The Answer Is Transaction Costs

Academic Publishing, Talking Frogs, and Nailing Your Head to the Floor

• Michael Munger • Season 1 • Episode 12

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What do Monty Python, George Akerlof, and the academic publishing industry have in common? They're all part of the explanation for the way academic publishing works.  High transaction costs and the race for tenure often push scholars to prioritize quantity over quality.

 So, if you've ever wondered why professors seem to produce endless streams of research, this episode is for you.  Plus the TWEJ, a triple-header!

Some links:

1.  Some images sent by EA, about "Desert Town", by Claude Gillot
Two carriages at an intersection, arguing about who gets to go first
A drawing of same, with a judge to determine the merits of the claims

2. The Insectivore's Dilemma: An actual instant of the "eat a bug!" coupon.

3. George Akerlof and the "Loyalty Filters" article in the American Economic Review, 73(1), 54–63.  

4. Kevin Munger and the Journal of Quantitative Description

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !


You can follow Mike Munger on Twitter at @mungowitz


Michael Munger:

This is Mike Munger, the knower of important things from Duke University Academic publishing the problem of deans who can count but can't read, getting your head nailed to the floor and the insectivorous dilemma, the value of talking frogs and more. Also twedge and this week's letter Straight out of Creebmore. This is Tidy C.

Michael Munger:

Last week's letter was from JT. I would love to hear your thoughts on academic publishing through the lens of transaction costs. Specifically, I'd love to hear your thoughts on what transaction costs can tell us about how the industry is structured. Why is it structured the way it is, whether it serves academics well and what counterintuitive changes might result in improved outcomes. End of letter.

Michael Munger:

One of the first things that I always ask people about academics when we're talking about academics for someone who is outside the industry, what do they think about tenure? Why does tenure exist? Should it continue? Well, the idea behind tenure is we hope that people will do more and better research when all material incentive to do so is removed. Let me say that again. The only justification I can think of for tenure that actually works is that we're hoping professors will do more and better research when all material incentive to do so is removed. Now, it's true that it may also protect you if you say something unpopular or you have unpopular political views, but that's not a very good reason to give someone lifetime employment. What we're hoping to do is to use lifetime employment to improve the quality of work that people do as a result. So one solution would be to get rid of tenure, but in the meantime a large and highly profitable industry has grown up around it.

Michael Munger:

Now I think we can take it as true that a successful scholar publishes important, influential work. The problem is that deans some of them at least and other academic administrators can count, but they can't really read. So instead of judging the quality of research and scholarship, they count the number of publications. The publications might not be important or influential, but if there are many, it means that that scholar has written a lot of papers. But what is a publication? What makes it a publication worth counting? So what we do in order to make publications worth counting is not make sure they're good, we make them difficult. We try to maintain standards so that the papers are refereed by anonymous peers who decide on the quality of the paper. Now, the process differs by discipline, but usually something like three or more anonymous people do judge the quality of research.

Michael Munger:

Journals have low acceptance rates and it's very difficult to publish in them. So it's not unlike calligraphy in the classic poems that were memorized by Chinese civil servants that we talked about in a previous episode. It's utterly pointless and frankly boring work, but it can be done in great quantity as a loyalty filter. I have friends who joke I think they're joking about minimum publishable units. So if a paper has more than one minimum publishable units, or MPUs, you should divide the paper to make sure that you get more publications. No paper should have more than one MPU, so I think it's a joke. It's not a joke, they're totally serious. Obviously, under this system, you should try to maximize the number, not the quality, of your publications, so a key part of this is the ability to access other work in your field, work that has already been published.

Michael Munger:

Once, academics subscribe to several journals and they had hard copies in their office. Today, it's much more common to use your university's access to library subscriptions. Now, many journals are published by associations, by academic associations. Some of those are free-standing. A lot of the journals, though, operate just on their own. Most of them, regardless of whether they're associated with an organization or not, make their money from library subscriptions, which can be very expensive thousands of dollars per journal and notice that these are not in print journals anymore. These are online, so the cost of providing them at the margin is almost zero.

