How does this narrow definition of creditworthiness apply to Tessier-Lavigne? Who were the owners of what assets that were transferred to him & what would ROI have looked like?
Applying my model to the Tessier-Lavigne situation suggests the key exploit he used was that you could produce academic prestige more cheaply, and at a higher ROI, via optimizing papers purely for prestige and ignoring factual accuracy, than via writing papers with the constraint of only saying true things and aiming for informativeness.
Furthermore, the so gained academic prestige can then be translated into two things:
More labor available to produce a greater volume of prestige-optimized papers, and to market existing papers more aggressively, as many additional PhD students and postdocs and professors want to work with you. Funding comes into play a bit at this point as well, but the central unit by which labor gets allocated in academia is prestige.
Greater ability to direct the enforcement mechanisms of academia towards any potential leakers, auditors or investigators, which even as the scale grows, prevents information about the deceptively overleveraged prestige from becoming widely known
Both of these allowed Tessier-Lavigne to re-invest the academic prestige gained by the publishing of their first papers into an actually large-scale academic fraud.
If either of the above was not the case, a very large-scale fraud like Tessier-Lavigne wouldn’t be possible. Of course, sometimes someone can live a career of doing academic fraud at a constant rate, but in order for the rate of fraud to become actually substantially big, the mechanism that produced the fraud needs to gain resources as a result of the fraud that then get used to produce more of the fraud.
If Tessier-Lavigne had not been able to recruit more talent as a result of the prestige, their academic output would have been limited to the outputs of a single scholar, which would be much less substantial. Similarly, if Tessier-Lavigne hadn’t been able to use the prestige to suppress investigations into their research, the likelihood they could have kept up such a long career of fraud would have also been much lower.
The owners of that academic prestige were the existing members of the academic community. A lot of it was transferred from Stanford to Tessier-Lavigne, and much of it was transferred from the journals the fraudulent papers were published in, and much of it was transferred from the people who endorsed Tessier-Lavigne across their career. Social capital and prestige don’t fully behave quite like normal assets, for example, there is no clear ledger of who owns what at any given point in time, and it’s not as owner-independent as most things we think of as “assets” are (i.e. more of academic prestige comes is non-transferrable, or transferrable at greater cost), but I think it still works well-enough as the unit of analysis here.
I am not overwhelmingly confident my model of what happened here is right, but it’s my current best understanding of the situation, and it fits the model I am trying to explain pretty well.
Your overall model of the Tessier-Lavigne situation seems plausible. But it seems like a stretch to use the narrow “creditworthiness” framework of investors and assets. The “owners” of academic prestige (Stanford, journals, endorsers) aren’t really in the same position as owners of financial assets. They didn’t “transfer” prestige to Tessier-Lavigne in the way depositors transferred money to FTX. There’s no clear ROI calculation because there’s no actual stewardship relationship—nobody gave Tessier-Lavigne their prestige to manage with expectation of returns.
If anything, academia seems more in the position of a central bank managing a fiat currency—trying to maintain an aggregate level of activity, as well as the perceived value of credit within the system, by adjusting the aggregate level of credit extended—than in the position of the owner of a rivalrous asset like money investing it in a specific venture. Obviously individuals within academia face different problems and incentives, as do individuals within a fiat economy, but there doesn’t seem to be a clear analogue in academia to the financial investor.
I think we disagree somewhat to the degree to which social capital does actually follow rules largely analogous to normal capital. For example, I do think that endorsing someone can largely be seen as analogous to investing some of your social credit into them. If you endorse many people, your endorsement is worth less, so there is some kind of conserved quantity, and if the people you endorse go on and become more widely respected, your investment pays off, so there is something like a market price that goes up.[1]
I do agree there are really crucial disanalogies! I think the specific disanalogies don’t happen to break the model I propose in this post, but I am not enormously confident.
I would love to have better language that describes the actual dynamics of social capital/reputation/status, with the cleanliness and precision of the language that we have for financial currency. But of course, that’s a big ask, and IMO worthy of being one of the great big projects of humanity akin to the whole study of economics in its own right. In the meantime, I think there is a lot of mileage that can be gotten by applying existing models of financial terms to social capital, even if they don’t perfectly fit, and even if I have to handwave a bit to make it work out.
