Thursday, May 30, 2024

What do people think?

In a typical interview or press conference with an athlete or a coach, he or she may be asked something like “do you plan to be in the same club next season?” He or she may find the question uncomfortable, but if in the answer she includes, hidden somewhere, the word “yes,” chances are that the headline in the media a few minutes later will be: “Athelete/coach X plans to continue in the same club next season.”

Smart people would use this as an example of the intellectual mediocrity or opportunism of the Sports media, because the athlete was not “planning” anything, or if he or she was planning anything, it was perhaps to avoid being asked about the topic, to even avoid having to decide. However, it is not very different from the kind of expert analyses that are derived from opinion polls and surveys.

This is important because how people truly form their opinions is a key input in the analysis of democratic societies and of particular aspects of them, such as politics or business. Economists such as Harvard’s Stéphanie Stantcheva have recently devoted significant efforts to learn, through online representative surveys, how people form their opinions on a variety of subjects, from taxation to international trade or inflation. I am also working on this with colleagues, especifically about how people think about public vs private ownership or about the importance of competition.

As Stantcheva and her co-authors have illustrated, it is important to complement closed questions with a few options, with open questions where subjects can openly express their views without limitation. It is interesting how people develop their thinking when they are less primed by the options given by the researchers.

The example of Catalan Independence and Catalan identity (or similar identity problems) illustrates my concern. Lots of political debate hang around surveys where, for example (taking the last one by an official sociological body of the Catalan government), around 40% of respondents say they are in favor of Catalan Independence when there is just another option (no to Independence), and the figure goes down than by more than 10 points when there are more than two options. This is an example of the well known fact that the framing of the questions determines the answers to a substantial degree in many areas. In both cases, it is not clear what independence means (in or out of the EU or the euro-zone, for example), or what the other options are (what is a state in a federal Spain as opposed to an autonomous community).

But pundits and experts use the results of these surveys to say things like “support for Independence” has declined (or increased), when they should just say that the answer to these questions in surveys has increased to decreased in some way or other. Similarly when they are asked whether they feel only Spanish, only Catalan, more Catalan than Spanish, etc. What if they don’t feel anything about this, or they care little. Surveys do not capture vague preferences or the intensity of them.

Saturday, May 18, 2024

Complex social sciences

Some weeks ago, I read a review of three books in the Week-end Financial Times on Complexity Economics. I bought the three of them, written by Brian Klaas, J.Doyne Farmer and Maja Göpel. They are a good complement of  “How China scaped the poverty trap”, by Yuen Yuen Ang who also uses complexity arguments to explain the historical evolution of China, with references to other societies.

Klaas book, “Fluke,” is perhaps the most interesting and ambitious of the three, in the intersection between philosophy, natural sciences and social sciences. The book reviews the properties of complex systems, such as emergence, self-organization, non-linearity, interconnection, randomness and difficulty to make predictions (the latter, as in Taleb’s books). Complex is different from complicated in that when a part fails in a complex system, the other units change and adapt. Feedback loops, tipping points, and reverse causality are also characteristics of complex systems. These can be analyzed using network analysis and evolutionary dynamics.

In a complex evolving system, small causes can have big consequences. Applied to the human world, we are all part of an interconnected reality, the result of multiple contingencies that result in our existence. When we are born, we do not come into this Planet, but we emerge from this Planet. Klaas urges us to downplay the importance that our Western culture allocates to the individual. Our brains are the result of the interaction of many neurons, and an anthill is the result of many ants. These social insects invented agriculture before humans. We have evolved to develop a sense of self-awareness to survive, not to seek truth, and other beings have developed other skills that we do not have (flying wings, radars). 

We control nothing but we can influence everything. The complexity of human societies suggests to the author that instead of using the expression that something is or is not “rocket science,” we should instead say that something is or is not “social science.” At our state of knowledge, economic systems are more difficult to predict than some physical systems (such as planetary orbits).

To facilitate the connection with social scientists trained in traditional methods and models, books for a general audience discussing complexity should emphasize some elements of continuity with the more advanced existing methodologies. For example, I see a continuity with game theory, just with more players and less (or different) rationality, as in Bowles 2004 book on microeconomics.

For example, in the last part of the book I found useful thoughts that will help in my course on soccer and economics. When the context changes, randomizing strategies may be useful, as a tribe in Borneo does with the selection of the exact location of rice fields. Or as the animal species that follow mathematically perfect random rules in the ocean. It provides a new perspective on the use of mixed strategies, which so far I justified only in terms of being unpredictable in contexts such as penalty kicks or military strategy.

I also found useful the reference to Moneyball (the book and movie about how statistics revolutionized baseball) as a not necessarily desirable trend if brought to the extreme, because it makes the game more predictable. The notions of contingency, complexity and randomness may help explain why Moneyball techniques have been more successful in baseball (although there seems to be a backlash there as well according to Klaas) than in soccer, where the game, less dependent on set pieces, is more fluid and difficult to predict.

