Shared Creation

by on October 5, 2012 at 12:33 pm in Books, Economics, Web/Tech | Permalink

From Joshua Gans’s Information Wants to be Shared.

Economic theory has not quite caught up with this interesting area of
shared information. I can speculate on future business models for books and
the news because they fall within baseline economic motives. But when
it comes to shared creation, nonmonetary motives loom larger and the
economist’s toolkit is harder to rely upon. Wikipedia is a prime example.
More than just a content platform, it is built on and maintained by an army of anonymous volunteers. Back in 2001, when it started, economists would
not have predicted Wikipedia’s success; nor can they really explain it now.

Other social scientists have not waited for economists to catch up. But
perhaps no person has examined the notion that broad, shared creation can
be effective more than MIT professor Eric von Hippel. One of the great
facts from his research is this: a vast number of useful innovations come
not from some scientist and engineer tinkering in a lab, but from users
solving their own problems. Examples abound, from scientific instruments,
to mountain bikes and, of course, to open source software. In some cases,
the innovations were the work of lone innovators, while for others, local
communities together produced advances. It is the latter that interests us
here.

Economists thought that Wikipedia couldn’t work because of problems of motivation but what turned out to matter most was not motivation but transaction costs. With 7 billion people and low transaction costs what other forms of shared creation become possible?

prior_approval October 5, 2012 at 1:15 pm

‘But when it comes to shared creation…’

You mean the Internet?

‘With 7 billion people and low transaction costs what other forms of shared creation become possible?’

You mean the Internet, which allows information to be shared? Such as the information which allows the Internet to keep expanding?

The Internet is already involved at the very start of 3d printing, spreading the knowledge of what it is, the software to do it, and the plans for creating broad availabe hardware to implement it.

So, can one imagine that forming matter into useful forms is creative? And if yes, then the idea of shared creation takes on an entirely literal meaning.

Matter is not data, of course – much the same way sand is not glass. Until sand becomes glass, that is. Or is part of the raw materials used to create an ocean spanning glass fiber cable (at a considerably lower energy cost than the copper it replaced).

Willitts October 5, 2012 at 1:38 pm

Voluntary contributions toward public goods has been in the economics literature for decades. Gans invents a platitude of “shared creation” and claims it as novel.

It is insightful to observe seeming counterexamples to the stylized fact that markets underprovide public goods through voluntary contribution. In my opinion Wikipedia is both useful and valuable. But it suffers from an underprovision of quality. Many entries are polluted with POV bias, weasel words, incomplete or superfluous information.

Many entries have ceased looking like encyclopaedia entries which may or may not be a good thing. One thing is clear: many entries are provided by people with a low opportunity cost of their time. This may reduce labor costs, but it also decreases reliability.

While it appears we have found an apparent anomaly in need of explanation, we must compare it to what we consider optimal. We also lack information on the public bad of incorrect or biased information.

mulp October 5, 2012 at 2:03 pm

Name a book in politics and economics that you paid for that you or I won’t claim is “polluted with POV bias, weasel words, incomplete or superfluous information.”

I can list a lot of them, and I wish the textbook by Mankiw I was required to buy for an intro to macro class for about $125 was the last one, but I’m guessing I’ll break down and buy one of Tyler’s cheap ebooks “polluted with POV bias, weasel words, incomplete or superfluous information” in order to comment authoritatively. I want to verify that Tyler condemns local organic food but rejects 10,000 mile factory food as unacceptable in Tyler gets lunch – does Tyler declare McDonalds the absolute best place to eat lunch because it is the best mass produced high tech food delivery system using the highest economies of scale and market theory.

And many people pay sizable cable and other media fees to get a steady stream of stuff where “We also lack information on the public bad of incorrect or biased information.” Do you trust the Fox or MSNBC label to define the quality of the information?

Willitts October 5, 2012 at 2:56 pm

If you don’t understand the difference between public and private goods, there really isn’t any point in having a debate with you on this topic.

Mankiw’s book is a private good, regardless of whether you and a million other people were “forced” to buy it for a course and university and major that you chose.

Wikipedia is a public good. It is theorectically excludable, but certainly nonrival.

They appear similar only in jointness of supply.

I have neither read Mankiw’s book nor the Wiki entry on Venus Fly Traps. Both sets of information are available. One I am excluded from by price. The other I can access for free in less than ten seconds. I get the good, the bad, and the ugly of Wikipedia regardless of my willingness or ability to pay. I get the good, the bad, and the ugly of Mankiw only if I choose to pay. And if I am informed of the relative proportions of good, bad, and ugly in Mankiw’s book I can make an informed decision on whether to purchase it. I need not make that decision with Wikipedia.

Public goods have a free rider problem that is reduced with books (we could share a book, but then it is a highly congestable club good). Wikipedia is indeed an interesting case of voluntary provision worthy of research, but the topic is not novel nor has the analysis been ignored by economists or economics. Your statements were ignorant of the state of the art. I grant you only that this particular topic is underdeveloped in the science. In sociology and psychology, it may be recognized but it is not rigorously analysed or modeled.

