Blog by Nate Archives: Quick Note on the Decline in Effective Corporate Taxes (March 27, 2013)

[Migrating my old blog content to my new blog.  This is an active project that will have a new working paper in a few weeks.]

Quick Note on the Decline in Effective Corporate Tax Rates

The Washington Post had a short article on the decline in corporate taxes paid by the Dow 30.

I have an ongoing research project with Adam Rosenzweig on the decline in U.S. corporate taxes.  We’re specifically interested in what is causing the decline and what government policies, if any, have been effective in slowing this decline.

But here is a quick picture on effective corporate tax rates of the Fortune 500 (from Compustat data).  We use the same methodology as this paper on lobbying and taxes. Below is a graph on the average effective corporate tax rates of the Fortune 500 with a trend line and the 95% confidence interval.

There clearly is a decline.  But what is the cause?  Is it learning by firms?  Changing rules on transfer pricing and use of tax havens?  Government policies that are increasingly generous in their deductions and allowances?

Blog by Nate Archives: How Firms Influence Politics (March 25, 2013)

[My blog migration continues.  This is a post from way, way back in the day when I was a professor at Washington University in St. Louis.]

How Firms Influence Politics

Today in my graduate International Political Economy class we discussed how firms influence the political process.

While the US media often focuses on campaign contributions in a quid pro quo exchange with firms, political science has rejected this simple approach.  Even in cases of government contracts (think Halliburton getting billions during the Iraq war) there is limited evidence that politicians trade votes for campaign contributions?

Really?  How come?

First, the empirical evidence simply doesn’t point to this type of exchange.  As documented in this classic paper(and first described by Tullock), there is too little money in politics.  In the last election cycle over $1 billion was spent by special interests.  But compared to $3.5 trillion in government spending or $615 billion in non-defense discretionary spending, political contributions are quite small.

If a company like Walmart could swing government policy, they should be investing millions and millions in campaigns.  They don’t.  They spend hundreds of millions in charitable contributions and advertising, and only thousands in political contributions.

Second, most of the studies cited in this study find very limited evidence of contributions affecting roll call votes.

That was a quick empirical point, but doesn’t explain the theory.  How come money isn’t more influential?  Thispiece by Gordon and Hafter makes three points (focusing specifically on regulation).

  1. Reductions in regulations are a collective good for the industry.  Sure, chemical companies want looser environmental laws, but the lobbying by a single firm could provide the good for everyone.  The collective action problem means that this actually makes it less likely for this to be provided.
  2. There is a classic problem of credible commitments.  A politician gets thousands of campaign contributions from a firm with the promise that the politician will shield the firm in the unlikely event of an environmental disaster.  The disaster strikes and then politicians run away from the firm.  Let’s call this example Congress and BP Deepwater Horizon.
  3. More generally, politicians are getting campaign contributions to help win elections.  If the positions politicians have to take to get these contributions are unpopular, this can defeat the purpose of getting the contributions in the first place.

These are probably obvious points to most my reader(s), but worth noting.  Most firms invest more in crappy corporate art and definitely much, much more in advertising than in political contributions.  Why?  Because of collection action problems and that you can’t trust those lying politicians.

I don’t want to go too far.  The above cited Gordon and Hafter piece is an excellent study of how contributions can be used influence politics.  But the point is that contributions may matter, but they are not the main way that firms influence politics.

Years ago I had a MBA student in one of my Ph.D. classes.  His answer to these sort of questions was always something like, “why don’t you just ask the firms.”  One recent paper did something along these lines, by examining 250,000 Enron emails to see how important contributions were as a political strategy.  The quick point is that they aren’t very important in general (summary link).

Contributions have minimal influence, but firms can influence politics in other way.  Let me outline one quick mechanism. Work such as Eddy Malesky’s research on Vietnam show that foreign investment, by generating jobs and tax revenues, is supported by local elites.  Local are willing to bend or break central government rules for investors for these benefits.