This doesn’t mean critiques that point out the disanalogies aren’t important! Indeed, I find myself wanting to write a follow-up post that’s just something like “ways social capital does not behave like financial capital” that improves my ability to better notice when it’s inappropriate to apply a financial capital lense to social dynamics.
If anything, academia seems more in the position of a central bank managing a fiat currency—trying to maintain an aggregate level of activity, as well as the perceived value of credit within the system, by adjusting the aggregate level of credit extended—than in the position of the owner of a rivalrous asset like money investing it in a specific venture.
I agree that academia at large has central bank dynamics, but I think the specific institutions and individuals that were duped by Tessier-Lavigne and extend their credit to him were not in very much of a central bank position. I think Stanford just lost a bunch of prestige, as did a lot of the people who worked with Tessier-Lavigne and endorsed him, and Stanford does not consider itself responsible for the reputation of all of academia, or the flow of credit within all of academia.
While there are some dynamics where academia has a more centrally planned status-economy, I think most social capital gets allocated by the choices of specific individuals who want to get ahead in the social status game of academia.
One of the things that I think doesn’t have a great analogue is the process of selling/”exiting your market position”. Like, in a market you have a clear point of selling your asset, and in a social capital market you can start removing your endorsement from someone, or start calling them overrated, but the connection does not feel as clean.
We can imagine prestige very imperfectly as an asset with a quantifiable value, but while this is fairly (but not entirely) accurate for tournament structures like organized sports, in academia it’s more like being a central location in a canonical reference map; not the sort of thing that’s easy to use in ROI calculations.
If we can operationalize it well I’d likely bet against the claim that Stanford lost a lot of prestige. The centrality of the biggest institutions is hard to dislodge, as they’re sufficiently mutually entangled that problems like this seem to do more to demoralize academia generally, than to specifically discredit any one institution. Nor do I think academia’s losing credit in any straightforward sense, as it’s widely considered too big to fail even by many dissenters, who e.g. are extremely disappointed with standards in scientific academia but still automatically equate academia with science in general.
What happens as a result of the kinds of failures you describe is not at all like a decline in price, a little bit like a decline in the aggregate purchasing power of money, somewhat more like increased vulnerability to speculative attack, and most similar to a decrease in transaction volume as people see fewer and fewer opportunities for profitable transactions within the system. E.g. publishing papers seems less appealing as a way to inform others, reading papers seems less effective as a way to be informed, giving and receiving grants seems less effective as a way to organize efforts to figure things out.
Nor do I think academia’s losing credit in any straightforward sense, as it’s widely considered too big to fail even by many dissenters, who e.g. are extremely disappointed with standards in scientific academia but still automatically equate academia with science in general.
Huh, I do think our world models must differ here. My current sense is societal trust and reliance on academia is dropping pretty sharply, partially though not centrally as a result of things like this, and I similarly expect the market value of things like PhDs to drop relatively intensely in the coming decade (barring major AI disruption making that question moot). I would be happy to bet on this, if you disagree.
What happens as a result of the kinds of failures you describe is not at all like a decline in price, a little bit like a decline in the aggregate purchasing power of money, somewhat more like increased vulnerability to speculative attack, and most similar to a decrease in transaction volume as people see fewer and fewer opportunities for profitable transactions within the system.
I found this set of potential analogies helpful! I do think I still disagree about the relative appropriateness for each one of these analogies to the situation. Not sure how much value I would provide by going through them all in this comment thread, though I might take the opportunity and do it in a top-level post.
I don’t think the central-case valuable PhDs can be bought or sold so I’m not sure what you mean by market value here. If you can clarify, I’ll have a better idea whether it’s something I’d bet against you on.
I would bet a fair amount at even odds that Stanford academics won’t decline >1 sigma YOY in collective publication impact score like h-index, Stanford funding won’t decrease >1 sigma vs Ivy League + MIT + Chicago, Stanford new-PhD aggregate income won’t decline >1 sigma vs overall aggregate PhD income, and overall aggregate US PhD income won’t decline >1 sigma. I think 1 sigma is a reasonable threshold for signal vs noise.
