest, the most important, and what problems the speaker may have missed.  You can view and take the poll here.  The group has also set up a Facebook page to allow folks to continue the discussion.

I think this is a great initiative.  Of course, the degree to which it is helpful will be determined largely by three factors:

• Diversity of the respondents: The more diverse the individuals responding, the more reliable the results of the poll will be.  This means not only getting people from multiple disciplines to respond, but also people from outside academia who can bring even greater diversity to the questions.
• Independence of the respondents: The respondents should be independent from one another–that means we need to have people outside of the graduate students of the heavy hitters answering questions, since often times their perspective is heavily influenced by who they have chosen to train under.
• Localization of the respondents: Parts of academia have often been charged with being to Euro- or US-Centric (on the latter point, the study of international relations and political economy are often charged with being too US-Centric).  The poll will work best if they manage to engage respondents from numerous disciplines as well as numerous geographies.

I do not know the extent to which they group is taking seriously the need to manage and engage the responding community in order to get the most out of the crowdsourcing effort, but of course this is also key to such an effort. Also, at present I am not so sure they have done enough to institute and promote the proper incentives for respondents, but I have to investigate more.

Either way, it is a very interesting initiative.

A recent survey by Yoram Bauman and Elaina Rose, two economists from the University of Washington, explains that in experiments, economics students are less generous, more likely to choose an unco-operative approach and more likely to accept bribes.

Bauman and Rose’s survey built upon an earlier study 30 years ago which demonstrated that “postgraduate students of economics were more likely than others to “free ride” in a laboratory game, effectively exploiting other players for their own benefit.”

I tend to agree with Hartford’s supposition that what is really going on here is that economists–as well as political scientists and sociologists–are simply choosing optimal strategies based on the game theoretic models upon which the laboratory experiments are based.  Cooperation is not inherently a good strategy, but rather one that is determined by the structure of a game or experiment (e.g. what is the payoff structure of particular combinations of choices, is the game a one-shot deal or is it iterated, etc).  Social scientists are trained in, and therefore comfortable with, game theory and the various structures and payoffs that exist.  It is reasonable then to assume that if placed in an experiment that mimics those structures and payoffs they are more likely to play the most dominant strategies.

For example, if I recognize that the experimental situation is a one-shot, Prisoner’s Dilemma then I am going to defect rather than choose to cooperate. Why? Because the outcome depends on my choice as well as my fellow subject, and the structure of the game dictates that defection is the dominant strategy for both parties–why assume the other subject would choose differently, particularly given the risk I run of a huge loss if they don’t choose to cooperate? Now, if they game is iterated and neither of us know when we will stop having to choose to cooperate, the shadow of the future makes cooperation a more dominant strategy. As Hartford noted:

[P]erhaps the budding economists are not truly mean and selfish, but are simply showing that they have mastered their studies by producing the behaviour described in simple textbook models. Arguably, the students of economics are not doing anything sinister, any more than if they calculated the roots of a quadratic equation.

There is also the possibility that those that choose to enter postgraduate training in the social sciences are simply more jaded, cynical, or “realist” in their worldview.  And while they may hold personal views that cooperation and selfless behavior are desirable and moral endpoints, their research and training illustrates to them that in many cases it can be unproductive (or, in some cases, counterproductive) to cooperate oneself without taking into account what others will do.

I am a firm believer that the historical knock on the social sciences is unwarranted and that many of the theories, frameworks, and concepts found in the various disciplines are widely applicable in the real world, business in particular.  So when I read about the Amazon-Macmillan dispute I was struck at how a number of social science concepts shed quite a bit of light on these developments; namely Albert Hirschman’s concepts of exit, voice, and loyalty as well as signaling and the indirect use of force.

So what do these concepts have to do with e-books?  Glad you asked.

In his classic Exit, Voice, and Loyalty, political economist Albert Hirschman provided an elegant framework for analyzing the options available to individuals when they become displeased with actions of an organization. According to Hirschman, individuals have three options: they can be loyal to the organization, they can exercise voice (e.g. protest, negotiation), or they can exit the organization (e.g. join a new group, shop at a new story, etc). The framework is quite elegant and can easily be applied to both explain and predict the behavior of consumers in a market or citizens in a political system.

