Michael Chwe explains common knowledge, and why it matters to Mark Zuckerberg

Michael Chwe for UCOMM - 130321Michael Chwe, whose book, Rational Ritual: Culture, Coordination, and Common Knowledge has, in his words, “made its way out of the backwaters of course syllabi” to catch the attention of Mark Zuckerberg, had a terrific piece on the Monkey Cage blog of the Washington Post explaining exactly what common knowledge is, and why it’s so important. According to Chwe, common knowledge is generated by large scale social media platforms like Facebook, and this matters because of the many ways it can be leveraged, among them, stopping violence against women, and helping to foster collective political action.

From his piece on the Washington Post:

When Facebook’s Mark Zuckerberg chose my book “Rational Ritual” last week for his “A Year of Books” book club, I was surprised. “Rational Ritual” came out in 2001, and has somehow slowly made its way out of the backwaters of course syllabi into the elevated spheres of technology companies. This is gratifying to me, because even though it is a scholarly book published by a university press, “Rational Ritual” is essentially a popularization.

“Rational Ritual” tries to popularize the concept of “common knowledge” as defined by the philosopher David Lewis and the sociologist Morris Friedell in 1969. A fact or event is common knowledge among a group of people if everyone knows it, everyone knows that everyone knows it, everyone knows that everyone knows that everyone knows it, and so on.

When I was a graduate student in economics in the late 1980s, most people considered common knowledge as an idea of only theoretical interest. People who thought about collective action (and its flip side, political repression) were mostly interested in the problem of free riding, rather than how people communicate. But social change isn’t just about tackling incentives to free ride – it’s also a problem of coordination.

Read the rest here.

Recently, Michael Chwe, a master of interdisciplinary applications for otherwise “rarified mathematical theories” has been particularly active in exploring how game theory can help curb sexual violence. Check out his piece on the topic on the PBS Newshour blog here. His recent Q&A with Facebook Books is up here.

Math Drives Careers: Author Ignacio Palacios-Huerta

Logical thinking, analytical skills, and the ability to recognize patterns are crucial in an array of fields that overlap with mathematics, including economics. But what does math (or economics, for that matter) have to do with the world’s most popular sport? Economist Ignacio Palacios-Huerta’s recent book, Beautiful Game Theory: How Soccer Can Help Economics  made a splash during the last World Cup, showing how universal economic principles can be understood through soccer. Read on for his thoughts on why the language of modern economics, including behavioral economics, is mathematics.

The Role of Mathematics in my Life as an Economist

To describe the role of mathematics in my life as an economist, I first need to explain what, to me, Economics is all about. So let me take you to one of my favorite books, A Treatise of Human Nature, written almost 300 years ago by David Hume.

Beautiful Game TheoryIn the introduction Hume writes, “‘Tis evident that all the sciences have a relation, more or less, to human nature … Even Mathematics, Natural Philosophy, and Natural Religion, are in some measure dependent on the science of Man, [which is] the only solid foundation for the other sciences”. By the science of man Hume means the understanding of all facets of human nature, including preferences, senses, passions, imagination, morality, justice, and society. This science applies wherever men are making decisions, be it running public institutions or countries, as employees in firms, or as individuals investing in education, taking risks in financial markets, or making family decisions. This science of man is thus what one may initially be tempted to call Economics for, as George Bernard Shaw puts it in my favorite definition, “Economy is the art of making the most of life”.

But of course this definition is incomplete because other social sciences (e.g., sociology, history, psychology, political science) are also concerned with human behavior. So what makes Economics “different”? Here is the difference: the difference is not the subject matter but the approach. The approach is totally different, and a very mathematical one. As such, mathematics plays a critical role in the life of any economist.

Let me elaborate. Continuing with Hume, it turns out that he also anticipated our methodological approach in modern Economics: observation and logical arguments. Which can be translated as: data and data analysis (what we call econometrics), and mathematics, for mathematics is, after all, the language of logic. So in Economics, as in physics, we write down our ideas and theories in mathematical terms to make logical arguments, and then we use more math (statistical, econometrics, etc) to check whether the data appear to be consistent with the theoretical arguments. If they are, the evidence can be said to support the theory; if they aren’t, the theory needs to be refined or discarded. Yes, lots of math and related techniques provide what is our distinct “economics approach to human behavior.” It is not the subject matter but the approach that is different, and it heavily relies on mathematics.

To economists and other social scientists, mathematics has many methodological virtues: it can lend precision to theories, can uncover inconsistencies, can generate hypothesis, can enable concision and promote intelligibility, and can sort out complex interactions, while statistical and econometric analysis can organize and carefully interpret voluminous data.

