Peter Levin’s Rethinking Markets

February 28, 2008

No seriously, how do you know what you like?

Filed under: Art, Culture — Peter @ 2:49 pm

This article from the NYT today highlights “art anxiety,” the inability for wealthy folks to purchase real art for fear that they will either pay too much, or be outed as having poor taste. There’s interesting stuff here, though I’ve mostly given up on the Times’ feature articles nowadays (good gracious they’ve moved from interesting to trite to maddening as I’ve gotten older and more thoughtf….wait a second, maybe it’s not them, maybe it’s me!):

Art paralysis takes many forms. In addition to the would-be buyers who are intimidated by galleries, there are those worried about making an unfashionable choice; those obsessed with investment value; and those who return to a gallery for months, even years, never buying a thing. (Some of these suffer from a form of art paralysis that Stephen Nordlinger, the president of the Foundry Gallery in Washington, calls red dot syndrome — a desperate longing only for those pieces bearing the red dots that show they’ve been sold.) And then there are the people whose reasons make no sense at all, at least to those doing the selling.

Theoretically, the structure of the art market is, I think, to blame. In order for art to be commodified as a culturally-laden fetish object, it has to be taken out of the realm of normal consumption, and placed into a more rarified space. One of the effects of this move is to make that space inaccessible. I particularly liked the Chelsea gallery owner who quoted a painting’s price in UK pounds. Ask for a price, get a snooty ‘no’ - persist and get the price in pounds. Any questions?

From a marketing perspective, the problem is that if you make the space less rarified, you at the same time make it less likely that the art market would be able to sustain high prices.

Per the anxiety itself, I’ve argued before, I think it takes training to know what you like, as opposed to what you are expected to like given the conventions of a field. Chasing ‘good taste’ is immensely challenging precisely because it is so far out of your hands. Without cuing up the Free to Be You and Me music, I would suggest that cultivating your own sense of self-via-taste is harder, and much more likely to make you overtly iconoclastic, but also possibly more rewarding.

February 25, 2008

not market related, but…

Filed under: Ramble — Peter @ 1:14 pm

Once was my favorite movie of 2007 (perhaps not the best, but my favorite), and if you can’t be happy for Hansard and Irglova for winning best song, I don’t even want to know you.

And on an unrelated shmoopy note, my darlin’ re-arrived from HI yesterday, and for a small window of time I’ll share an appropriately sweet non-Once, hard-to-track-down, India.Arie song (warning, it’s an mp3).

February 22, 2008

A two-by-two on markets and culture

Filed under: Culture, Markets — Peter @ 9:38 pm

With Brayden upping the ante, Lena suggests a table, but I feel that this may confuse more than illuminate. Welp, only one way to find out:

I also realize it’s tacky to stick neo-classical economics in the low/low box. And the yes/no doesn’t quite work - I originally went with ‘low’ and ‘high’, or ’settled’ and ‘unsettled’. But you get the gist, I hope..

More on Markets, culture, markets

Filed under: Culture, Markets — Peter @ 6:26 pm

I still haven’t addressed the payoff question, but here’s more of my thinking about culture and economic sociology, in pictorial:

The constitutive group, which does in fact tend to study the ’settlement’ (a loaded term, yes, but think of it more like a butterfly alighting temporarily than obdurate institutions) of markets, treats the market itself as the dependent variable: how does a market become something that looks like a market?

The second group, what I think of as complementary (as in, it complements economic studies of markets, doesn’t challenge the idea of markets as such), is more like:

From a paper I’m working on, here’s the problem:
The dichotomy between the constitutive and complementary approaches has resulted in a theoretical limitation for the field. The central problem is not necessarily the lack of conversation between these two groups, as they often do build on one another. It is the either/or conception of culture. Culture acts as either something that affects how markets are built, or else it affects how markets operate. Constitutive activities are necessary to stabilize market actors, objects, and actions, enough so that ‘normal’ market forces – now with cultural variables added as key determinants – can operate. And once these activities occur, markets are seen as acquiring a kind of permanent stability which allows us to then gauge their operation. As a result, we end up with analyses of how creativity and highly contextualized knowledge of fashion is transformed into a commodity for consumer sale (like Patrik Aspers’ work), and studies of how social ties affect performance among garment industry firms (eg, Uzzi’s awesome study of the garment industry in NYC). But very little on the interactions across these processes.