Related work includes Pinto and Pinto’s study of how the industry of investment matters for politicians. Left politicians, favoring labor, will enact policies that will help encourage investment in labor intensive industries, while right politicians, representing capital, will represent capital intensive industries.

Finally, work by Facco and co-authors documents “politically connected firms”.  In most cases these are firms where executives or board members of a firm are also politicians.

What doe these three studies have in common?  In all three of them, politicians have strong incentives for certain firms to do well.  Politicians are willing to champion these firms, either because they affect an important constituency, or that they directly impact a politicians own asset performance.

These are just a couple of quick points from a single week of my grad IPE class.  Thought I would share.

Blog by Nate Archives: South African Investment Incentives (March 22, 2013)

[My blog is migrating and I am really trying to develop a huge South African fan base.  A post from 2013.]

South African Investment Incentives: Inflated Job Numbers

My many posts on investment incentives have mostly focused on the US.  I’ve been collecting some info on incentives in Canada, the UK, Brail and now South Africa.

South Africa is an interesting case where the majority of the incentives are provided through a government agency based on this tax incentive act.

This act directly specifies what types of investments are eligible for incentives and at what level.

  • R900 million in the case of any Greenfield project with a preferred status;
  • R550 million in the case of any other Greenfield project;
  • R550 million in the case of any Brownfield project with a preferred status;
  • R350 million in the case of any other Brownfield project;
  • An additional training allowance of R36 000 per employee may be deducted from taxable income; and
  • A maximum total additional training allowance per project, amounting to R20 million, in the case of a qualifying project, and R30 million in the case of a preferred project.

Basically, new investment (greenfield) is privileged over mergers and acquisitions or expansions of existing investment (brownfield).

Further details include:

  • Upgrade an industry within South Africa (via an innovative process, cleaner production technology or improved energy efficiency);
  • Provide general business linkages within South Africa;
  • Acquire goods and services from small, medium and micro-sized enterprises (SMMEs);
  • Create direct employment within South Africa;
  • Provide skills development in South Africa; and
  • In the case of a Greenfield project, be located within an Industrial Development Zone (IDZ).

Sounds fair.  How does it work in practice?  This is the latest press release.

Not a lot of detail on these investments, but I wanted you to focus on one stat.  The claim is that these investments will create 1,618 direct jobs and 25,448 indirect jobs.  Indirects jobs are the jobs that will be created by suppliers or other businesses benefiting from the investment.

This is a crazy number of indirect jobs.  My conversations with people in US economic development offices have indicated that they have hard rules (and some specific software) on calculating the indirect benefits of investment.  Automobile investment is the best type to get, where the multiplier is 7-8 indirect jobs for every direct job at the most.  The South African average multiplier is an average of over 15.

What is going on?  This week I saw five announcements of incentives in South Africa.  Below are the companies and tax incentives in U.S. dollars.

  1. Mamba Cement: $20.59 million
  2. Omnia Group: $8.71 million
  3. Sepkahu Fluoride: $20.59 million
  4. Sappi Southern Africa: $20.59 million
  5. Lomotek Polymers:  $2.51 million

What do these investments have in common?  First, all five are South African companies, so don’t blame foreign MNCs for this.  Second, all of these investments are classified as being investments in the “Basic Materials”.  Mamba Cement is pretty self-explanatory.  Omnia, Sepkahu and Sappi are chemical plants and Lometek makes “second generation” pallets.

Do these investments justify job multipliers of 15?  I don’t have any details about South Africa, but the United States Bureau of Economic Analysis has standard multipliers by industry (and by region).  Here are multipliers for investments in California.

Don’t bother clicking on the document.  The quick story (presented in Column 6 of the many pages of tables) is that for every direct job created, most industries created about 2 total jobs.  A few industries hit multipliers of 6 or 7 (automobile production is 6.45).  Petroleum refineries are a 9 and Electronic Computer manufacturing tops 13, and on type of finance (funds, trust, etc.) hits 14.  That is the maximum.