Apple's iPad includes an e-reader functionality

Since the launch of Amazon’s Kindle, book publishers have tried to exercise their voice vis-a-vis Amazon and their pricing requests, but to little avail. Until now, voice and loyalty seemed the only realistic options. Sure, there are other e-book retailers out there, but success of Amazon’s Kindle and the attractive prices they set for their customers provided the retailer with a huge advantage in terms of a distribution channel. However, with the launch of Apple’s iPad, book publishers now have a more realistic exit option. Not only is Apple a potentially powerful sales channel, but they have agreed to pricing terms that are more favorable to publishers than Amazon (Apple will take 30% of whatever price publishers choose to charge, leaving the price point up to individual publishers).

When individuals have the option of exit, we should see typical market dynamics at work–i.e. customers can shop around to various suppliers to find the products they want at the price they want, with competition among those suppliers driving the quality of products higher and the price for goods lower. This is why we generally abhor monopolies, since by nature they stifle market dynamics and leave customers with only the options of loyalty or voice, meaning they lack much leverage. With the launch of a new and potentially powerful sales channel, publishers now have a more realistic exit option that can be brought to the table in negotiations with Amazon.

However, rather than alter the current pricing terms with Macmillan as a result of this new exit option, Amazon stopped distributing Macmillan’s e-books altogether. The question, of course, is why? I would posit that Amazon was trying to send a signal to dissuade other publishers from also trying to renegotiate terms. Now I have no information as to what Sargent may have proposed and if any ultimatums were given, so what follows is purely an intellectual exercise.

We can view Amazon’s move as a deterrent threat to other publishers who, emboldened by Apple’s entry into the market, may attempt a similar renegotiation. By harshly punishing one actor (i.e. refusing Macmillan access to a valuable and dominant sales channel) that attempted to change the status quo (Amazon’s preferred pricing structure), Amazon hopes to send a signal to other potential actors to not attempt something similar. This is a great example of signaling and the indirect use of force, two related concepts that economists (such as Michael Spence and Thomas Schelling) and political scientists (such as Robert Jervis and James Fearon) have fleshed out over the past 40+ years. Rather than having to expend resources forcing every potential adversary to either change their behavior or maintain the status quo, an actor can choose to send a signal to all potential adversaries by making an example of one of them. Not only can an actor make a threat to punish their adversaries, but they can also demonstrate that they have both the capability and the will to do so by carrying out such a punishment on one adversary.

This dynamic is accentuated in systems where one actor faces challenges from many potential actors versus just one. Barbara Walter has looked at why some states decided to deal with separatist groups and factions in a violent manner versus through negotiations. The key variable: the number of potential separatist groups that may also seek self-determination. As the number of potential adversaries increases the probability of solving these disputes through negotiation decreases. When faced will many potential challengers, governments will choose to demonstrate their willingness and ability to put down rebellions in order to deter other separatists groups from similar challenges. In other words, having reputation for resolve when dealing with adversaries becomes more important when you face many potential threats than just one.

In the case of Amazon, it could be that seeing the potential for many actors to attempt to renegotiate the current pricing structure it was decided that they should send a signal to the rest of the publishing world that attempts to change the status quo would not only fail, but would result in sever punishment (i.e. the loss of a popular sales and marketing channel).  My guess is that this likely won’t work for two reasons: 1) as mentioned earlier, the publishers actually have someplace else to go–they can exit the current relationship and cast their lot with Apple; and 2) Amazon is heavily reliant on the book publishers.  Without their titles the allure of a Kindle decreases.  The threat may not be credible, or at least sustainable for long.

Thoughts?

Goffman's classic text

[Goffman's] fundamental contribution is how he slants his premise that we present a front in all our behavior before others. You have to understand that this posturing is real and pervasive, but rarely a consequence of out-and-out deception, or because we have succeeded in deceiving outselves. Usually we simply associate certain behaviors as appropriate in certain circumstances; some stylization is inherent in our interactions.

For instance, just as a certain attention to style–or a stubborn flouting of its demands–enters into the clothes we choose to wear in public, there is inherent artificiality in our choice of screen name on a social network (unless an account related to our real name happens to be available). And whatever we choose certainly expresses something we want to reveal about our nature. This doesn’t mean we are deceiving ourselves or others–we are being ourselves, but in a stylized manner.