I’m ready to start getting on to these kinds of interactions.

Photo credits, various but all from Flickr, w/Creative Commons licenses:
Apple
Apple pie
Baked apple
Apple preserves
Apple opened

February 19, 2008

Setting a Meeting, Academia-style

Filed under: Institutional — Peter @ 12:59 pm

Having trouble finding a common time to set a meeting? Problem solved! Pass this handy-dandy sheet along to all the member of the committee, and let the matchy-matchy begin! I guarantee that, unless someone is out of town, you will be able to nail down a time within an absolute maximum two-week window.

Make-a-meeting

February 18, 2008

White people like…

Filed under: Culture — Peter @ 11:09 am

Not on markets, and a little outside my own expertise as an economic sociologist, and yet:

This blog has gotten a lot of attention lately, cataloging the things that White People Like. It is funny and pointed, in a really interesting way, and some of the reactions - ie the 1300 comments on Unfogged, are worth checking out.

I think Ogged catches my own sense of the thing, arguing that what makes it funny is not quite the self-mocking mirror that one can hold up to one’s own experience (or rather, my own experience), but the perfection of the trope against its unspoken counterpart - non-White people. Or as Ogged puts it, the screwed. So things like recycling, dogs, and Netflix are just so insignificant against the backdrop of dramatic, categorical, privilege. And I am not pushing an essentialist line here, I think that ‘White people’ stands in for privilege rather than a particular skin color. Not all White people are ‘White people’ in this fashion.

Anyhow, check it out for the funny, or check it out for the deep social commentary dressed up as fluff.

February 15, 2008

I’m torn between…

Filed under: Ramble — Peter @ 4:17 pm

this: “[Michelle Obama] talks on the campaign trail about high school advisers who tried to dissuade her from applying to Princeton because they thought her scores were not good enough. (She graduated with honors in sociology in 1985.)”

and this: “The man who opened fire on students in a lecture hall at Northern Illinois University was described by police on Friday as a 27-year-old former sociology student there who had been highly regarded, but who had begun to act erratic after he stopped taking medication….When Mr. Kazmierczak was a graduate student in sociology at the university, he appeared to be a model student, earning a Dean’s award in 2006.”

The repetition of high school and college shootings over a number of years has failed to make them any less gut-wrenching for me.

February 14, 2008

Economic Sociology, Culture, Markets

Filed under: Culture, Markets — Peter @ 2:04 pm

I’ve been thinking about this for a while, wrote about it in an in-process manuscript, and I’m just trying to work out the argument out loud for a bit. Bear with me, it’ll probably be a few posts.

Limitations on how we think about markets and culture. This is two parts a limitation of our theoretical tools, and one part a limitation that stems from doing sociology from the kinds of markets we are studying. From a theoretical point of view, we remain in something of a false dichotomous bind, between those kinds of markets that have a culture, and those kinds of markets that are culture. The paradigm of embeddedness - and with over 2500 citations, I’m not going to jump into that argument, but instead I think fairly assume for the moment that embeddedness=structural embeddedness=networks - suggests that economic activities are influenced by the fact that they occur in repeated rather than one-off interactions. More broadly, the embeddedness framework implies a split between the economic activity, something purely economic, and the culture/structures/networks that have effects on that economic activity. In effect embeddedness argues for more sociological independent variables for economic dependent variables.

