In early September, I blogged about a new paper by Luigi Zingales, an economist who works at the Booth School of Business in Chicago. The paper suggests that economists in business schools have a strong pro-business or rather pro-management bias.
Zingales was the guest on this week’s episode of Econtalk. I usually enjoy listening to Econtalk but this week’s episode was unusually good–educational and entertaining.
Obviously I’m not an economist, but I do work in a management school and I think that much of what Zingales says about the possibility of capture and pro-business bias applies to all management researchers, including business historians. At one point in the interview, Zingales says that scholars who use archival sources are less prone to capture than those who do research involving interviews with executives. Hmmm— I don’t know about that. I would suggest that Zingales read Stephanie Decker’s piece on research in business archives.
I thought that this particular exchange was particularly important to business historians who rely on company archives.
Zingales: So, first of all, let’s start with data. Nowadays it’s very sexy and trendy to either use propriety data for certain analysis, or to do a field study about a certain topic. Now, the best researchers guarantee themselves against being prevented from publishing their results, the research they do. Still there is a very subtle quid pro quo about what I’m doing. So, if I partner with some payday loan, with one payday loan firm to do some field experiment, I probably don’t want to come up with a result that says that payday loans
Russ Roberts: Exploit poor people.
Zingales: Exactly. And so, it’s not that I am sort of prevented from doing that. Like, the regulator is not prevented from really going after the industry. But the incentives are such that I probably will sort of fine tune and try not to look at the worst things, and look at the things I can look at. So, inevitably the research is going to be a bit biased. Now, we know every research is a bit biased. I don’t think that anybody holds[?] the truth. But in general, we come to the conclusion that if we come across research, those individual biases cancel out, and as a result, the average is pretty accurate. What I’m saying is, because the data in this case are controlled by people with a particular interest, even if you take the integral of all this research, the overall picture cannot be unbiased.I’ve been very lucky to work with company archivists who have given me no-strings attached access to internal documents. However, I know that not all firms are like that.
Luigi Zingales, an economist who works at the Booth School of Business in Chicago, has published an interesting paper that suggests that economists in business schools have a strong pro-business or rather pro-management bias. The ungated version of the paper is available here.
Abstract: The very same forces that induce economists to conclude that regulators are captured should lead us to conclude that the economic profession is captured as well. As evidence of this capture, I show that papers whose conclusions are pro-management are more likely to be published in economic journals and more likely to be cited. I also show that business schools’ faculty write papers that are more pro management. I highlight possible remedies to reduce the extent of this capture: from a reform of the publication process, to an enhanced data disclosure, from a stronger theoretical foundation to a mechanism of peer pressure. Ultimately, the most…
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The Past Speaks 
I always thought that the danger of writing corporate history was much the same as writing biography: you can end up either thinking the subject is wonderful or terrible (see Tom Bower’s muck-raking journalistic approach for good examples of the latter). My first piece of research — on a railway company — was selected partly because I come from a family of railwaymen (and women), and I am sure there was a bias in there somewhere… Historians face the additional problem of trying not to impose modern values on something written by people brought up in a very different context, and if one works on business operating in a different country from one’s own there are issues of both chronology and culture to consider when attempting to interpret a source in an objective way…
Your point about family background is really important and something Zingales doesn’t address. Marriage to an executive in the industry being studied is another potential source of bias.