I think that if these kinds of crises caused academia to be devalued, then when the Protestant Reformation and Enlightenment revealed the rot in late-medieval scholastic “science,” clerical institutions in the Roman Catholic model like Oxford and Cambridge would have become irrelevant or even collapsed, rather than continuing to be canonical intellectual centers in the new regime.
TBTF institutions usually don’t collapse outside strong outside conquest or civilizational collapse, or Maoist Cultural Revolution levels of violence directed at such change, since they specialize in creating loyalty to the institution. So academia losing value would look more like the Mandarin exam losing value by the civilization it was embedded in collapsing, than like Dell Computer losing value via its share price declining.
I don’t think the central-case valuable PhDs can be bought or sold so I’m not sure what you mean by market value here. If you can clarify, I’ll have a better idea whether it’s something I’d bet against you on.
I was thinking of the salary premium that having a PhD provides (i.e. how much more people with PhDs make compared to people without PhDs), which of course is measuring a mixture of real signaling value, and simply just measuring correlations in aptitude, but I feel like it would serve as a good enough proxy here at least directionally.
I would bet a fair amount at even odds that Stanford academics won’t decline >1 sigma in collective publication impact score like h-index, Stanford funding won’t decrease >1 sigma vs Ivy League + MIT + Chicago, Stanford new-PhD aggregate income won’t decline >1 sigma vs overall aggregate PhD income, and overall aggregate US PhD income won’t decline >1 sigma. I think 1 sigma is a reasonable threshold for signal vs noise.
What’s the sigma here? Like, what population are we measuring the variance over? Top 20 universities? All universities? I certainly agree that Stanford won’t lose one sigma of status/credibility/etc. as measured in all universities, that would require dropping Stanford completely from the list of top universities. I think losing 1 sigma of standing among top 20 universities, i.e. Stanford moving from something like “top 3” to “top 8″ seems plausible to me, though my guess is a bit too intense.
To be clear, my offered bet was more about you saying that academia at large is “too big to fail”. I do think Stanford will experience costs from this, but at that scale I do think noise will drown out almost any signal.
TBTF institutions usually don’t collapse outside strong outside conquest or civilizational collapse, or Maoist Cultural Revolution levels of violence directed at such change, since they specialize in creating loyalty to the institution. So academia losing value would look more like the Mandarin exam losing value, than like Dell Computer losing value.
Hmm, I don’t currently believe this, but it’s plausible enough that I would want to engage with it in more detail. Do you have arguments for this? I currently expect more of a gradual devaluing of the importance of academic status in society, together with more competition about the relevant signifiers of status creating more noise, resulting in a relationship to academia somewhat more similar (though definitely not all the way there) as pre-WW2 society had to academia (which to my understanding was a much less central role in government and societal decision-making).
I would expect PhD value to mostly be affected by underlying demographic factors; they’re already structurally on an inflationary trajectory and I expect that to be more important than whether they’re understood to be fake or real. No one thinks Bitcoins contain powerful knowledge but they still have exchange value.
If there’s a demographic model of PhD salary premium with a good track record (not just backtested, has to have been a famous model before the going-forward empirical validation) I might bet strongly against deviation from that. If not, too noisy.
Variance (and thus sigma) for funding could be calculated on basis of historical YOY % variation in funding for all US universities, weighted by either # people enrolled or by aggregate revenue of the institution. Can do something similar for h-index. Obviously many details to operationalize but the level of confusion you’re reporting seems surprising to me. Maybe you can try to tell me how you would operationalize your “dropping pretty sharply” / “drop relatively intensely” claim.
Less than a sigma seems like it can’t really be a clear quantitative signal unless most of the observed variance is very well explained (in which case it should be more than a sigma of remaining variance). Events as big as Stanford moving from top 3 to top 8 have happened multiple times in the last few decades without any major crises of confidence.
I agree the disagreement about academia at large is important enough to focus on, thanks for clarifying that that’s where you see the main disagreement.
One argument for the TBTF paragraph was in the immediately prior paragraph. The posts I linked to at the end of the first comment in this thread are also in large part arguments in support of this thesis. Pre-WWII the US had a much weaker state. Hard to roll that back without constituting a regime collapse.