This is not the radical critique of someone like Harrison White, who wants to shift the whole discussion from actors and ties to analyses of ties and structures of ties themselves. But the movement in that direction has not been taken up by economic sociology but by the network people in the proto-socio-physics camp. Duncan Watts in sociology leading to its apotheosis in the Reality Mining of the MIT Media Lab. A post for another day.

On the other side of this dichotomy are those who argue that markets are culture. That is, markets are themselves cultural phenomena. This is close to, but not identical to Viviana Zelizer’s critique, that markets are subsumed by culture. I think she’s right for many cultural anthropologists, but the contemporary economic sociology research points to something a little different (and I claim myself to be more a part of this camp than the first). Here, the aim is to understand the determinants of markets - so, what is a commodity, agency, exchange, interests. Markets become the dependent variables, and a rather wide range of other kinds of variables become the explanations for markets. These include institutions, law, conventions, formulae, theory. Callon and the performativity crowd potentially fits on this side of the divide.

This divide maps onto a distinction made by Ann Swidler with regard to culture (and thanks to KH for pointing this out to me, though he’s not responsible for my argument here) - that the kind of markets that are analyzed come into play when taking one position or the other. When markets are settled, we are likely to look at culture as it affects them; when markets are unsettled, we are likely to analyze the determinants of them. Many studies of manufacturing jobs are now about cultural effects on labor and performance outcomes, not about the making of labor (this was certainly the main gist of Marx and industrial sociology, but as we have split organizational and industrial sociology from economic sociology it has dropped out as such). In capital markets, there is a wide split between those looking for sociological effects on finance - and I might include behavioral finance on the settled/’markets-have-culture’ side of the argument - and those looking for the creation of calculative agencies. And while I’ve placed various markets along this axis, even the same market can slide along this axis as it moves in time from settled to unsettled. So we look at network effects on volatility for options markets (Baker 1984; markets have culture, settled market), but the role of formulae in the making of the options market (MacKenzie and Millo 2003; markets are culture, unsettled market). The origins of the CBOT in the 19th century are about the making of futures; the contemporary work is about effects of regulation on market exchange.

I want to argue that this limits what we research and how we go about researching it. I’d like to suggest that are culture/have culture, and are settled/are unsettled ought to be an orthogonal rather than a two-dimensional axis.

February 7, 2008

What is XBRL, and Who does XBRL help?

Filed under: Data, Institutional, Markets, Technology — Peter @ 10:02 am

Put it on your radar screens, the next big thing is going to be XBRL. It stands for extensible business reporting language, and it is meant to commensurate business reporting via standardization. So instead of entering text into an annual report, companies, governments, NGOs, anyone who would like to comply with governmental mandate will be using XBRL. You can think of XBRL as a set of metatags for financial and company data, so that instead of bracket-tags for header, title, links, etc. you would have bracket-tags for earnings, time periods, definitions of costs, etc.

From CoreFiling’s insight blog: “It won’t be very long before it is those documents - the bar-coded financial disclosures - that will be the primary materials consumed by financial market systems to help analysts and investors make decisions about the best way to invest. This is vastly more sophisticated than today’s processes that rely on slow and inaccurate re-keying of a subset of the financial information published by companies.”

This is commensuration more than just standardization, since the tags are designed to be specific to a particular business enough so that everyone is not required to give the same information, yet the tags are standardized enough that everyone is required to give information that can be made comparable. The pitch for companies (other than, because otherwise we’ll fine you and take away your business license) is that XBRL will make their financial reporting less costly, less prone to error, and ultimately more efficient.

Personally, I think this is a flat out misrepresentation of what’s going on here. XBRL helps one group of people orders of magnitude more than anyone else: investors. And the trade-off between increased government efficiency and business streamlining of compliance data on the one hand, and increased ability for data-gatherers for banks, hedge funds, and the investor class is totally totally off the charts. What this will end up doing is: 1) creating a standard way for companies to report financials; 2) creating some increased efficiency for government entities to keep tabs on the finances of these organizations; and 3) create a massive additional datastream for financial services and investment firms to work with. If you think it is a challenge for public firms to resist making short-term decisions based on financial analysts’ quarterly reports of earnings now, wait until this information is directly readable by quant trading models.

