Soc of Finance in Bloomberg!

August 14, 2013

Bloomberg Businessweek covers the NYSE sociology of finance mini-conference here. The opening is a bit.. something:

It was not hard to distinguish the sociologists from the financiers. The sociologists had beards.

I wonder what the women members of the sociology of finance community make of that last bit. I don’t think the article was reflecting critically on the gender dynamics of the subfield (I imagine the NYSE is itself a pretty male-dominated setting), but it’s plausible to read it in that light.

The article also collapses the difference between sociology and economics to one of qualitative vs. quantitative:

For the last 70 years, we have looked to economists to explain how markets work. The kind of economics popular among graduate programs has focused on what academics call “quantitative” data, which you might call “numbers.” Other social sciences have been left with “qualitative” data, or “talking to people.” Sociologists, with their tradition of interviews and ethnographic studies, know how to talk to people. I was told once (by an economist) that the quickest way to offend an economist is to call him a sociologist. Both disciplines, though, poke at the same problem: How do people make decisions?

How unfortunate, especially given the strong history of quantitative research on the sociology of finance (and more broadly, in economic sociology). That said, the prominent work in SSF does seem to be dominated by qualitative and historical approaches right now. Why is that? In order to do our work, most sociologists of finance must necessarily be very quantitatively savvy – our actors, after all, live in a world of numbers. And yet, at least the modern SSF classics are pretty devoid of statistics. That probably has more to do with how the space of questions is divided up in sociology itself right now than with any direct comparison to economics, but it still seems unfortunate. What SSF questions could be usefully answered with quantitative analysis? Are there things we are missing because of our subfield’s location within sociology right now?

4 Responses to “Soc of Finance in Bloomberg!”

  1. I’d love it if there were more quant research in our field (anyone want to team up?).

    I suspect part of the problem is that it sets a high bar for readers. It’s hard enough to get someone to sit down and read a paper on the valuation of structured products. Throw in some social network analysis and a discussion of eigenvector centrality, and you’ve reduced your potential readership to nearly the null set.

    Then again, this wouldn’t be a problem if quant research techniques were more widely taught in soc grad programs, but it’s a tough equilibrium to break.

  2. marthapoon Says:

    As I’ve understood it, the purpose of SSF is to examine the historical process through which quantification became the dominant language of markets. So it makes sense to me that we study numbers quite intensely, but don’t try to make them.

    I’m a professed fan of literary theorist Mary Poovey who has gone to great lengths to develop the tension between numbers and text as a central question of humanities research: Why is economic value increasingly attached to figures not words? When did the novel and the newspaper become less valuable commodities than models and algorithms? And (this one’s for Taylor) why do finance professors get paid more than sociologists…?

    Either way, much research – including Poovey’s brilliant chapter on double entry bookkeeping in A History of the Modern Fact (1998) – discusses how number must be accompanied by narration to have any meaning and value. (I’m reading a draft paper right now by Yasmine Chahed @ LSE on precisely this issue – the shifting relationship between numbers and words in financial reporting…!)

    PS. Despairing un-bearded sociologists may wish to refer here:

  3. Philip Grant Says:

    I would suggest the solution lies in Taylor’s parenthetical question: teaming up. Anyone studying the social studies of finance ought to have a basic statistical literacy, enough at least to understand our interlocutors’ narratives about numbers and to talk with them about them. But whether we all ought to be able to do large-scale advanced quant work or not is a moot point. The answer is surely ‘no’ if all we’re doing is replicating the kind of work already done in economics or finance, since the whole point of SSF is to provide a different (and I think we could concur, more incisive and holistic) perspective. If there is a compelling case that this different perspective is enhanced by some serious statistical modelling, then ‘yes’. And that’s where the teaming up comes in: those of us who aren’t up to doing this kind of work can collaborate with those of us who are, which would recognise that SSF is a transdisciplinary formation (and not a ‘subfield located in sociology’) to which people bring very different disciplinary and non-disciplinary trainings.
    On a related note, our interlocutors do indeed live in a world of numbers (but also of narratives, and debate, not to mention affect, and power…), but that world is far from homogeneous. As an ex-equity fund manager working on professional equity investment, I’d say that most people in the equities world are not particularly statistically literate; they just have a strong basic numeracy and a working grasp of the relatively simple maths of things like CAPM (which most of them would readily acknowledge doesn’t really explain how equity markets work anyway). Clearly ‘numbers’ have a quite different practical meaning for an equity fund manager than they have for someone modelling credit derivatives, and this is where SSF can bring some important insights (into the differences in narratives etc.)
    Finally, re. the reductive split between quant and qual – I remember an old anthropologist teacher of mine, one who worked with statistics, telling us that the distinction between the two types of research was mistaken, since all ‘qualitative’ research at some point involved counting things and was therefore quantitative too. And clearly quantitative research involves qualitative judgments as well. So I would say we need not only to think about why SSF tends toward the qualitative, but on how we can challenge the perception that the two are mutually exclusive. That way we might also be able to show people in the finance world and beyond that SSF is not about another way of studying ‘how people make decisions’, but a far more extensive problematisation of finance in general, and in all its dimensions (including gender, with which the above post quite rightly begins).

  4. How important is the role of sociologists in a Bloomberg trading market like this? Incidentally I am an employee in the financial field like stock trading. I also want to cultivate the stock.

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