The industries most closely related to the three chemical investments are chemicals are 3-7, and cement at 4.45.  I don’t have a multiplier for “second generation” pallets, but most plastic manufacturing has multipliers of 2-3.  My brother worked at a pallet company in Wisconsin.  2 is generous.

What is the story here?  Looks like the South African government is providing very large incentives (even by US standards) to local companies using inflated indirect job numbers.  Why?  That is a question for future research.

Blog by Nate Archives: Double Irish with a Dutch Sandwich (March 20, 2013)

[I am migrating my old blog content to my new blog.  This post is still pretty relevant.]

Double Irish with a Dutch Sandwich: Investing in the Netherlands to avoid corporate taxes

I received a media inquiry today about US investment abroad.  One of the questions was why does the Netherlands receive so much US foreign direct investment (FDI)?  Even more surprising might be the top five countries (in 2011) were: the Netherlands, UK, Luxembourg, Bermuda, and Canada.

The answer to the original question is the Dutch Sandwich.  Or if you want to get more complicated, a Double Irish with a Dutch Sandwich.

What?

The Dutch Sandwich is basically a way for firms to establish a Dutch holding company, route their foreign income through the holding company, and then send the money to a tax haven.  The outcome of this is that companies can, legally, move foreign profits from countries with high (or non-zero) tax rates to tax havens with zero tax rates.  You can get more complicated and move money from Ireland to the Netherlands and then to a tax haven.

Here is a story on how Google uses this strategy to minimize their tax burden.

There are clearly examples of firms doing this, but how much do these practices affect global FDI patterns?  Attached is the 2011 US Bureau of Economics Analysis Report on US outward and inward FDI. See my highlights on page 32.

Here is the key quote from the report:

For the third consecutive year, the position in the Netherlands was the largest—at $595.1 billion, or 14 percent of the total. Most of the position increase and 77 percent of the position in the Netherlands was accounted for by holding companies, which likely invested the funds in other countries; see the box “Indirect Ownership in the Statistics on U.S. Direct Investment Abroad.”

The biggest FDI recipient largely attracts foreign investment to avoid taxes.  Bermuda and Luxembourg aren’t attracting manufacturing investments.  These are mostly holding companies as well.

One final note.  The establishment of Dutch subsidiaries isn’t only for tax purposes.  The Dutch have an extensive network of investment treaties around the world.  Establishing an operation in the Netherlands can also give you access to use these treaties and “forum shop” different legal venues if you have an investment dispute.

UPDATE:  I had a tax lawyer friend who had a couple of comments on my blog post.  The original version of this post used the terms “evade” rather than “avoid” taxes.  This is importance since the firms are engaging in legal means of reducing their tax burden.  I also changed the language that firms are reducing their “foreign income” subject to taxation, not necessarily their US income.  I’m not 100% if firms are using these strategies to also reduce their US income, or if they are just reducing their foreign income tax burden.  This is above my pay grade/my time commitment to blogging.

Blog by Nate Archives: Investment Incentives in the EU (March 14, 2013)

[Did you follow my old blog and loves the dozens of investment incentive posts?  You want them reposted on my new blog?  Sure.  You’re welcome.]

Investment Incentives in the EU: State Aid to the Auto Industry

As part of a book project with Eddy Malesky I did a little poking into financial incentives offered to firms investing in the EU.  The EU governs incentives through “state aid” rules, constraining the ability of wealthier regions from giving aid to firms.  The conventional wisdom is that these rules limit the fiscal bidding wars for firms.

I was surprised to see so many large incentives given over the past 10 years.  Here is a quick list just from the European auto producers over the past 10 years.