Michael Munger:

So what is the value proposition here? Well, the research, time and effort is provided for free by the professors themselves. Their funding comes from universities or from government agencies and foundations. It may take millions of dollars in the sciences or the medical fields in order to support the research for a single paper. In fact, many journals have submission fees where you pay them for the honor of them considering publishing your paper. Now, the editor of the journal is paid something, but not much. The prestige of the journal, like the honor of getting to whitewash Tom Sawyer's fence, is the reward. The referees may be paid some small amount, but usually not. It's a professional obligation provided for free, and the level of the quality of this is often exactly what you would expect for something you don't pay for.

Michael Munger:

Most papers don't get published. If they do, there was a process of revision that took months or years of tedious and largely pointless changes to satisfy referees who probably didn't really read the paper, want you to cite them more or want you to write a different paper entirely. So it's as if you were at a Starbucks. There's an enormous wasted time in queuing up for your latte, except when most people get to the front of the line. The Starbucks Nazi says no publication for you. They don't get to buy the latte they've been standing in line for they have to go get in line at another coffee shop.

Michael Munger:

So after months, sometimes years, your paper is turned down at that journal and you have to start all over again somewhere else, if it is accepted and most are not. But if it is accepted the papers are then formatted and printed, except that's using latex or some other software. That expenses largely avoided by the journal themselves. They're already typeset. So the journals do a terrible job for the most part of typesetting. They're amazingly indifferent to errors and mistakes, because it's actually all the authors fault.

Michael Munger:

All of the editing, the formatting and the proofreading are all offloaded onto the authors, who are the ones who are providing all of the effort in the first place. The journal provides almost nothing. All of this is foisted on the authors, who are providing the work for free in the first place. At this point, once they have the journal publication put together and they can sell it electronically, the journal charges a fortune to hundreds of libraries around the world. So university libraries are paying publishers for access to the research that those same universities paid for in the first place.

Michael Munger:

Professors are lining up for the right to get their work published for no payment and it's now common to have to pay the journal to get the publication of work that the professor spent Enormous amounts of time and money to produce in the first place. And the question is why? Well, there have been estimates that a top tier publication in economics or political science say in the American economic review, american political science review, journal of political economy and so on a single publication in a top journal is worth $50,000 or more in terms of the present value of increased salary and promotion. That is, you're going to get promoted sooner, you're gonna get tenure at your current job. You're going to get outside offers, you're going to get raises for a young person. If you take the present value of the difference in your career between having an American economic review early on in your career or not, it can be at least $50,000 in difference. Even a minor journal publication is worth at least $10,000 or more for a young scholar.

Michael Munger:

Now remember, deans can count, even if they can't read. You generally get six years as an assistant professor and then you go up for tenure if you've published seven or ten papers in journals. Given all the obstacles to publication, you are clearly the sort of bovine drudge who can be herded towards continued academic success. Tenure for you. Well, there are exceptions to everything that I've said. Many deans are hard-working and very smart heck of a lot smarter than I am. They read carefully. Many journal editors are serious about scholarship. Many publishers are careful about proofreading my characterization. I will stand by as being the norm. I'm afraid most of the time the bad things that I've said are true.

Michael Munger:

Journal articles have become the currency by which academics buy the desirable commodity of tenure and, unsurprisingly, that currency is often counterfeit. We've turned the process on its head. We've started with the idea that an energetic and creative scholar is going to publish papers and important journals. We've arrived at the stage where we judge anyone who publishes papers in any of the proliferating set of useless and unread journals Must be an energetic and creative scholar. That's nonsense. In many cases, publishing useless papers that no one will ever read is what people do instead of energetic and creative scholarship.

