Political Entrepreneurs

The Economic Engine of Political Change

Ranking Think Tanks: The Challenge of Specialization

March 19th, 2013 by Edward Lopez

I argued last time that an ideal measure of a think tank’s effectiveness would be its marginal effect on the marketplace of ideas. I also argued that, while conceptually simple, this ideal measure is impractical for a number of reasons.

A simpler measure?

A simpler measure would be funds raised through non-politicized (usually private) donations. This has the feel of a market test, in the sense that a donation indicates value created for the donor (otherwise, they wouldn’t donate). Fundraising also lets the performance metric tap into the implicit rankings of the donors themselves, using their own subjective criteria. As a quasi-market test, this approach treats a think tank’s success as being analogous to a market firm’s revenues. But the analogy is not complete (as I argued last time) because the true test of a market firm is profit and loss, yet most think tanks are non-profit. That being said, fundraising does enjoy some advantages as a performance metric. For one thing, it leads to clear predictions: poor performance will lead to dwindling funds raised, and fundraising should correlate over time with a think tank’s sustained marginal effects on the marketplace of ideas.

At the end of the day, however, fundraising is still an input metric, not a performance or output one. Furthermore, donations could be mostly unrelated to think tank performance if, say, donors are simply matching their ideologies with a think tank’s guiding philosophy, or if they’re giving to think tanks with particularly charismatic development staff, or if some other behavioral scenario is in play. Finally, the fundraising metric rewards size and breadth when, in fact, we know that many think tanks deliberately strive to remain small and narrow in focus.

This latter point is an important one. Think tanks specialize, and ultimately it’s this specialization that holds back a meaningful ranking across all types of think tanks.

How do think tanks specialize?

Many think tanks specialize according to topic. Some are single-issue focused, like the National Taxpayers Union or the Health Care Cost Institute. Others focus on a small number of issues, like the Pacific Research Institute (education, technology, health care) or the Employment Policies Institute (health insurance, labor compensation). Region is another margin of specialization, for example the Middle East Forum, the National Bureau of Asian Research, and the large number of state-based think tanks in the United States. And think tanks specialize according to their guiding philosophies: some are ideological (libertarian, left-liberal, conservative, etc.); others are partisan, bi-partisan, or non-partisan; still others are religious or secular, and so on.

It’s true that some think tanks appear not to specialize — that they are quite general in casting a wide focus both in terms of topic and region. I’ll return to this point shortly. Most interestingly, for our purposes, is the way that think tanks specialize according to their planning horizons: how long-term is their focus? Or, to rephrase the question in the borrowed terms of our Framework: how roundabout is the think tank’s production process? It’s worth taking a reasonably close look at this.

The Structure of Think Tank Specialization

The small triangle here is the structure of ideas, institutions, incentives, and outcomes that was featured in the second post of this series. (It comes from Chapter 5 of Madmen, and you can browse an interactive version of it on the Book page of this site.)

The larger triangle blows up the ideas section of the smaller triangle to suggest how think tanks specialize according to roundaboutness. In both triangles, the degree of roundaboutness changes as we move along the vertical dimension. So, for instance, the closer we move toward the bottom of the larger triangle, the closer we get to the decisions that madmen in authority make to change institutions in the smaller triangle.

Some think-tank-like organizations operate primarily in the bottom segment of this larger triangle, attempting to influence the current set of proposals and the debates surrounding them. Activities at this level could include seminars for congressional staff, talking points for media, and retreats for elected officials. This level is also where organizations attempt to mobilize public support, through t.v. spots, polling, astroturfing, rallies, demonstrations, and other coalition efforts. There is no research, and very little writing, at this level of ideas.

More writing, and a little more research, is done inside the next higher level marked “Communication & Dissemination.” Here is where we find organizations with a relatively short, but not immediate, time horizon. An organization at this level might self-identify as a “do tank” rather than a think tank, and its mission statement might focus on supplying the public, activists, and policymakers with sound ideas and guidance on current proposals. For example, on its iTunes channel the Manning Centre for Building Democracy describes itself as

a Canadian conservative-oriented “do tank” to equip future grassroots activists and political leaders with the ideas, skills and networks necessary to make an effective contribution to Canadian politics.

By contrast, the next higher section labeled “Applied Research” is where most “think tanks,” conventionally and properly conceived, tend to operate. Most of these organizations follow a basic model: hire scholars to write policy studies like cost-benefit analyses, applied ethics arguments, and accessible histories; recruit a board of scholars who lend their names to validate the organization’s academic credibility; maybe publish a peer-reviewed journal that features applied research on the topics of choice; and, crucially, hire a development staff to fund the research on the one hand, and a public relations staff on the other hand to amplify the research output. Finally, hold lots of events, preferably with wine and cheese.