  • In 2004 Fiat received grants of €8 million, €33 million, and €47 million for investments in Italy.
  • In Spain, Renault received grants of two grants of €30 and one of €33 for in 2004, €45 million in 2005, €13million and €32 million in 2006, and €17 and €18 million in 2010.
  • Puegeot received a €58 million grant for their investment in Galicia, Spain in 2006.
  • Volvo and Volkswagen got €4 and €9 million incentives for a Spanish investments in 2005 and 2006.
  • BMW received €14 for their investment in the Ober-Österreich region of Austria and €4.9 million for an investment in Warwichshire, UK.
  • In 2008, Renault obtained a comparatively modest €3 million in France and a massive €25.5 million direct grant from Romania.
  • The Czech Republic has gave a €22 million grant and €29.5 million tax exemption to Skoda in 2008 and 2011.
  • Volkswagen and Fiat received €16 million and €26.99 million in grants from Poland
  • Opel grabbed €20 and 22.5 million in grants and tax benefits from Denmark and Hungary in 2010.
  • The Rolls-Royce Group (ok, not all auto production) have racked up a total of €49 million in grants and other incentives in the UK between 2010-2012.

These examples are just from the operations of European auto producers, ignoring the massive incentives given to Ford, GM, Nissan and Toyota, among others.  It also doesn’t address the massive incentives offer to other iconic manufacturing companies such as: Abbott, Alcoa, Amazon, BP, Bridgestone, Caterpillar, Coca-Cola, Cadbury, Caesars Hotel, H&M, Dell, Dupont, Eli Lily, GlaxcoSmithKline, Hewlett-Packard, IBM, Intel, Johnson and Johnson, Merck, Michelin, Pfizer, Pirelli Tyres, Samsung, and Sony.

My favorite ones is cash strapped Greece providing a €28.9 million subsidy for a Formula One race track in 2012.

Blog by Nate Archives: The Stability of US News Graduate Rankings (March 14, 2013)

[Are you new to this blog?  Great.  This is an old post from my WashU blog.]

The Stability of US News Graduate Rankings

As the Director of Graduate Studies at WashU in Fall 2012, I completed the US News survey of political science grad programs.  For those of you unfamiliar with the methodology, DGSes and department chairs fill out a survey ranking all schools on a 1-5 scale and write in the top ten departments for each subfield.

This is really tough to do.  You try it.  Take all of the Ph.D. programs in your state and rank them on a 1-5 scale.

The rankings for 2013 literally didn’t change from 2009.  Ok, there are a few more ties in 2013, but the order of schools is the same.

2013                2009

Harvard                      1                      1

Princeton                    2                      2

Stanford                     2                      3

Michigan                    4                      4

Yale                            4                      5

Cal                             6                      6

Columbia                   7                      7

UCSD                        7                      8

MIT                            8                      9

Duke                          10                    9

UCLA                         10                    10

Chicago                     12                    11

UNC                           13                    13

WashU                        13                    13

Rochester                   15                    13

Wisconsin                   15                    15

NYU                            15                    17

Ohio State                   15                    17

What gives?  Is it that reputations of top programs really don’t change?  Or that this survey is so poorly designed most of us are going to simply recall the past rankings as a heuristic to rank programs?

Actually, there is a methodology reason for this.  Turns out that for the first time ever (with no explanation) they averaged the survey from 2008 (the 2009 rankings) with the survey in 2012 to make the 2013 rankings.

Why?  It could be that with only 50 responses, they got some odd rankings that didn’t make sense.  Or that a few top programs got panned, and for whatever reason they averaged the response.

UPDATE: Someone pointed out that there is already a discussion of this issue at Political Science Rumors.  This is what I get for not following the rumor blogs

Blog by Nate Archives: My Experience with Big(ish) Data (Feb 27, 2013)

[I am migrating content from my blog to my new virtual home.  This post on big data from 2013 already seems dated.  Lots of disappointment and criticism of “big data” in political science.]

