Expert Failure

Cambridge Studies in Economics, Choice, and Society

by Roger Koppl

The humble idea that experts are ordinary human beings leads to surprising conclusions about how to get the best possible expert advice. All too often, experts have monopoly power because of licensing restrictions or because they are government bureaucrats protected from both competition and the consequences of their decisions. This book argues that, in the market for expert opinion, we need real competition in which rival experts may have different opinions and new experts are free to enter. But the idea of breaking up expert monopolies has far-reaching implications for public administration, forensic science, research science, economics, America's military-industrial complex, and all domains of expert knowledge. Roger Koppl develops a theory of experts and expert failure, and uses a wide range of examples - from forensic science to fashion - to explain the applications of his theory, including state regulation of economic activity.

Genres: Economics, Politics, Nonfiction

290 pages, Hardcover

First published February 8, 2018

Reviews

[Ronald J. · Rating 3 out of 5]

Experts tend to have monopoly power. Roger Koppl argues that real competition is needed in the market for expert opinion, where new experts are free to enter. Consider the election of Donald Trump, Brexit, and the Flint water crisis, just to name three examples where the public expressed discontent with the so-called experts. Further, Alan Greenspan’s “shocked disbelief” over the Great Recession he presided over, and Jonathan Gruber’s said the “stupidity of the American vote” was essential to the passage of Obamacare. Not to mention the evil of eugenics, largely supported by expert elites, including Plato and Aristotle. Reading Koppl’s book make me think of William F. Buckley’s famous line, “I’d rather be governed by the first 500 names of the Boston phonebook than the faculty of Harvard.” There’s a lot of wisdom there. In the author’s theory—an “economic theory of experts—an expert is anyone paid for their opinion, whether or not they sincerely believe the message to be true. It’s distinct from other economic models, such as principal-agent, asymmetric information, and credence-goods models. It also doesn’t require that we judge whose expertise is legitimate or scientific. There’s a problem of experts because different people know different things, hence the division of knowledge must be at the center of any theory of experts.

Some conclusions:

• Expert failure is more likely when experts choose for their clients than when the clients choose for themselves.

• Failure is more likely when experts have an epistemic monopoly than where they compete.

• Poverty is caused by a shortage of expertise, say the development experts. But it’s really a shortage of rights (William Easterly wrote on this, in the Tyranny of Experts).

• Koppl got interested in this topic due to his interest in forensic science, which has been a rich source of expert failure.

• Under experts, knowledge is imposed on the system. Instead, knowledge should emerge from the system.

• Experts are not above “the system” but a part of it! The theory needs to explain the theorist. They are just one more ant in the anthill. Public choice theory should be part of the theory. 1) experts seek to maximize utility, including praise; 2) cognition is limited and erring. For example, the hotter a scientific field, the less likely the research findings are to be true. Koppl discusses this with respect to climate change research by the UN’s IPCC.

• More virtuous experts are not necessarily more reliable.

• No one person knows how to make a pencil. The knowledge is distributed across all participants in the division of labor. Pencil-making knowledge is synecological.

• Efficiency in the market for assassins is bad. It’s not the only thing that matters, and it’s morally neutral and generic. It’s why effectiveness is much more important—doing the right thing.


President Eisenhower, in his farewell address warned of the military-industrial complex, but less famously known he also warned of a “technological revolution” that changed the conduct of research in American universities. He was worried about the domination of Federal employment and the power of money could mean that public policy itself become the captive of a scientific-technological elite. Looks prescient today. We should not impose a uniform body of knowledge on society, for fear of creating the failure of Soviet style planning. Koppl ends with this: “My fondest hope for this volume is that it may help induce the reader to value expertise, but fear expert power.” He did exactly that for this reader.

[Paul Sand · Rating 3 out of 5]

[Imported automatically from my blog. Some formatting there may not have translated here.]

Yes, that's a November 7, 1940 picture of "Galloping Gertie" on the cover, the collapsing Tacoma Narrows Bridge, built by the "experts" of the day; fortunately the only fatality was Tubby, a cocker spaniel who was left in the last car to drive on the bridge, as the owner crawled to safety.

So I was expecting (hoping?) a rollicking account of egg-on-their-faces "experts" whose grand schemes are brought low by reality. Not what I got, though. This is a relatively dry thesis; the author, Roger Koppl, is a professor of finance in the Whitman School of Management at Syracuse University, and his book is written in standard academese. It's clearly one salvo in an ongoing slow-motion debate on the role of experts in (mostly American) government and society. (Amusingly, his school's web page lists him as one of its "Faculty Experts".)

Koppl goes back to the ancient Greeks to find the roots of the notion that experts can and should be in charge of public policy. You remember Plato and his philospher-king idea. (Koppl floats the theory that Socrates might have bribed the Oracle of Delphi into proclaiming him the wisest man in Athens. Darn, another hero tarnished.)

What's wrong with that? Shouldn't smart people be telling the rest of us dullards what to do? Koppl draws on Hayek's theory of knowledge to argue that's the wrong path; it's literally impossible for even very smart experts to gather enough data in their brains to match the wisdom engrained and distributed throughout society. Koppl also references the public choice theory of Buchanan/Tullock, arguing that it's fallacious to imagine a coterie of disinterested experts; they're as human as the rest of us, subject to bias and self-interest. And they are largely shielded from the consequences of their decisions.

In sum, giving experts "monopoly power" to make decisions is a mistake, for the same reasons that monopoly businesses are problematic. Koppl argues for open competition between experts, allowing free entry into that noble priesthood. To simplify: we need expertise very badly, but we mustn't toss the car keys to the "experts" and let them drive.

Koppl's writing style verges on the muddy; although he's a Hayek fan, his prose often makes Hayek look like Lee Child in comparison. Some of that is due to the academic need to Cite Sources, which Koppl does in spades:

Information choice theory includes identity as a motive of experts. Aberlof and Kranton (2000, 2002) introduce identity to the utility function. Aberlof and Kranton (2005, 2008) put identity into the utility function of the agent in an otherwise standard principal-agent model. Cowan (2012) and Koppl and Cowan (2010) spply the principal-agent model of Aberlof and Kranton (2005, 2008) to forensic science.

I'm sure there are readers deeply immersed in the relevant field who might find that to contain useful information.

Koppl winds up with a chapter on the "deep state". He equates this, roughly, with what Ike called the "military-industrial complex" in his 1961 farewell address. That's reflective of the term's origin, referring to the unwarranted influence of defense contractors, the military bureaucracy, and their civilian enablers. That's important, sure. But it's not hard to see the term could well be applied more broadly to every coalition of self-interested bureaucrats, legislators, and their beneficiaries inside and outside the formal government. You don't have to be a Breitbart News conspiracy-theory believer to see that as a problem.

[Tara Brabazon · Rating 2 out of 5]

I was really looking forward to this book. But it is a real worry. Yes, it is important to explore 'expert failure.' The book however is lacking a theory of failure, and is examples driven. These examples include eugenics and the 'deep state.'

Oh dear.

The book is relentless in showing the weaknesses of 'experts.' Knowledge is reified to opinion or a view. Verification protocols are not discussed.

And - most importantly - the alternative is not presented. OK - experts fail. But does that mean, policies and research should be guided by non-experts? At times, this book is an apologist for populism.

The last thing we need at the moment...

[Kevin Gomez · Rating 5 out of 5]

Highly recommend for technical and case study evidence that our faith in experts is a little much.

[Rachel Devenney · Rating 4 out of 5]

It was a decent read a little repetitive at times. Plus the examples I thought could have been stronger. I liked the call backs to ancient times to make his point more strong.