This would be an amazing dissertation topic. I would track: a) the creation of the standard; b) the adoption of the standard around the world; c) how XBRL is being incorporated into financial modeling; d) the before-and-after effects of XBRL on market prices for firms; and e) qualitatively, what gets excised from XBRL, or rather, what remains incommensurable about firms, governments, etc.

UBMatrix
XBRL’s main site
US SEC’s ‘Interactive Data Viewers’
Microsoft uses XBRL
US GAAP XBRL Taxonomy (GAAP is the accounting standard in the US)
CoreFiling

February 6, 2008

Black Swans, Risk Management, and Undersea Cables

Filed under: Institutional, Technology — Peter @ 11:16 pm

I’ve taken issue before with Nassim Nicholas Taleb’s black swan thesis, that high-impact, low-probability events are responsible for market crises and accidents. The more general implication is, as Taleb and Pilpel note:

What matters in life is the equation probability × consequence. This point might appear to be simple, but its consequences are not.

Suppose that you are deriving probabilities of future occurrences from the data, assuming that the past is representative of the future. An event can be an earthquake, a market crash, a spurt in inflation, hurricane damage in an area, a flood, crops destroyed by a disease, people affected in an epidemic, destruction caused by terrorism, etc. Note the following: the severity of the event, will be in almost all cases inversely proportional to its frequency: the ten-year flood will be more frequent than the 100 year flood – and the 100 year flood will be more devastating.

Now comes word that some number (actually up to 5 now) of undersea cables have been cut, knocking a wide area of the Middle East off the internet, particularly the route between Europe and Egypt, and from there to the rest of the Middle East.

But where is the 100 year flood? What appears to have happened is a connected series of accidents and snafus, including possibly the weather, an anchor dragging along the sea floor, or who knows what. Mysterious. What I would contend, drawing from org theory, is that what is more dangerous than a 100 year flood is a sequence of preventable, unforeseen errors. That is, it is the disruption of the routine more than a freakish activity that is most likely to create accidents and crises. The routine fire in a particularly bad location, a minor earthquake in an unexpected place, a sequence of coupled organizational routines that lead one-to-another into disaster. It’s not that you shouldn’t be looking for the next giant storm that’s inevitably coming down the pike, but more problematic are the breaks in the caulk around the tub that floods the electrical box, that shorts the grid. Or a failure in the bathrooms at the airport.

Read your Saul Alinsky, and get in the game.

February 4, 2008

I have seen the future…

Filed under: Ramble — Peter @ 7:18 pm

…and it is the blissful taste of the Cara Cara Navel Orange. Also, there is a blog by Steven Jenkins, Fairway’s buyer. For all my complaining, there is quite a bit to say for living in Manhattan.

February 3, 2008

When art production and consumption disconnect

Filed under: Culture — Peter @ 3:55 pm

I was speaking about context with a colleague, specifically about Gbenga Akinnagbe, who plays Chris on the Wire (he’s on the left), but also plays Jimmy in the Savages. I was remarking about how scary he looks in the Wire. But this is quite possibly about me, I think, and the belief that more black=more scary (although you can decide for yourself: here he is, on the far left in the Wire, and here is his gallery at IMDB). But he is scarier looking in the Wire by design, and I also think it’s possible that Chris, Snoop, and Marlo (the main baddies in season 4) collectively scared me more than the Barksdale/Bell crew from the earlier seasons because of their ‘you think it’s one thing, but it ain’t, it’s the other thing’ approach to violence.

In any event, none of this compares to Mitt Romney doing impromptu rap.