It’s within this Applied Research level where we find think tanks appearing not to specialize — instead, covering a wide range of topics and exerting an international if not global reach. A few examples would be the Brookings Institution, the Cato Institute, the Center for American Progress, and The Independent Institute. The existing rankings (which inspired this series of posts) focus on a couple dozen of these comprehensive think tanks. Yet in a world of more than 6,000 think tanks, these groups are exceedingly the exception. They are like conglomerates in economic markets, consisting of many different divisions, partnerships, and brands throughout the world; they are the GE’s, Philips’s, and Disney’s of the marketplace of ideas.

Whence ideas, then?

In light of the past few paragraphs, you might expect the top segment of the larger triangle to be labeled “basic research,” or perhaps “universities.” But that would be making a separate point from the one in this post. The point here is to examine specialization within the think tank world. So I think universities should be counted separately.

More importantly, “Talent Development” captures an important set of policy-relevant organizations that operate much like think tanks do, yet serve as inputs to think tanks. They invest in training individuals (i.e. “talent”) with knowledge and skills that can then be used to make think tanks more effective. Specific activities include media training, grant-writing workshops, seminars on great books, and more. Some purely grant-making institutions also belong in this category.

Notice that competition in ideas serves to integrate these four stages of specialization. Talent developers serve as an input to applied researchers, whose studies are then disseminated and communicated by “do tanks” and parallel organizations, whose output is in turn transformed into PR, outreach, and activism by groups at the lowest segment in the triangle of specialization.

In short, think tank specialization in the marketplace of ideas is analogous to the division of labor in the economic marketplace. Whereas the entrepreneur is the driving force of the market process, the political entrepreneur is the driving force of the political process.

Implications?

First, this analysis could lead to an improved definition of “think tank.” Which organizations count, and which ones don’t, as think tanks? This could be useful in some respects, but at the end of the day it will be best if everyone recognizes that the concept of a think tank will never be uniform and will instead remain “fuzzy, mutable, and contentious”.

Second, this portrayal of specialization suggests that any single chosen performance metric (reputation, profile, fundraising, other) is going to miss the mark in important ways. Fundraising favors large groups and perhaps especially the highly visible conglomerates. Measures of profile in terms of web traffic and social networks will favor the PR/outreach/activist segment. Scholarly citations will favor applied research organizations. And so on.

All of which leaves us with an important question for political entrepreneurship. If you’re a manager or a scholar at a public policy think tank — or, better yet, if you’re a prospective donor to one — how do you seek to specialize in the marketplace of ideas? And, given that, how do you measure the performance of your efforts? This will be our focus in the fourth (and likely final) entry in this series.

 

UPDATE: Links to the first entry and second entry in this series.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.189, ch.7)

The most successful entrepreneurs know what they do well, they know the market and the opportunities within it, and they choose those activities that create the most value. This is true in economic as well as political markets.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.178, ch.7)

[W]hen the right elements come together at the right time and place and overwhelm the status quo, it is because special people make it happen. We call them political entrepreneurs.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.176. ch.7)

While we started this book with Danny Biasone saving basketball, we end it with Norman Borlaug saving a billion lives. These stories are not that different. Both faced vested interests, which were reinforced by popular beliefs that things should be a certain way—that is, until a better idea came along.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.174, ch.6)

Because there was a general belief that homeownership was a good thing, politicians found the public with open arms.... Everybody was winning—except Alfred Marshall, whose supply and demand curves were difficult to see through the haze of excitement at the time, and except Friedrich Hayek, whose competition as a discovery procedure was befuddled... In short, once politicians started getting credit for homeownership rates, the housing market was doomed.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.166, ch.6)

Everyone responded rationally to the incentives before them. In short, the rules that guided homeownership changed over time, which in turn changed the incentives of these actors. And bad things happened.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.153, ch.6)

They understood the economics. The ideas had already won in ... the regulatory agency itself. All that remained to be overcome were some vested interests and a handful of madmen in authority.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.146, ch.6)

If the idea for auctions of spectrum use rights had been part of the public debate since at least 1959, why didn’t the relevant institutions change sooner? What interests stood in the way?

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.121, ch.5)

When an academic scribbler comes up with a new idea, it has to resonate well with widely shared beliefs, which in turn must overcome the vested interests at the table. Many forces come together to explain political change, even though it may seem like coincidence of time and place.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.120, ch.5)

It’s the rules of the political game that deserve our focus, not politicians’ personalities or party affiliations.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.119, ch.5)

In short, ideas are a type of higher-order capital in society. Like a society that is poor in capital and therefore produces little consumer value, a society that is poor in ideas and institutions will have bad incentives and therefore few of the desirable outcomes that people want.

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