Indonesia | Economics

Wednesday, September 06, 2006

Research excellence and the O-ring theory

Yesterday afternoon, I had lunch with Roby Muhammad. For those of you who don't know who he is, Roby is a member of a small but growing number of quantitative sociologists. For the past few years, he has been doing cutting edge research on network behaviour with Duncan Watts (of six-degree fame) at Columbia University.

Anyway, after a brief chitchat, Roby told me he would like to see in Indonesia something akin to Stanford's Institute of Advanced Studies, to allow young, brilliant researchers to do basic (theoretical) research. He couldn't understand why no such institute existed in Indonesia. "It isn't that difficult. Three or four (likeminded) people can hang out and discuss together -- that would have been enough."

He asked my opinon on it. So, I told him of Michael Kremer's O-ring theory of development.

The O-ring is the malfunctioning seal ring that caused the explosion the the space shuttle Challenger in 1986. It didn't matter that the rest of shuttle was in perfect working order: one malfunctioning component was enough. It suggests that high-quality parts would be useless when paired with low-quality ones.

Michael Kremer used this example to illustrate a development problem: Brilliant workers (or scientists) prefer to work with other brilliant workers because by doing so, they are guaranteed the high payoffs of their high-quality skills.

There are two reasons why this is so. First, this arrangement averts highly skilled workers from O-ring-type accidents. Second, highly-skilled workers gained from their interactions with other similarly skilled workers -- the so-called "spillover effects". These gains are reflected in a collective payoff that are much higher than the sum of its parts.

As the result, there is what economists called "pooling equilibriums" where high-quality workers "agglomerate" with other high-quality workers, leaving low-quality workers together with similarly low-quality workers. Kremer used this to explain various stylized facts about rich and poor countries, and why incomes are diverging between the richest and poorest countries. But this theory can also be explain Roby's conundrum.

Roby took for granted the ease of which he could do theoretical modelling in the United States. I could imagine him and several of his colleagues, on a Friday afternoon, sitting in a coffee-shop scribbling out some new theory on a piece of napkin, say, of the network behaviour of an epidemic. The day ended well when a satisfactory model was developed, and the whole thing felt so easy. After all, what was needed was a pencil (or pen) and a piece of paper.

But Roby missed out on the fact that, right there and then, at Columbia University, he was probably sitting with people that are amongst the best in their fields. That's why getting to top graduate programs is so damn difficult. Administrators of those programs understand clearly this idea of positive spillovers amongst smart and highly-skilled people in an academic environment.

So, will dumping loads of money to create an institute that employs and draws the best of Indonesian social researchers solve the problem?

Well, not quite. You see, I believe that most of the times, Roby (and other researchers studying in the United States) managed to solve their problems on their own. But on those rare days when they got stuck -- say, in figuring out why a particular equation cannot be solved -- they can easily visit their colleagues elsewhere, say in the Math department, to help them out.

Similarly, when they need data to be collected or statistically analyzed, it's relatively easy to find highly-skilled data collectors (and, mind you, you need a special skill to collect data properly) and analysts at Columbia University. And that's only at Columbia -- there are still Harvard, MIT, Yale, etc. Meanwhile, I dare anyone to name just one graduate program in Indonesia that can claim it only admits the best and brightest students.

This goes back to the O-ring problem. One underappreciated fact about world-class researches is that most are actually results of collective enterprises, whether the principal authors realize them or not. Unless all of the high-quality parts are there, it's not possible to come up with a Challenger that can touch the moon.

So, does this mean that there is no hope for a world-class Indonesian "Institute of Advanced Studies"? Realistically, not in the next five (or even ten?) years. But now that we have identified the problems (and it isn't just about money!), we can start trying to think of ways to get around of them. If you have any idea, please do pitch in.

Update (9/10): This post on Greg Mankiw's blog suggests an implication of this phenomenon.


  • Ya, there is one grad program in Indonesia that will admit only the brightest students: the would-be CSIS Graduate School...:-)


    By Anonymous philips vermonte, at 9/06/2006 10:00:00 pm  

  • i find your o-ring analogy interesting.

    but the question left is when did harvard start to become 'harvard', and how? i presume that at the time when harvard is yet to be harvard, the intellectual world was still gravitating around oxford-cambridge, no? if so, then how did the transition took place, and what were the main factors behind?