February 2, 2008

An Opportunity to learn about Performativity

Filed under: Management Schools, Markets — Peter @ 4:26 pm

This would be an interesting opportunity for someone who would like to learn, network, discuss:

From Bodies to Black-Scholes: A Two-day Workshop on Performativity and the Social Studies of Finance
Organized by Daniel Beunza (Columbia U.) and Yuval Millo (LSE)
Columbia Business School, New York, 28-29 April 2008

The Social Studies of Finance (SSF) is one of the fastest-growing and most intriguing new fields in the social sciences today. Born from the intersection of sociology of science, economic sociology, management and critical accounting, SSF offers a new vantage point for the analysis of financial markets and their dynamics.

This intensive two-day workshop is convened by Daniel Beunza from Columbia Business School and Yuval Millo from the London School of Economics. It is aimed at presenting the field to newcomers, and is directed at research students and early-career researchers in accounting, finance, management, political science and sociology.

To allow effective discussion, the group size is limited to 12 participants. The workshop’s fee is US$ 200, which includes meals. To apply for the workshop, please send by February 31 your CV and a one-page description of your research and how it relates to SSF to y.millo@lse.ac.uk

For more details

February 1, 2008

Critics, meet Markets

Filed under: Culture — Peter @ 10:39 am

You may have missed the news that mass market games such as Guitar Hero and Wii Games are doing well against traditional video games such as Bioshock, Halo 3, and the Orange Box. But what you shouldn’t miss is the discussion about critics and art nestled pretty far into the article:

…as video games become more popular than ever, hard-core gamers and the old-school critics who represent them are becoming an ever smaller part of the audience.

That is not so unusual in other media. In most forms of entertainment there is a divide between what is popular with the masses and what is popular with the critics. Plenty of films get rave reviews but never make it past the art houses. Plenty of blockbusters are panned.

The reasons for that seem fairly clear. Film, books and music (and food, for that matter) have been around long enough to have developed highly sophisticated cognoscenti whose tastes have little to do with the mass audiences that still drive those markets. Food critics have as much sway over Red Lobster as book critics do over Danielle Steel.

That has not been the case with video games. Game critics and players have been closely aligned in their tastes, perhaps because the writers and buyers came from more or less the same pool of tech-savvy young men.

But judging from the Top 10 list, that paradigm may be breaking down. And that’s not necessarily a bad thing for either the financial or the creative health of video games. The importance of the mass audience in gaming’s spectacular growth is seen most clearly in the success of Nintendo’s Wii, which is far outselling its more technically advanced hardware competitors, the Xbox 360 from Microsoft and PlayStation 3 from Sony. The Wii is easy to use, while the 360 and PS3 are aimed at veteran players. Critics and game developers have been known to gripe about the Wii’s selling so well even though there aren’t many “great” games for that system.

The consumer doesn’t care. Wii Play was the No. 2-selling game of last year even though it received an abysmal score of 58 out of 100 at Metacritic.com, which aggregates reviews. Mario Party 8 for the Wii made the list at No. 10 with a similarly bad Metacritic rating of 62. Both Wii Play and Mario Party 8 are basically collections of mini-games, like table tennis, portrayed through simple graphics. To someone steeped in game lore, that’s pretty lame. To someone who just bought a Wii for the family, that’s pretty cool.

Of course, if such games are making the Top 10, that means that some games adored by the gaming experts are now falling short of the best-seller list.

The two and a half interesting things here are: 1) the relatively closer connection between critics and players of video games than in other entertainment industries - including movies, fine arts, music; and 2) the contention that this is about the ‘maturity’ of the industry, rather that some other feature of the art market in question. Intertwined are notions of what a market is (the market ‘doesn’t care’ about critics, as quasi-personified impersonal market-forces), as well as what critics are supposed to do (to someone steeped in game lore). Finally, 2.5) Metacritic is itself an aggregated, assumedly market-like representation of criticism! So we have the market talking to an anonymous, aggregated crowd of critics.