Michael Munger:

Now a statistic how many citations would you think that a journal article would get? Well, the answer is the median is zero. That is, more than half of all published paper have a lifetime Citation record of zero citations. Oh, for many journals, it's 60% of their papers or more are never cited. Nearly two-thirds of the papers that are published through this enormously wasteful process are then never cited. Many of those that are cited are only cited by their own authors in some other pointless and unread publication.

Michael Munger:

So there's a kind of arms race, with all sides using transactions costs as the limiting factor. Not everyone can get tenure. There aren't nearly enough jobs, so we ration by scholarship. It's easy to add journals and since journals can make money, some of these are quite predatory selling publication space. So we use other means, such as impact factor, to judge quality journals. But then those high quality journals charge higher subscription fees to libraries and impose high transaction costs on authors who may have to undergo four rounds of pointless revision, producing papers that are 30 pages long but that have 50 pages of online appendix and extra materials, because some referee decided that they should go do another experiment. There still aren't going to be enough jobs. So all of those counterfeit quality measures are ultimately wasted, as in any arms race or prisoner's dilemma setting.

Michael Munger:

Why doesn't that system change? It's obviously broken. Well, all the old people have a stake in the current setup because they are the winners. The journals have a huge stake in the status quo because they make big revenue from library sales and tight control of access to the commodity of top journal. But notice that top journal is just one that's hard to publish in, not a journal that publishes important work. Judging important work is too hard for the bureaucratic golems that are shuffling paper through this system. So we just count publications, we multiply by the number of pages in the article and then multiply that by the impact factor of the journal and that's our judgment of the quality of the publication. Frankly, it's a scandal and it may be on the verge of collapsing under its own weight.

Michael Munger:

I want to mention that my son, kevin Munger, was one of the founders of an alternative, heterodox journal called the Journal of Quantitative Description. It's direct, open access. They have a streamlined process of refereeing. I suggest you check it out. I'll put a link in the show notes.

Michael Munger:

The problem is we're trying to ration access to a valuable rent, that is, a tenured professorship.

Michael Munger:

To limit corruption we try to use measurable metrics such as publications in referee journals, but then the cost of rent seeking overwhelm the value of the rents themselves, to the point where we likely just burn up more than the value of the available positions by forcing young people to spend excessive time preparing papers that have very little actual research content or impact. The big money makers in this process are the journals and publishers. They'll continue to try to protect their enormous rents even though there is no social value being produced and in fact, the net result when you look at all the rent seeking is probably to waste resources. The problem of determining loyalty Will you continue to publish after tenure has unintentionally created an entire shadow industry of useless articles, fake journals and a generation of young people disillusioned by the life of the mind. This problem of loyalty is something that was famously made fun of by Monty Python in their story of Dinsdale Piranha of Kipling Road. He famously valued loyalty and he used transaction costs to reveal the type of his neighbors and associates.

Guest:

Stig I've been told that Dinsdale Piranha nailed your head to the floor. No, no, never, never. I was just a smashing bloke, but he pleased to have film of Dinsdale actually nailing your head to the floor. Oh yeah, well, he did that. Yeah, but why? Why, he had to, didn't he? I mean, be fair, there was nothing else he could do. I mean, I had transgressed the unwritten law. What had you done? Well, he never told me that, but he gave me his word that it was the case and that's good enough for me. With old Dinsie, I mean, he didn't want to nail my head to the floor. I had to insist. He wanted to let me off. He was a cruel man, but fair.

Michael Munger:

I broke the unwritten law. Well, that's very interesting in the context of loyalty. I'm afraid we're taking a generation of young scholars, freshly minted PhDs, and we're nailing their head to the floor because they have violated the unwritten law. I'm going to later do an entire episode about initiation rights and military training as loyalty filters. George Akerlof wrote a great paper in 1983 in the American Economic Review and I'll put up a link to that in the show notes. Whoa, that sound means it's time for twedge.