At this point I feel that I’m repeating myself enough that I don’t see how to continue this conversation productively; I don’t expect saying the same things again will lead to engagement, and I don’t expect that complaining about the problem procedurally will get a constructive response either. If you propose a well-operationalized bet and an adjudicator and escrow arrangement I will accept or reject the proposal.
I wasn’t trying to say that you had provided no argument for it, sorry! I was just curious whether you had written about this previously with a handy link. It feels like a theme in a bunch of your writing, but you seemed in a better position to remember any specific essay or section.
If you propose a well-operationalized bet and an adjudicator and escrow arrangement I will accept or reject the proposal.
I’ll think about it over the next day or two and see whether I can find something. I am currently skeptical we can find something given that I don’t expect shifts at the scale of “Stanford stop being a top university at all”. But I’ll try for a bit.
How does this narrow definition of creditworthiness apply to Tessier-Lavigne? Who were the owners of what assets that were transferred to him & what would ROI have looked like?
Applying my model to the Tessier-Lavigne situation suggests the key exploit he used was that you could produce academic prestige more cheaply, and at a higher ROI, via optimizing papers purely for prestige and ignoring factual accuracy, than via writing papers with the constraint of only saying true things and aiming for informativeness.
Furthermore, the so gained academic prestige can then be translated into two things:
More labor available to produce a greater volume of prestige-optimized papers, and to market existing papers more aggressively, as many additional PhD students and postdocs and professors want to work with you. Funding comes into play a bit at this point as well, but the central unit by which labor gets allocated in academia is prestige.
Greater ability to direct the enforcement mechanisms of academia towards any potential leakers, auditors or investigators, which even as the scale grows, prevents information about the deceptively overleveraged prestige from becoming widely known
Both of these allowed Tessier-Lavigne to re-invest the academic prestige gained by the publishing of their first papers into an actually large-scale academic fraud.
If either of the above was not the case, a very large-scale fraud like Tessier-Lavigne wouldn’t be possible. Of course, sometimes someone can live a career of doing academic fraud at a constant rate, but in order for the rate of fraud to become actually substantially big, the mechanism that produced the fraud needs to gain resources as a result of the fraud that then get used to produce more of the fraud.
If Tessier-Lavigne had not been able to recruit more talent as a result of the prestige, their academic output would have been limited to the outputs of a single scholar, which would be much less substantial. Similarly, if Tessier-Lavigne hadn’t been able to use the prestige to suppress investigations into their research, the likelihood they could have kept up such a long career of fraud would have also been much lower.
The owners of that academic prestige were the existing members of the academic community. A lot of it was transferred from Stanford to Tessier-Lavigne, and much of it was transferred from the journals the fraudulent papers were published in, and much of it was transferred from the people who endorsed Tessier-Lavigne across their career. Social capital and prestige don’t fully behave quite like normal assets, for example, there is no clear ledger of who owns what at any given point in time, and it’s not as owner-independent as most things we think of as “assets” are (i.e. more of academic prestige comes is non-transferrable, or transferrable at greater cost), but I think it still works well-enough as the unit of analysis here.
I am not overwhelmingly confident my model of what happened here is right, but it’s my current best understanding of the situation, and it fits the model I am trying to explain pretty well.
Your overall model of the Tessier-Lavigne situation seems plausible. But it seems like a stretch to use the narrow “creditworthiness” framework of investors and assets. The “owners” of academic prestige (Stanford, journals, endorsers) aren’t really in the same position as owners of financial assets. They didn’t “transfer” prestige to Tessier-Lavigne in the way depositors transferred money to FTX. There’s no clear ROI calculation because there’s no actual stewardship relationship—nobody gave Tessier-Lavigne their prestige to manage with expectation of returns.
If anything, academia seems more in the position of a central bank managing a fiat currency—trying to maintain an aggregate level of activity, as well as the perceived value of credit within the system, by adjusting the aggregate level of credit extended—than in the position of the owner of a rivalrous asset like money investing it in a specific venture. Obviously individuals within academia face different problems and incentives, as do individuals within a fiat economy, but there doesn’t seem to be a clear analogue in academia to the financial investor.