None of this is obvious when you begin studying Economics (“Why should I take all this math, statistics and econometrics? Why all this pain?”). But I think most of us soon learn to appreciate that the language of modern economics is mathematics, and that it is rightly so. And this is not math for the sake of math (as in pure mathematics), but math with a purpose: modeling human behavior.

Let me conclude by saying that since the economic approach is applicable to all human behavior, any type of data about human activity can be useful to evaluate economic theories. This includes, why not, sports data, which in many ways can be just perfect for testing economic theories: the data are abundant, the goals of the participants are clear, the outcomes are easy to observe, the stakes are high, and the subjects are professionals with experience. If a theory is “correct”, sport is a good setting to check it.

So just as data involving falling stones and apples were useful to Galileo Galilei and  Isaac Newton to test for the first time theories that were important in physics, data from sports can be useful in Economics to do exactly the same. As such in some of my contributions to Economics I have used math to develop theoretical models, and further mathematical tools applied to this type of data to test them.

Spotlight on…Public Intellectuals

Worldly Philosopher, by Jeremy Adelman

Worldly Philosopher
by Jeremy Adelman

The title of Jeremy Adelman’s biography of Albert O. Hirschman, Worldly Philosopher, concisely sums up the character of many public intellectuals of the twentieth century. In battles that overflowed the geopolitical arena to encompass culture, the arts, and political theory, intellectuals frequently found themselves where history was being made.

Born in Berlin in 1915, Hirschman left Germany in 1933 when the Nazis announced the expulsion of Jews from the universities. He fought in the Spanish Civil War, and later guided escapees across the Pyrenean mountain passes between Vichy France and Spain. He worked in Algiers as a translator for the OSS (precursor to the CIA), in Europe for the Federal Reserve Board on the Marshall Plan, and in Colombia for the World Bank. His experiences in Europe and Colombia influenced his thinking on economics and development: Hirschman realized that the grand plans and idealized markets of his fellow economists were unworkable in the real world. Instead he proposed a strategy of improvisation and experimentation, responsive to local conditions and opportunities. Later works, including Exit, Voice and Loyalty and The Passions and the Interests, continued against the grain of conventional economic thinking and established Hirschman as one of the foremost intellectuals of his time.

Isaiah Berlin too was an emigrant: born in Riga in 1908 (now in Latvia, then part of Russia), he lived through the 1917 revolutions in St. Petersburg before his family moved to England in 1921. He found a home at Oxford University and, despite his Russian Jewish, roots rapidly found himself at the heart of the British establishment, working for the British Diplomatic service in the embassies at Washington and Moscow during the Second World War. His position, and his legendary brilliance as a conversationalist, gave him access to a veritable Who’s Who of politicians, intellectuals, writers and academics. He played a part (recently dissected by Frances Stonor Saunders) in the smuggling of the manuscript of Dr. Zhivago out of Russia. Personal Impressions, Berlin’s collection of biographical essays, draws on first-hand acquaintance with Boris Pasternak, alongside Winston Churchill, Albert Einstein, John Maynard Keynes, Virginia Woolf and many others.

Michael Lewis reads “Fortune Tellers” by Walter Friedman

Michael Lewis, author of The Blind Side & Flash Boys, was recently interviewed by The Boston Globe. To prepare for an upcoming TV pilot, Lewis read Fortune Tellers by Walter Friedman. Lewis said, “I read a book in a day on Saturday, which I haven’t done in ages – ‘Fortune Tellers’ by Walter Friedman…It’s a history of early 20th-century economic and stock market forecasting.” Read the rest of Michael Lewis’ interview, here. Be sure to check out the introduction to Fortune Tellers for free, here.


 

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Fortune Tellers:
The Story of America’s First Economic Forecasters
Walter A. Friedman

Interview with Adam Levine, author of American Insecurity on MSNBC.com

Adam Levine talked with MSNBC co-host Krystall Ball on her popular vodcast Krystal Clear about his new book, American Insecurity: Why Our Economic Fears Lead to Political Inaction. Check out the first chapter of American Insecurity for free, here.


 

bookjacket American Insecurity:
Why Our Economic Fears Lead to Political Inaction

Adam Seth Levine

Author profile: Ken Elzinga

An inside look at one of the men behind the Henry Spearman Mystery trilogy.

If you haven’t picked up copies of the mysteries, check out the first chapters of each for free (linked below). You will not be disappointed.