Sunday, May 5, 2024

Why sports clubs fail

Acemoglu and Robbinson wrote “Why nations fail,” an impressive and controversial book that concluded that nations fail when they do not find inclusive institutions to make growth and cohesion compatible. Garicano wrote “Why organizations fail,” an article summarizing the literature on the economics of organizations, concluding that organizations fail when they do not allocate talent well, and when they do not balance well the short run with the long run.

A subfield of organizations that deserves a specific treatment is Sports organizations and soccer clubs in particular. Admittedly, in the current institutional setting, these organizations are very difficult to manage, because of the pressure of promotion and relegation and the economics of superstars. But clearly some of them are better managed than others. 

Soccer clubs never totally fail, but they may decline significantly, when their officials do not follow a coherent line and only care about the very short run, like bad politicians or business managers. They are too big or too important in their communities to fail, and that’s part of the problem: the moral hazard that results from the impossibility of totally failing.

Until the reelection of Joan Laporta as president of FC Barcelona in 2021, the history of the rise and fall of what some called the greatest soccer club is explained in Simon Kuper’s book “Barça.” At the end of the book, he didn’t seem very optimistic about the president that had been eleted for a second time.

Since then, three years later things are even worse. Today, the men’s Barça team (the one that just 10 years ago was the world’s best) is out of the new Clubs World Cup of 25 teams, 12th in the ranking of teams in Europe, 3rd in the Spanish league and 2nd in Catalonia after Girona. The financial crisis of the club is even deeper than then, and the president has been unable to retain or assemble a professional economic team to address the problem.

Barça does not sign the players they need, but those that they can afford or that are offered to them by opportunistic agents. Young talent, something the club keeps producing in abundance, will receive offers from clubs that have better chances of winning big titles, more money and are better managed. The club should learn from the good and bad things of the past: look abroad to learn from the best, control populism in the transfer market and coach appointment decisions, and build on the good assets that the club still has: youth academy, women’s team, a popular brand (have a look at the new and good Barça One app)… The team that had the three best players of the world in 2010 (Messi, Iniesta and Xavi) has been allowed to decay. Since it will never disappear, it would be better to give it a more decent life.

Saturday, May 4, 2024

The federalist taboo

Wikipedia defines taboo as “a social group's ban, prohibition, or avoidance of something (usually an utterance or behavior) based on the group's sense that it is excessively repulsive, offensive, sacred, or allowed only for certain people. Such prohibitions are present in virtually all societies. Taboos may be prohibited explicitly, for example within a legal system or religion, or implicitly, for example by social norms or conventions followed by a particular culture or organization.”

People like me will be voting in the next few days in Catalan (May 12th) and European (June 9th) elections. The fact that the same citizens will be electing members of Parliament at two different levels, just above and below the state level (in our case, the Spanish level, on which we voted less than one year ago, a few weeks after we voted for our local representatives in the City Council), illustrates the federal character of our political reality. It is not that different from what happens in the USA, where voters have the right to participate in local, state and federal elections.

However, for some misterious reason, in Catalonia, Spain and Europe, we refuse to call this state of affairs “federal.” OK, perhaps there are historical reasons, or perhaps we are not a complete or a perfect federation, perhaps we lack some elements of that… but also do other realities that call themselves federal: for example, both Spain and Canada, two very decentralized countries, do not have a Senate as a powerful territorial chamber as in Germany, but Canada calls itself federal and Spain does not.

Spain today is Euro-Spain (in the EC since 1986), a member-state in the most integrated core of the EU: member of the euro-zone, and the Schengen area. It does not have an independent army, but it participates in NATO and in UN forces. The old nation state, in this very integrated region, is something of the past, but the sovereignists find this difficult to swallow.

Not only we do not call our federal features by the f word, but many of those in favor of better or more complete federal structures also refuse to call themselves federalists, or cautiously avoid the word. Just recently, two former Italian Prime Ministers, Letta and Draghi, and the French President, Emmannuel Macron, have made proposals (through reports, speeches or interviews) for a more integrated Europe, with stronger federal institutions, but in no part of their arguments does the f word show up.

It is a mistery to me why “federal” and its derivatives are almost taboo words, but sovereign and its derivatives are not. Part of it is the confusion around the term, although many other social or political concepts are also confusing and vague. If political scientists do not agree on a definition of federalism, or on whether Spain is a federation or not (certainly, it is not a unitary state or a confederation), it may be asking too much for people to have a clear idea of it.

But we live in an increasingly interconnected world, we live in a complex adaptive system that must be managed as such. Distributed but connected structures provide more stability and adaptabiblity than centralized or unconnected structures. And it is difficult to think of a better tradition and set of principles, other than federalism, to manage this complex reality.

Rodrik’s trilemma shows that in a hyperglobalized world, we may have to choose between national sovereignty and democracy. Federalism already provides stability to many regions of the world. But it is not a panacea, and there have also been failures and federal roads not taken. The nation-state remains a blueprint to solve conflicts, but it is rarely succeeding, as we see in former Yugoslavia or Israel-Palestine.

In Europe, we need to federate to defend ourselves (a typical motive for federations in history, from classical Greece to American native groups) but also to cooperate internally and externally, to harmonize taxes and fight against tax havens.

The defeat of national sovereignty is slow, as it is the victory of federalism. But there should be no doubt about the necessary winner.