Bob Knaus October 5, 2012 at 2:39 pm

Unfortunately, your observation about Wikipedia entries could apply to many MR comments lately.

Willitts October 5, 2012 at 2:57 pm

They are precise analogs if not identical entities, so with your critique you prove my point.

Cliff October 5, 2012 at 4:27 pm

They are not analogs because no one is editing our blog comments. Wikipedia accuracy, while not perfect, is greater than that of traditional encyclopedias.

Willitts October 5, 2012 at 7:42 pm

But you rebut my point which is actually a form of editing more transparent than the behind-the-scenes editing of Wikipedia which also reflects POV and other biases. So again by refuting my point you prove it. Have your rebuttals and the lack of support for my thesis constituted the optimal amount and type of analysis on this matter? Of course not! There are people free riding on our discussion or they have useful things to say but their time value of saying it is too high or they don’t care. This blog and its comments is a voluntary provision of public goods that I assert, from existing models, is suboptimally provided.

I reject as unproven your assertion that Wikipedia is more accurate than traditional encyclopedias which are written by experts, not some random person who might think he knows more than experts. Wiki has the advantage of constant updating.

Again, I am a fan of Wikipedia and I am the author of several entries. It is an interesting case study in voluntary provision of a public good. But the efficiency of provision must always be measured against some optimum. Current models predict that voluntary provision will ne suboptimal. Quantity as well as quality must be measured. There isn’t sufficient evidence or formal model that Wikipedia demonstrates optimal provision despite apparent free rider problems. I have often had to search other sites after Wikipedia. In many cases, the text of Wiki was less valuable than the link to the source material.

You and Gans and Mulp seem enamored with the notion that Wikipedia or this blog even exist! Mulp’s criticism was that economists ignore this facet of human behavior. Balderdash!

Basic economic theory of public goods determined decades ago that these goods WOULD exist. People contribute SOMETHING to public goods because they derive private benefits from it. The question at bar is whether they provide the optimum amount for society’s sake. The answer is decidedly NO, otherwise many of these dedicated Wiki authors and editors would DO MORE. There are a lot of Wiki pages that have glaring warnings at the top that the entries are underdeveloped.

Bob Knaus October 5, 2012 at 8:24 pm

“underprovision of quality”
“low opportunity cost of their time”
’nuff said.

kb October 6, 2012 at 10:11 am

papier ist geduldig……and that goes for all media

mulp October 5, 2012 at 1:45 pm

Is Alex a teacher purely out of motivation to be paid to teach?

If Alex had no paid opportunity to teach, Alex would never teach no matter how ignorant the person he encountered was?

Just out of curiosity, did Adam Smith write only for the profit from publishing? Was his income for the decades of his work based on his delivering his two major works? Would “economics” exist if Adam Smith was not paid to create the study of economics?

Going back further, do the origins of physics and biology rooted in ancient times result from the philosophers being paid to create the study of science?

Knowledge, no matter how free, delivers nothing. Human effort is required to turn knowledge into a mountain bike. Very few of those making mountain bikes were paid (enough) for their efforts, but they were happy with the reward of creating the sport of mountain biking with time spent with lots of fellow mountain bikers.

wikipedia is a classic case of economist failing to understand the basics of microeconomics and economies of scale and markets. But doing so in contradictory ways:

1. labor price is determined purely by supply and demand – if demand results in pay of $1,000,000 a minute,that is rational, but no minimum wage should exist because supply and demand might set the price at $0.00001, because the price of labor is not constrained by any factor cost like food and housing and health care and transportation. Well, if an economist will not argue labor price must exceed a minimum cost which is determined by fixed and variable costs, then information produced by free labor is absolutely required to exist. If a supply of research and writing exists with demand at a price of zero, then the market must deliver research and writing for wikipedia for zero cost.

2. low friction like the internet will allow free knowledge delivered for minimal charity support for the common good – which is hardly a leap if one argues government should not provide welfare because charity will provide expensive goods with high friction to the needy – providing aid in a war zone requires paying for expensive supplies, paying for expensive delivery means, by people going into high friction conflict zones.

Only if you believe all charity is impossible can wikipedia NOT be obviously successful.

I contribute to wikipedia several times a week with minor edits (fixing and adding links mostly) at a cost of less than an hour mixed in with hours reading, which is as expensive as picking up something I notice someone dropped and handing it back to them, or picking up trash I pass while walking. On the other hand, providing aid to someone in Africa is easily a thousand times more costly even if I had a cell phone to text $3 in aid to Africa.

Wonks Anonymous October 5, 2012 at 2:02 pm

Samuel Johnson reports that Smith was not a pleasant conversation partner because he deliberately withheld information that people would need to buy his books for.

Willitts October 5, 2012 at 2:14 pm

Once we get past all of your false generalizations about economics and economists, we find….you’ve said nothing at all.