A Deadly Indifference: A Henry Spearman Mystery
Murder at the Margin: A Henry Spearman Mystery
The Mystery of the Invisible Hand: A Henry Spearman Mystery

 


 

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A Deadly Indifference:
A Henry Spearman Mystery

Marshall Jevons

 

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Murder at the Margin:
A Henry Spearman Mystery

Marshall Jevons
With a new foreword by Herbert Stein and a new afterword by the author
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The Mystery of the Invisible Hand:
A Henry Spearman Mystery

Marshall Jevons

Mass Flourishing by Edmund Phelps is a certified bestseller in China

Nobel prize-winning economist, Edmund Phelps’s book Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change is a bestseller in China. Phelps’s success in China includes the prestigious Friendship Award, “China’s highest honor for foreign experts who have made outstanding contributions to the country’s economic and social progress.” He was also named dean of China’s New Huadu Business School, which operates in Fuzhou, Beijing, and Shanghai. More information on Phelps’s achievements in China can be found, here.

Congratulations to Edmund Phelps!


 

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Mass Flourishing:
How Grassroots Innovation Created Jobs, Challenge, and Change
Edmund Phelps

Princeton University Press’s best-selling books for the last week

These are the best-selling books for the past week.

Alan Turing: The Enigma, The Book That Inspired the Film The Imitation Game by Andrew Hodges
The Original Folk and Fairy Tales of the Brothers Grimm edited by Jack Zipes
Irrational Exuberance: Revised and Expanded Third edition by Robert J. Shiller
Mastering ’Metrics: The Path from Cause to Effect by Joshua D. Angrist & Jörn-Steffen Pischke
1177 BC: The Year Civilization Collapsed by Eric H. Cline
Mostly Harmless Econometrics: An Empiricist’s Companion by Joshua D. Angrist & Jörn-Steffen Pischke
On Bullshit by Harry Frankfurt
How to Solve It: A New Aspect of Mathematical Method by G. Polya
Privilege: The Making of an Adolescent Elite at St. Paul’s School by Shamus Rahman Khan
The Age of the Crisis of Man: Thought and Fiction in America, 1933–1973 by Mark Greif

Drumroll, please…. Introducing Princeton University Press’s best-selling books for 2014

With 2014 in the history books and the media already predicting which books will be big in 2015, we are happy to look back at our best-selling titles for the year. It is a list noticeable for diversity of subject (fairy tales, math, ancient history, and birds all make an appearance) and for what it says about the longevity of some of our older titles, (say hello to stalwart books like On Bullshit, The I Ching, and The Box). We hope you find something wonderful to read on this list and if you’ve already read any of these books, let us know in the comments section below.

The Original Folk and Fairy Tales of the Brothers Grimm edited by Jack Zipes
Alan Turing: The Enigma, The Book That Inspired the Film The Imitation Game by Andrew Hodges
1177 BC: The Year Civilization Collapsed by Eric H. Cline
Tesla: Inventor of the Electrical Age by W. Bernard Carlson
On Bullshit by Harry Frankfurt
The Warbler Guide by Tom Stephenson and Scott Whittle
The I Ching or Book of Changes edited by Hellmut Wilhelm
The Transformation of the World: A Global History of the Nineteenth Century by Jürgen Osterhammel
The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup by Noam Wasserman
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger by Marc Levinson
The 5 Elements of Effective Thinking by Edward B. Burger & Michael Starbird
Fragile by Design: The Political Origins of Banking Crises and Scarce Credit by Charles W. Calomiris & Stephen H. Haber
The New York Nobody Knows: Walking 6,000 Miles in the City by William B. Helmreich
Bumble Bees of North America: An Identification Guide by Paul H. Williams, Robbin W. Thorp, Leif L. Richardson & Sheila R. Colla
The Calculus Lifesaver: All the Tools You Need to Excel at Calculus by Adrian Banner
Why Government Fails So Often: And How It Can Do Better by Peter H. Schuck
The Soul of the World Roger Scruton
The Age of the Vikings Anders Winroth
Mostly Harmless Econometrics: An Empiricist’s Companion by Joshua D. Angrist & Jörn-Steffen Pischke
Rare Birds of North America by Steve N. G. Howell, Ian Lewington & Will Russell

New Economics and Finance Catalog!

Be among the first to browse and download our new economics and finance catalog!

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Click here to download

Of particular interest is Climate Shock: The Economic Consequences of a Hotter Planet by Gernot Wagner and Martin Weitzman. If you had a 10 percent chance of having a fatal car accident, you’d take necessary precautions. If your finances had a 10 percent chance of suffering a severe loss, you’d reevaluate your assets. So if we know the world is warming and there’s a 10 percent chance this might eventually lead to a catastrophe beyond anything we could imagine, why aren’t we doing more about climate change right now? We insure our lives against an uncertain future—why not our planet?