Goffman’s approach certainly applies online, because our postings–even our instant messages–are more deliberate acts than our informal behaviors in real life. Although some participants play at being flippant and spontaneous on Facebook walls and microblogs, they must have greater consciousness of their effects on the viewer than most dinner table guests or concert attendees. Our online personas, therefore, conform even more closely to Goffman’s idea of everyday life than our everyday life does.

Goffman is by far one of my favorite social scientists and a major influence on my graduate research and my worldview in general.  I recommend the entire piece.

It’s a nod in the direction of social science, rather than economics per se.  It’s another homage to the New Institutional Economics and also to Law and Economics.  It’s rewarding larger rather than smaller ideas, practical economics rather than abstract theory.

For those interested in a deeper discussion of her work, Henry Farrell at Crooked Timber provides an excellent overview and personal reflection on Ostrom.

As a political scientist, this is especially gratifying and I think reflective of some broader trends in social science, whereby the best insights and research culminate from the cross-fertilization of ideas from multiple disciplines within the social sciences (as well as the hard sciences).   If you look at some of the more recent winners, their work transcended the discipline of economics and had a much broader impact on the study of human behavior and social dynamics broadly.

Personally, my research focused on decision-making, signaling & reputation, and conflict.  The work of recent winners, such as Thomas Schelling (game theory), Daniel Kahneman (behavioral economics), A. Michael Spence (signaling), John Harsanyi & John Nash (game theory), and Douglass North (path-dependence, neo-institutionalism), all played a role in how I approached (and continue to approach) those issues.

Maybe a day will come when the prize is renamed the Nobel Prize for Social Science–another step towards the social sciences getting their day.

As I was watching the video I thought about the potential to leverage such a platform for large-scale coding of qualitative data. Coming from the social sciences, often we find the need in large scale research for the massive coding of data, whether it is language from a speech, the tenor or sentiment of quotations (or newspaper articles in media studies), the nature of cases (i.e. did country A make a threat to country B, did country B back down as a result, etc.), or the responses from an open-ended survey. Coding is an issue whether you conducting qualitative or quantitative analysis–especially where you have captured large amounts of data. Often times the data is not inherently numerical and needs to be translated so that quantitative analysis can be conducted. Likewise, with a qualitative approach one still needs to categorize various data points to allow for meaningful comparisons.

The interesting thing about a service like Crowdflower is that it can leverage a ready group of workers globally who are ready and willing to conduct the coding at a reasonable price. Additionally, Crowdflower utilizes various real-time methods to ensure the quality of the coding. Partially this is achieved through the scoring of coders relative to their past performance, how they fair on tasks that are “planted” by Crowdflower (i.e. salting with tasks where the correct answer is known ahead of time), and how much agreement there is between coders on various items.

The final method comes up quite a bit in social science research when you have to determine how to categorize a given piece of data. The level of agreement is crucial to confidently coding a particular case. I would imagine that a platform such as CrowdFlower could make that task easier and more robust by quickly tapping into a larger pool of coders.

Has anyone used a service like CrowdFlower in this way (i.e. coding data from qualitative research)? Would be interested in your perspective.

Stanley Milgram

Gartner Vice President Kathy Harris discusses in some detail four areas of jobs needed in the near future. Though she never really uses the words “social networks” the implication is that most companies aren’t really geared toward taking advantage of the impact of these online communities, and that the numbers will be too large to ignore, regardless of the business you are in.

“Many of the needed technical capabilities originate in the social sciences and are aimed at usability and adoption of technology-related business services,” Harris said in a release. “These capabilities embody the notion of ‘action at the interface’ between the enterprise and its markets or between business management and technology management. Therefore, organizations are likely to shift the responsibility for leveraging technology outside centralized IT organizations and into the business units responsible for growth and innovation of revenue, products and services.”

Erving Goffman

To me, if you combine the plethora of data being generated by Web 2.0 technologies with the inherent social and behavioral aspects of these technologies, it screams for individuals that have training in sophisticated research methodologies (both quantitative and qualitative) as well as substantive subject’s that relate to sociology, psychology, and behavioral economics.  It may be creating a perfect storm where individuals with this particular skill set finally find themselves in high demand outside of the Ivory Tower.  As a trained social scientist myself, I also hope it puts to bed, once and for all, the short-sighted notion that the social sciences don’t really belong in the category of ‘science’ compared to their physical cousins.

(Via Jason Spector)