My Experience with Big(ish) Data

Many years ago I started a project examining firm-level data on foreign investment.  This data is from the U.S. Bureau of Economic Analysis (BEA) on the operations of all of the 20,000+ foreign affiliates of U.S. multinationals.  This paper, on the taxation of multinationals, has been finally published at International Studies Quarterly.

I wanted to briefly document my experience with this project since it related to a number of discussions on “big data” in the social sciences (here is one good post on big data).  I know, 20,000 obsevations isn’t a lot, but this can be used as time-series data and there are other aspects of this data that are similar to “big data”.  Hold on.

Here is a couple of very quick bullet points on my experience with this paper.

  • I found out about this incredible firm-level data set by reading a few econ papers that used it.  To my dismay, the data is confidential, housed in Washington, DC.  So I had to petition to the BEA to see the data.  After a few months, I got the ok from the BEA and then went through the process of getting a security clearance to use this data.  A few more long months.
  • Once I was given access to the data (and a special sworn employee of the BEA) I had to comply with the rules of using the data.  The data is housed in DC and has to be used on site.  I had to fly to DC every time I wanted to run a regression.  Good thing my college roommate lives in DC.
  • All of the data are housed in different MS Access files and that only old versions of Stata were available on the computers that I could work with.  No downloading files from the internet (R, do files, etc).  Putting together the data set and even running a few simple regressions was a lot more difficult than I expected.
  • This data set was a gold mine, but like most mining operations, extracting anything from it is really, really messy.  How do you “clean” data that isn’t comparable to other data sets?  For example, I had way too many zero observations for one variable in the data.  Were these true zeros or just missing values that were coded as zero?  I went to the BEA papers archives and pulled a sample of paper forms to double check the coding.
  • I rarely get a paper get accepted on the first go.  This means for every time the article this article was reviewed, I had to plan a trip to DC to run another set of regressions.  I went to APSR, IO, AJPS (R&R that was rejected), JOP and then finally ISQ.
  • Given the barriers to replication, article reviewers and one NSF panel were probably harsher on this project than my others.  I can’t say that I blame them, but I got at least one negative comment from every journal and grant review process on the inaccessibility of the data.

The paper I wrote with this data won an award for best political economy paper at APSA in 2008.  It is now forthcoming in International Studies Quarterly in 2013.

What is my experience with “big data”?

  1. The barriers to entry are really high. You probably already knew this.
  2. Data quality is a serious issue.  When using a cross-national dataset, I look at the individual observations to make sure nothing looks odd.  It took much more legwork to verify the quality of this data.
  3. The potential for “data mining” is much, much lower that you would think.  This relates to point 4.
  4. There is no way to let the data “speak” to you.  It is a confusing mess that you really need to have a plan on how to analyze it.
  5. Control variables or other important variables aren’t often available at the level of analysis that you’re examining.
  6. Because this is “new” data, many of the standard methods of data analysis might not apply.

My only concrete suggestion is that theory is even more important when using “big data”.  You can only really harness the richness of complicated micro data if you have clear micro theories.

Barriers to entry can create rents for a researcher, but they also make it much more difficult to replicate your results.  This means that journal reviewers and grant reviewers can hold this against you, and the ultimate impact of your work might be lower.  This isn’t a suggestion.  It is a warning.

In the end, I’m really like this paper and I am really grateful for the folks at the BEA for giving me access to this project.  But this was a tough slog.

Blog by Nate Archives: $100 Million Dollar Incentive Deals (Feb 22, 2013)

[My blog is moving.  Actually it mostly moved.  This is a post about investment incentives as part of a book project with Eddy Malesky.  It is actually a book manuscript under review.  Hope is grows up to be a published book someday.]

$100 Million Dollar Incentive Deals: Big River Steel invests in Arkansas

I am collecting data on investment incentives around the world as part of a book project.  One big deal was just announced this week.  Big River Steel is investing over $1 billion in Arkansas.