Economics has never precluded altruism. Economists have explicitly modeled interdependent utility functions. And then there is the whole literature on positive externalities and public good

In direct response to your missive, the liberal arts – art and science for their sake – was established by persons of wealth and privilege who didn’t need to conduct art or science to earn their next meal. Prestige and honor were interwoven with whatever private gains they had from self-actualization. The frequent fights over credit for achievements or discoveries are evidence that their efforts were not altogether altruistic. Just because benefits and costs are intangible doesn’t mean they don’t exist.

ila October 5, 2012 at 2:40 pm

To answer the author’s question, an example:

http://www.albinoblacksheep.com/flash/vertical2

BSF October 5, 2012 at 2:59 pm

From Wealth of Nations, Book 1, Chapter 1:
“A great part of the machines made use of in those manufactures in which labour is most subdivided, were originally the inventions of common workmen, who, being each of them employed in some very simple operation, naturally turned their thoughts towards finding out easier and readier methods of performing it. Whoever has been much accustomed to visit such manufactures, must frequently have been shewn very pretty machines, which were the inventions of such workmen, in order to facilitate and quicken their own particular part of the work. In the first fire–engines, a boy was constantly employed to open and shut alternately the communication between the boiler and the cylinder, according as the piston either ascended or descended. One of those boys, who loved to play with his companions, observed that, by tying a string from the handle of the valve, which opened this communication, to another part of the machine, the valve would open and shut without his assistance, and leave him at liberty to divert himself with his play–fellows. One of the greatest improvements that has been made upon this machine, since it was first invented, was in this manner the discovery of a boy who wanted to save his own labour.”

RM October 5, 2012 at 3:20 pm

The manor reason Wikipedia works is because there is pride in being a poster. You may even say there is a role for altruism. Of the people who post, how many of them depend on it as a sold source of income? 0.01 % (including those paid to amend Romney’s records)?

ChrisA October 5, 2012 at 9:53 pm

Reading many living famous people bios on wikipedia leads me to a conclusion that they are paying people to ensure the bio is as flattering as possible and plays down or disregards negative information. I bet that companies are also doing the same. But is true that the majority of this negative information is also available elsewhere on the net, since it is usually only the recent stuff that people care about.

I don’t think we need to invoke altruism too much for the unpaid contributors to Wikipedia. There are many people who enjoy the actual act of compiling information and sharing it with people (just like I like commentating). If you have ever been to a bar there is usually a few people there who are glad to educate you. There are also people who can’t stand incorrect facts and so are motivated, not by any mushy love of mankind, but simple irritation, to correct misinformation. The beauty of wikipedia is that it has found a way to harness these motivations.

Willitts October 6, 2012 at 12:39 am

Exactly. The Wiki entry on Nancy Pelosi reads like a campaign staffer wrote it as an ad. Of course, the page is locked from editing. No politician every had as much control over their Brittanica entry.

As I said above, the question isn’t whether people will voluntarily contribute to a public good, but whether each and all will contribute the optimum amount. Theory says they won’t, and I see no reason to reject that hypothesis. People like Gans think this provision is anomalous. It has been part of existing economic literature for many years. Altruism is sufficient but not necessary for public good provision because people get private gain from public goods. Only in the most extreme cases where a minimum threshold must be met to provide any benefit (like a levee system) do we see no provision whatsoever.

Dismalist October 5, 2012 at 4:41 pm

Shared information has not quite caught up with this interesting area of economic theory. Never has so little been said by so many.

Scott Lahti October 5, 2012 at 10:19 pm

“Of the people who post (articles at Wikipedia), how many of them depend on it as a sold source of income?”

For a few months, anyway.

Saturos October 6, 2012 at 2:46 pm

Good job, man!

Scott Lahti October 6, 2012 at 4:14 pm

Why, thank you, Srijit. It will be our little secret, or at least so far, four days after the announcement, it almost is. And anyone whose YouTube feed introduces me to the Sonic Youth cover of the Simpsons theme deserves an award in his own right.

Ray Lopez October 6, 2012 at 4:52 am

True or false: Wikipedia is broader but shallower than Encyclopedia Britannica? True. Pick a subject you know well, look it up in the former then the latter. You’ll get more trivia in the former, more substance in the latter. And for course you’ll get a broader range in the former–you can, after all, set up a Wiki page about yourself or your ordinary neighbor.

Which leads to the conclusion: the reason the former put the latter out of business was not so much the superiority of the former, but the fact the latter did not price itself properly: it should have been cheaper, and on-line. I’d gladly pay $5 a year to have the latter on-call. And if a billion other people did likewise, E.B. could easily hire the best experts to update it better than Wikipedia, which is (IMO) quite simplistic when it comes to giving a nuanced view of a subject. Great for high school students, not so great for professionals.

Another topic that shows the superiority of paid over free (shared) content: Windows vs Linux. Windows wins despite being “closed and expensive” and Linux being “open source and free”.

Rahul October 6, 2012 at 9:23 am

Question is how much do people value depth over breadth. What’s the tradeoff?

Would you choose 1000 long articles (Britannica) or 4,069,111 shorter (Wikipedia) articles?

For professionals, there’s usually other better options. e.g. Kirk Othmer Encylopedia of Chemical Technology etc.

Britannica’s neither here nor there.

Jule October 6, 2012 at 4:51 pm
fluoxetine OVERNIGHT October 24, 2012 at 2:16 am

Rahul, I am totally agree with your thoughts. Keep doing these type of work.

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