I think we disagree somewhat to the degree to which social capital does actually follow rules largely analogous to normal capital. For example, I do think that endorsing someone can largely be seen as analogous to investing some of your social credit into them. If you endorse many people, your endorsement is worth less, so there is some kind of conserved quantity, and if the people you endorse go on and become more widely respected, your investment pays off, so there is something like a market price that goes up.[1]
I do agree there are really crucial disanalogies! I think the specific disanalogies don’t happen to break the model I propose in this post, but I am not enormously confident.
I would love to have better language that describes the actual dynamics of social capital/reputation/status, with the cleanliness and precision of the language that we have for financial currency. But of course, that’s a big ask, and IMO worthy of being one of the great big projects of humanity akin to the whole study of economics in its own right. In the meantime, I think there is a lot of mileage that can be gotten by applying existing models of financial terms to social capital, even if they don’t perfectly fit, and even if I have to handwave a bit to make it work out.
This doesn’t mean critiques that point out the disanalogies aren’t important! Indeed, I find myself wanting to write a follow-up post that’s just something like “ways social capital does not behave like financial capital” that improves my ability to better notice when it’s inappropriate to apply a financial capital lense to social dynamics.
I agree that academia at large has central bank dynamics, but I think the specific institutions and individuals that were duped by Tessier-Lavigne and extend their credit to him were not in very much of a central bank position. I think Stanford just lost a bunch of prestige, as did a lot of the people who worked with Tessier-Lavigne and endorsed him, and Stanford does not consider itself responsible for the reputation of all of academia, or the flow of credit within all of academia.
While there are some dynamics where academia has a more centrally planned status-economy, I think most social capital gets allocated by the choices of specific individuals who want to get ahead in the social status game of academia.
One of the things that I think doesn’t have a great analogue is the process of selling/”exiting your market position”. Like, in a market you have a clear point of selling your asset, and in a social capital market you can start removing your endorsement from someone, or start calling them overrated, but the connection does not feel as clean.
We can imagine prestige very imperfectly as an asset with a quantifiable value, but while this is fairly (but not entirely) accurate for tournament structures like organized sports, in academia it’s more like being a central location in a canonical reference map; not the sort of thing that’s easy to use in ROI calculations.
If we can operationalize it well I’d likely bet against the claim that Stanford lost a lot of prestige. The centrality of the biggest institutions is hard to dislodge, as they’re sufficiently mutually entangled that problems like this seem to do more to demoralize academia generally, than to specifically discredit any one institution. Nor do I think academia’s losing credit in any straightforward sense, as it’s widely considered too big to fail even by many dissenters, who e.g. are extremely disappointed with standards in scientific academia but still automatically equate academia with science in general.
What happens as a result of the kinds of failures you describe is not at all like a decline in price, a little bit like a decline in the aggregate purchasing power of money, somewhat more like increased vulnerability to speculative attack, and most similar to a decrease in transaction volume as people see fewer and fewer opportunities for profitable transactions within the system. E.g. publishing papers seems less appealing as a way to inform others, reading papers seems less effective as a way to be informed, giving and receiving grants seems less effective as a way to organize efforts to figure things out.
Huh, I do think our world models must differ here. My current sense is societal trust and reliance on academia is dropping pretty sharply, partially though not centrally as a result of things like this, and I similarly expect the market value of things like PhDs to drop relatively intensely in the coming decade (barring major AI disruption making that question moot). I would be happy to bet on this, if you disagree.
I found this set of potential analogies helpful! I do think I still disagree about the relative appropriateness for each one of these analogies to the situation. Not sure how much value I would provide by going through them all in this comment thread, though I might take the opportunity and do it in a top-level post.
I don’t think the central-case valuable PhDs can be bought or sold so I’m not sure what you mean by market value here. If you can clarify, I’ll have a better idea whether it’s something I’d bet against you on.
I would bet a fair amount at even odds that Stanford academics won’t decline >1 sigma YOY in collective publication impact score like h-index, Stanford funding won’t decrease >1 sigma vs Ivy League + MIT + Chicago, Stanford new-PhD aggregate income won’t decline >1 sigma vs overall aggregate PhD income, and overall aggregate US PhD income won’t decline >1 sigma. I think 1 sigma is a reasonable threshold for signal vs noise.
