27 Apr 2009

How Tyler Cowen and David Friedman Can Get Rich(er)

All Posts No Comments

One of the things that contributes most to my feelings of guilt is that I have to blow off so many people who email with possibly fantastic new ideas that would revolutionize a particular academic field or even the “real world.” More and more, I’ve had to say, “You may very well be right, but I simply don’t have the time to read your paper. I encourage you to try to clean it up and submit to journals X, Y, Z…”

The problem, of course, is that a lot of these people are…weird…and on top of that they don’t have any official credentials. Furthermore, they are often (rightly or wrongly) bitter that here they are, sitting on Fantastic Idea X, and even the Austrians / libertarians / whomever don’t appreciate how awesome it is!!

So I thought of a possible way to process these ideas, to reduce the chance that we’re letting something beautiful slip away just because the guy who thought of it has a tendency to send emails with a lot of CAPITALIZED WORDS. This approach wouldn’t work with me (yet), because I’m not a big enough gun for most academics or venture capitalists to care about. But it might work for, say, Tyler Cowen or David Friedman, who not only are big names and considered really really smart, but also have a reputation for being multidisciplinary. In other words, I think a lot of people would take it seriously if Cowen or Friedman thought they came across a really good idea. So here’s the process:

(1) At the start of the calendar year, the Big Gun establishes a submission price. Let’s say it’s $1000. The entrant submits a Great Idea with the $1000 fee, and then the Big Gun will spend 5 quality hours really considering its merits. For this effort, the Big Gun pays himself $500, and puts the other $500 in a pot.

(2) At the end of the calendar year, the Big Gun ranks the submissions in terms of which should receive more attention from the experts in the relevant field(s). I.e. the top pick is “the single most promising idea submitted to me all year.”

(3) Besides the seal of approval from the Big Gun, the top entrant(s) get dibs on the other half of the submission fees. E.g. maybe the first place gets 50% of the pot, while second place gets 35% and third place gets 15%. The cash award helps the submitters develop their idea more.

Now if this were to really take off, it would spawn a new industry of talent scouts. E.g. after Tyler Cowen had announced his rankings three years in a row, third parties would have a pretty good idea of what types of entries end up winning. (E.g. anything involving secession would be out, and anything involving ethnic food would be a strong candidate.) So these scouts would setup websites where Joe Schmoe could email in his idea for free. Then if the scout thought Joe Schmoe’s idea good enough, the scout would (according to a prearranged contract on the website) pay Joe Schmoe a flat fee (say $100) and then put up the $1000 submission for Tyler’s own procedure. If Joe Schmoe’s idea won that year, then the talent scout would retain the cash award (and maybe give Joe Schmoe a cut, again based on the arrangement beforehand) but of course the world would know it was Joe Schmoe who actually came up with the idea.

I think a process like this would avoid some of the flaws in our current arrangement. I really am not being facetious when I say that I’ve had some potentially brilliant ideas emailed to me, but I’m also being dead serious when I say I just can’t afford to properly investigate them. And it’s also not “right” that I should only consider ideas where someone pays me to consider them (e.g. here). That would leave too many potentially great ideas unconsidered.

Over time, those Big Guns who proved themselves capable of really identifying promising ideas would be able to command bigger and bigger fees. Competition would presumably also whittle down the percentage of the submission fees that the Big Gun keeps for him or herself. Those thinkers who have a comparative advantage in spotting a promising idea–which may not necessarily be the same thinkers who can dream up their own ideas, or who can take a promising idea and bring it to completion–would end up spending more and more of their time evaluating entries. With the promise of someone taking them seriously, thousands of amateurs all over the world would dust off that one really great idea they had, and spend a few weekends developing it enough to send to the talent scout websites.

And Hayek would smile on the whole enterprise.

Comments are closed.