According to this article, the incentive deal includes:

…$125 million for start-up costs: a $50 million loan to the company, $50 million for site prep, $20 million for piling and $5 million for bond insurance.

Other state incentives include:

  • sales tax refunds on building materials, taxable machinery and equipment used in the project;
  • a 4 percent income tax credit based on new payroll jobs for five years;
  • $10 million from the Governor’s Quick Action Closing Fund;
  • $5 million from the Department of Workforce Services Trust Fund to be used for training;
  • an income tax credit for recycling equipment equal to 30 percent of eligible recycling costs that will include legislation that could extend the credit from three to 14 years;
  • and a sales tax exemption on utilities that will include legislation to fully exempt sales tax associated with the sale of natural gas and electricity.

This is a huge deal, but the dollars often obscure the actual costs to the state.  There are big differences in a loan (even at a subsidized interest rate), tax exemptions (which reduce the tax burden in the future) and cash up front.

To me, the most troubling type of incentives are the “deal closting funds”.  Arkansas has one of the larger deal closing funds (although dwarfed by the Texas Enterprise Fund).  The last report I can find is that in 2011 it had $23 million in assets.  Essentially, the Governor’s office is providing a special, $10 million cash grant to a specific firm.

What could go wrong?

A year or so ago I put a freedom of information act request to Texas and Arkansas on their incentive programs.  Texas gave me the info on the accepted and rejected applications (they accepted most applications).  Arkansas couldn’t provide any info on rejected applications.  Dodgy.

Blog by Nate Archives: Revising Failed Economic Development Policies (Feb 21, 2013)

[My blog is migrating.  From St. Louis, MO to Silver Spring, MD.  Just like me.]

Revisiting Failed Economic Development Policies: Brazil’s quest for automobile investment

Brazil’s automobile regime in the 1970s and 1980s was the poster child for failed economic development policies.  In short, Brazil combined high tariffs on imported cars with lucrative investment incentives to attract foreign producers.  These foreign producers were required to use “local content” in the form of local suppliers and in some cases local managers.

Sound good?  As you might predict, auto producers came to Brazil because of the protected market, but they build small boutique production facilities that made crappy cars that were sold at high prices.  This was expensive for consumers and tax payers and did little to generate economic development.  Policies of “import substitution” largely fell out of favor.

BMW recently announced the opening of a new production facility in Brazil.  Why?

Brazil’s new auto regime sounds a lot like the failed economic development policies of the past.  Brazil introduced a new tax on imported cars (from 25% to 55%) although they are exempting producers with Brazilian factories from this tax.  Although it seems like this tax will be gradually reduced.  Right now, cars like the Toyota Corolla cost almost twice as much in Brazil than in the US.

Brazil also has complicated local content rules and they are enticing firms with large investment incentives.

Sounds a lot like the failed policies of the past.

Blog by Nate Archives: Making Errors Alone or Together (Feb 5, 2013)

[My cut and paste blog migration continues.  I kinda like this post from 2013.  Seriously.  Ok, I didn’t reread it.  But I think I liked it.  All yours.]

Making errors together or alone?  More on the Academic Job Talk

Dan Nexton kicked off a debate on the value of academic job talks.  Dan provides a nice follow-up that links to blog posts by Tom Pepinsky, Jeremy Wallace.  Tom Oatley has a provocative post on a potential historical explanation for the  emergence of the job talk.

Tom Oatley has a nice point that we should look for some data to address this debate. He focuses on a historical explanation.  But I also have a contemporary one on the use of talks as part of an evalaution process.

What are (job) talks for?

In my original post I mentioned that department speaker series often have the same format as job talks.  The point was that job talks may not be the most efficient ways to make a decision, but they: a) can complement other pieces of information for evaluation and b) they have other positive externalities.  We have speaker series because they are valuable to a dept.  A job talk can also provide some value outside of just evaluation.