In Climate Shock, Wagner and Weitzman explore in lively, clear terms the likely repercussions of a hotter planet, drawing on and expanding from work previously unavailable to general audiences. They show that the longer we wait to act, the more likely an extreme event will happen. A city might go underwater. A rogue nation might shoot particles into the Earth’s atmosphere, geoengineering cooler temperatures. Zeroing in on the unknown extreme risks that may yet dwarf all else, the authors look at how economic forces that make sensible climate policies difficult to enact, make radical would-be fixes like geoengineering all the more probable. What we know about climate change is alarming enough. What we don’t know about the extreme risks could be far more dangerous. Wagner and Weitzman help readers understand that we need to think about climate change in the same way that we think about insurance—as a risk management problem, only here on a global scale.

More of our leading titles in economics and finance can be found in the catalog. You may also sign up with ease to be notified of forthcoming titles at http://press.princeton.edu/subscribe/. (Your e-mail address will remain confidential!)

If you’re heading to the annual Allied Social Sciences Association meeting in Boston, MA January 3rd–5th, come visit us at booth 314.

Join us Sunday, January 4th at 4:00 p.m. for a glass of wine to celebrate the publication of Mastering ‘Metrics: The Path from Cause to Effect. See you there!

Fragile by Design, The Limits of Partnership, and others among Bloomberg Businessweek’s favorite books of 2014

Happy new year 2014It’s nearing the end of the year and that means everyone is taking a look back at the best and worst of the past twelve months. Bloomberg Businessweek recently published a “Best Books of ’14,” list to their site, and five Princeton University Press titles were selected as some of the best of the year!

Mervyn King, former governor of the Bank of England, got things going; “Charles Calomiris and Stephen Haber’s Fragile by Design is a magnificent study of the economics and politics of banking.”fragile

Bjorn Wahlroos, Chairman of Nordea Bank AB (NDA), selected Edmund S. Phelps’s Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change and wrote, “[Phelps] redraws many political front lines and provides us with an answer to those who believe more public funding for investment and innovation is the road forward for our stagnant economies. It is a marvelous book that deserves to be read by everyone, but particularly by those entrusted with the design of the European future.”mass flourishing

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond selected both Fragile by Design: The Political Origins of Banking Crises and Scarce Credit by Calomiris and Haber and Human Capitalism: How Economic Growth has Made Us Smarter–and More Unequal by Brink Lindsey as his must reads of the year.human

“[Fragile by Design is] hands down the best single book for understanding the historical journey that laid the groundwork for the financial crisis.”

“[Lindsey] argues the case that economic inequality is more deeply intertwined with human capital accumulation and the process of economic growth than you thought.”

Dan Fuss, vice chairman of Loomis Sayles & Co., named The Limits of Partnership: U.S.-Russian Relations in the Twenty-First Century by Angela E. Stent as his choice for favorite book of 2014, while Satyajit Das, author of Traders, Guns, and Money selected The Transformation of the World: A Global History of the Nineteenth Century by Jürgen Osterhammel to round out the list of PUP titles. “Professor Jorgen Osterhammel’s fine book is anything but a linear recitation of events. Instead, it swoops, shimmies, and carves ellipses and spirals through the facts to give readers a remarkable picture of the 19th century, which has shaped much of the present world.”

angela stent world

Congratulations to all the PUP authors on the list! The rest of the article can be found, here.

 

Ian Goldin on Ebola and the consequences of globalization

goldinIan Goldin, co-author (with Mike Mariathasan) of The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do About It, voiced (or rather, wrote) his opinion on the Ebola outbreak and the role globalization has played thus far. In his PBS Newshour article, which can be read in its entirety, here, Goldin states, “globalization does not only lead to the spreading of ‘goods,’ such as economic opportunity and vaccines, but also to the spreading of ‘bads,’ such as diseases, financial crises and cyber attacks.” Ebola is just the most recent “bad” to come from greater globalization.

Goldin’s solution to prevent future infectious disease outbreaks (and other “bads”)  may not be popular among government officials responsible for budgeting resources, but it may be the only option. Outbreaks, like we’ve seen with Ebola, might become more common in an age of higher population density and increased international travel, yet the organization most responsible for preventing the spread of these diseases, the World Health Organization (WHO), is terribly underfunded according to Goldin.

“A breakdown or absence of public health infrastructure is the driving factor in over 40 percent of infectious disease outbreaks internationally,” writes Goldin. He also notes that the international organizations–WHO, International Monetary Fund, World Bank and UN Security Council, to name a few–needed to handle international crises “lack the leadership, legitimacy or capability to manage the spill-overs of globalization or emergent threats” because “national governments have stymied vital reforms…and attempt[ed] to wrest power back from what they think are mysterious, distant institutions.”

Goldin concludes his article with an ultimatum: “In order to harvest the ‘goods’ of globalization we need to invest in the institutions that manage the ‘bads.'”