    By Anonymous tirta, at 9/07/2006 12:15:00 am  

  • Philips,

    I hope when you finish your PhD, it will be "would-be" no more... ;-)


    I presume, instead your stated question (whose answer I don't just, just like I don't know why Silicon Valley is what it is), you're asking why the US has become the center of academic excellence.

    I have little knowledge of the history of the evolution of US universities. But if I have to give some hypotheses, I imagine it would have something to do with:

    i) a long history of (an open) academic culture
    ii) scholastic competition (see, for instance, here)
    iii) economic development (just look at the value of these endowments)

    If I were right, then creating one "center of excellence" would not be enough. We need several well-funded centers who collaborate and (most importantly!) compete with each other.

    By Blogger Arya, at 9/08/2006 01:02:00 am  

  • i’m triggered by tirta’s comment: i don’t know about harvard, but stanford is founded with a vision to be harvard of the west (coast) – or something along that line. and i’m pretty sure great university don’t just become one by chance. some people, somewhere down the line, must have realized the potential for the university to become great, set the vision, invest in people and infrastructure to support it, and thrive for it.

    i agree with arya that it’s not just about the money when it comes to indonesian universities. a university can have a lot of money, but choose to spend it to build an image of prestige rather than invest in human development and research. the drive is not to excel, but to impress. the former is imbedded within, the latter is lip service.

    this logic maybe is related to the o-ring problem: when you know that majority of the universities provides mediocre to ok quality of education, why strive for the best when being good is already put one above the rest?

    to get around this problem may mean to start the way stanford did. i think at least it would be easier than trying to shake up a whole university (not to mention others) that is already too comfortable with its current position. and yes, competition would be great :)

    By Blogger Dewi, at 9/08/2006 01:25:00 am  

  • By the way, Indonesia actually does have some world-class educational institutions -- the 'Harvards' and 'Stanfords' -- but not at the university level. They're at the high-school level. Of course, high schools are much cheaper to build and operate than universities.

    By Blogger Arya, at 9/08/2006 01:34:00 am  

  • I think "field ego" also plays an important factor in this. Say scientits in field "A" tends to value their field higher than others, therefore limiting cross-field studies or discussion. Just ask Phillips, I'm sure he has a lot to say about economist..:-)

    By Anonymous pasha, at 9/08/2006 10:46:00 am  

  • Pasha, about economists, since i don't understand them, i can't say anything. Speechless...:-)


    By Anonymous philips vermonte, at 9/09/2006 05:23:00 pm  

  • Dewi,
    You touched upon something related to point (iii) of my previous comment to Tirta, to wit, economic development. You're right: Why bother start up a world-class university, when a so-so one is adequate?

    Stanford successfully follows Harvard because the Harvard example suggests that a world-class university can work. In Indonesia, there is as yet a model of world-class higher education that suggest that it can be done here.

    And this, I think, isn't because Indonesians have never tried. I think people who started many recent universities and graduate programs in Indonesia started with such an idealism.

    Many, however, had to face off the problem of "economic development": there was not enough local demand for world-class universities with local contents, especially since those who really wanted world-class education could actually pay (or obtain scholarships) to go to world-class universities in developed countries.

    Many quickly adjusted by lowering admission (and, sadly, graduation) requirements to survive.

    Surely ego plays a part. But taking examples from people like Joe Stiglitz and Paul Krugman, surely there are more bloated egos amongst American intellectuals than Indonesian ones. Yet, more American academics than Indonesian ones managed to produce cutting-edge inter-disciplinary studies.

    By Blogger Arya, at 9/10/2006 12:39:00 am  

  • 'Ry,

    As much as I'd love to believe it, I don't think that many universities started out with such an idealism. This posting triggered me to finally spill out my grudge about UPH. See this

    By Anonymous Dewi Susanti, at 9/12/2006 08:56:00 am  

  • Arya,

    of "cutting-edge interdisciplinary studies", do you have in mind things akin to, say, between physics and sociology, as is the case with Roby. Or, is it between economics and other social sciences.

    Mainstream economics appears to have difficulties doing interdisciplinary research, I mean on equal footing, nothing more than simply applying economics principles to social inquiries/fields ;-)

    - Sonny

    By Anonymous Sonny, at 10/05/2009 04:15:00 am  

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