I have another example.

At WashU we’re on the second week of listening to our Ph.D. students present their 3rd year papers in the department.  These paper presentations take the form of a 20-30 min talk.  We actually have more of these presentations in a year than we have job talks.

I was on the committee that enacted this new requirement two years ago.  Our process for the 3rd year papers is that we have a faculty committee read the papers and we also included a public presentation of the work.  What was the logic of having a public presentation?

At least one faculty member advocating for presentations did say argue that students would eventually have to give a job talk and this would be good practice.  This is a similar logic to Tom Oatley’s path dependence argument.  But the more important reasons (at least in my mind) were:

  • Public presentations actually incentivize more effort.  Not only do you have to produce a paper; you also have to anticipate questions, know your data, and be able to explain your methods.  Papers can be narrow, but presenters have to almost always be more broad than their written work.
  • This was a low cost way to communicate research not only to faculty but to other graduate students in the program.  First year graduate students probably don’t read these papers (or job market candidate files), but they can learn quite a bit during a research presentation.
  • Attending these talks and really engaging the speaker is a way to signal to the students in our program that we take this process seriously and we our invested in the graduate program.

We could play with the format and have the presentation 5 min or 45 min.  The point is that these presentations serve multiple purposes.  If we just wanted to evaluate the work as efficiently as possible, we would circulate the papers to the faculty.  Hell, why not just circulate it to one or two faculty.  Who said an efficient process needs to impose uniformly high costs on all faculty members when delegation is possible?  But these presentations are more than just about evaluation.

Some of these reasons may not apply to a job talk.  But I think the quick point is that attending a job talk is a pretty low cost activity that teaches you about the speaker, the project, and informs the speaker about your department.

Making Better Decisions

My main point is that the job talks serve a evaluation function along with an intellectual and professional function.  But I think I might be alone in thinking about job talks in this way.  So let me go back to the big question on how to evaluate candidates.

I think there is a tremendous amount of uncertainty in junior faculty hiring for a number of reasons.

I’m all for a better search process.

The one common criticism is that job talks allow faculty to be lazy and make decisions based on the talk.  I’m not sure what the process looks like at other departments, but here is ours:

  • Job candidates are selected by a search committee that has already read the work.
  • Most of us have some form of a one-on-one or group meeting with the candidates.
  • Many of us read at least some of the written work.
  • The search committee has to circulate a report 72 hours before the faculty meeting when we discuss the candidates.
  • We have a faculty meeting where the search committee sets the agenda and then we discuss the candidate(s).

Most meetings have a few faculty that had to miss the talk for teaching or travel (although most faculty attend).  Faculty also have a range of exposure to the written work.  Committee members read a ton and a bunch of faculty outside of the committee almost always engage the written work.

Is it plausible that removing the job talk would incentivize more people to read more and engage the written work?  Sure, it seems plausible to me.  But would this lead to a better decision?

I personally agree that some people overweigh the value of the job talk.  I think letters are more informative, but many people place way too much stake in them as well.  I’m mostly a “read the dissertation” type person, although others have cautioned me that dissertations can easily be largely ghost written by a dissertation advisor.  Who’s right?

My colleague Matt Gabel has some work on group decision-making in medicine.  The simple point is that the best decisions are made when individuals that make different types of errors are in the same room together.  It doesn’t matter who is right (or who is wrong).  What matters is how me make a decision as a group.

I think it is equally plausible that having people that over weigh the job talk or the letters or the dissertation in the same room leads to better decisions.  A decision solely based on a job talk would be a terrible decision.  But having a faculty member or two advocate for or against candidate based on the talk seems like it could be a part of a healthy discussion about hiring.

This last part about decision making is really just a mix of conjecture and my application of group decision making (or portfolio theory) to political science hiring.  I’m not 100% sold on the job talk, but like I said, I’m mostly a “read the dissertation” type person.  I also like to attend the job talks.