I think that if these kinds of crises caused academia to be devalued, then when the Protestant Reformation and Enlightenment revealed the rot in late-medieval scholastic “science,” clerical institutions in the Roman Catholic model like Oxford and Cambridge would have become irrelevant or even collapsed, rather than continuing to be canonical intellectual centers in the new regime.
TBTF institutions usually don’t collapse outside strong outside conquest or civilizational collapse, or Maoist Cultural Revolution levels of violence directed at such change, since they specialize in creating loyalty to the institution. So academia losing value would look more like the Mandarin exam losing value by the civilization it was embedded in collapsing, than like Dell Computer losing value via its share price declining.
I was thinking of the salary premium that having a PhD provides (i.e. how much more people with PhDs make compared to people without PhDs), which of course is measuring a mixture of real signaling value, and simply just measuring correlations in aptitude, but I feel like it would serve as a good enough proxy here at least directionally.
What’s the sigma here? Like, what population are we measuring the variance over? Top 20 universities? All universities? I certainly agree that Stanford won’t lose one sigma of status/credibility/etc. as measured in all universities, that would require dropping Stanford completely from the list of top universities. I think losing 1 sigma of standing among top 20 universities, i.e. Stanford moving from something like “top 3” to “top 8″ seems plausible to me, though my guess is a bit too intense.
To be clear, my offered bet was more about you saying that academia at large is “too big to fail”. I do think Stanford will experience costs from this, but at that scale I do think noise will drown out almost any signal.
Hmm, I don’t currently believe this, but it’s plausible enough that I would want to engage with it in more detail. Do you have arguments for this? I currently expect more of a gradual devaluing of the importance of academic status in society, together with more competition about the relevant signifiers of status creating more noise, resulting in a relationship to academia somewhat more similar (though definitely not all the way there) as pre-WW2 society had to academia (which to my understanding was a much less central role in government and societal decision-making).
I would expect PhD value to mostly be affected by underlying demographic factors; they’re already structurally on an inflationary trajectory and I expect that to be more important than whether they’re understood to be fake or real. No one thinks Bitcoins contain powerful knowledge but they still have exchange value.
If there’s a demographic model of PhD salary premium with a good track record (not just backtested, has to have been a famous model before the going-forward empirical validation) I might bet strongly against deviation from that. If not, too noisy.
Variance (and thus sigma) for funding could be calculated on basis of historical YOY % variation in funding for all US universities, weighted by either # people enrolled or by aggregate revenue of the institution. Can do something similar for h-index. Obviously many details to operationalize but the level of confusion you’re reporting seems surprising to me. Maybe you can try to tell me how you would operationalize your “dropping pretty sharply” / “drop relatively intensely” claim.
Less than a sigma seems like it can’t really be a clear quantitative signal unless most of the observed variance is very well explained (in which case it should be more than a sigma of remaining variance). Events as big as Stanford moving from top 3 to top 8 have happened multiple times in the last few decades without any major crises of confidence.
I agree the disagreement about academia at large is important enough to focus on, thanks for clarifying that that’s where you see the main disagreement.
One argument for the TBTF paragraph was in the immediately prior paragraph. The posts I linked to at the end of the first comment in this thread are also in large part arguments in support of this thesis. Pre-WWII the US had a much weaker state. Hard to roll that back without constituting a regime collapse.
At this point I feel that I’m repeating myself enough that I don’t see how to continue this conversation productively; I don’t expect saying the same things again will lead to engagement, and I don’t expect that complaining about the problem procedurally will get a constructive response either. If you propose a well-operationalized bet and an adjudicator and escrow arrangement I will accept or reject the proposal.
I wasn’t trying to say that you had provided no argument for it, sorry! I was just curious whether you had written about this previously with a handy link. It feels like a theme in a bunch of your writing, but you seemed in a better position to remember any specific essay or section.
I’ll think about it over the next day or two and see whether I can find something. I am currently skeptical we can find something given that I don’t expect shifts at the scale of “Stanford stop being a top university at all”. But I’ll try for a bit.