Michael Munger:

This week's economics joke is a triple header. First, on economists as people Number one, the definition of an economist is someone who deals with numbers but who lacks the personality to be an accountant. Second, a young man was crossing a road one day when a frog called out to him from the side of the road and said if you kiss me, I'll turn into a beautiful princess. He bent over, picked up the frog and put it in his pocket. The frog spoke up again look, if you kiss me and turn me back into a beautiful princess, I will become your girlfriend and do anything that you want for a year. The man took the frog out of his pocket, smiled at it, returned it to his pocket. The frog finally said what's the problem? Why won't you kiss me? And the economist said look, I'm a male economist. I have no experience that could possibly help me predict the value of having a girlfriend, but a talking frog, that's gotta be worth a fortune.

Michael Munger:

Finally, joke number three, A woman hears from a doctor that she only has six months to live. Doctor advises her that what she should do is marry an economist. The woman says will that cure my illness? The doctor says oh no, my goodness no. But always having to listen to all that talk about transaction costs, well, that'll make the six months seem like at least a decade. I have to admit that's my wife Donna's, favorite, so I'm not sure that's really funny.

Michael Munger:

We got three letters this week that I wanted to say something about. First two short ones From EA. There's a really terrific set of drawings and paintings about well, that look a lot like the story of Desert Town that we got from David Schmitz. I'll put up the links to those. They're worth looking at. If you had to argue, who gets to go first at every intersection is really sort of not hypothetical. It has apparently been a problem in the past and you can see why. Having a stoplight or some sort of fair bit arbitrary rule to reduce the transactions cost of making those decisions would be a big help.

Michael Munger:

Second, the Insectivores Dilemma. Lh writes you made a joke several times on Tidy C that perhaps a grocery store could skip the expense of printed coupons and instead makes customers sort themselves into the highly price sensitive group by saying if you want a low price, you have to eat a bug. Are you aware that Cold Stone Creamery did this exact thing 20 years ago? It was a tie-in promotion with a TV show, survivor. Well, LH, no, I did not know that. I'm very glad to learn that it's true. I'll put up the link that you sent. Thanks, One of the funny things about economics is that often things that I think are a joke actually have happened out in the world. Finally, a very interesting letter from Gary Lynn. I generally don't read out names, I just use initials, but in this case Professor Lynn is actually a member of the economics death cult and the only way that I can link to some of the materials he mentioned is to give him his full name and full credit. Professor Rin-Lin writes. Professor Rin-Lin writes.

Michael Munger:

The answer is transactions cost in many cases in human interactions, because such costs arise in the context of shared interest among people. In dual interest theory. In meta-economics now, this is a field that Professor Lin has contributed to it is represented in the other interest, a shared interest that's internalized within the own self-interest Institutions, as argued by institutional economists going back to Veblen. Representing the shared other interest matter because institutions, culture, both formal and informal rules, including the enforceable and the unenforceable, as Russ Roberts and I talked about, affect the cost of achieving the shared other interest as well as the cost of achieving the shared interest. Professor Lin published a paper some years back that tried to document the rising disparity between beliefs, attitudes and values, with farmers who wanted water permits and regulatory staff who were reviewing the permit applications. This difference in values caused transactions costs to increase sharply at an increasing rate. But going the other direction is the shared other interest converged between the disparate group, the transactions cost dramatically decreased.

Michael Munger:

Transaction cost in the domain of other interests greatly affect the outcome of the pursuit of the self-interest of what looks like a commercial setting. The fact is that commensurability in price terms is not always the case, as some things in the realm of shared other interest are priceless, or at least cannot be compensated. So transactions cost may also arrive in the incommensurable, especially the unenforceable domain of value. Well, I shortened that letter quite a bit to simplify it and, as you can tell, it's still a pretty complicated set of issues. We will take up that puzzle next week, have another hilarious twedge and more. Thanks for listening to Tidy C.