gwern comments on The Robots, AI, and Unemployment Anti-FAQ - Less Wrong

47 Post author: Eliezer_Yudkowsky 25 July 2013 06:46PM

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Comment author: Lumifer 02 August 2013 04:09:32PM 1 point [-]

Privately held firms have noticeably longer time horizons, make more of these long-term investments, and that appears to be a major cause for them often performing better in the long run than publicly held businesses.

This sounds way too much like a cached thought to me. I'd like to see empirical data for that.

In general, however, we're talking about optimal planning horizons for businesses. As soon as you formulate the problem this way it becomes obvious that the answer is "it depends". I don't think a useful generic answer is possible -- businesses, from an iPhone-case producer to, say, Intel, are too diverse for that.

A related question (much studied, I think) is the impact of the agency problem on business management. It surely exists but I don't know whether it translates so straightforwardly into preferences for the short term and unjustified discounting of the long term.

Comment author: gwern 02 August 2013 04:29:54PM 0 points [-]

I'd like to see empirical data for that.

Here's two links: http://www.overcomingbias.com/2012/02/econ-advice-confirmed.html and http://www.overcomingbias.com/2012/02/info-market-failure.html

Comment author: Lumifer 02 August 2013 04:52:34PM 1 point [-]

So let's take a look at these links.

From the first one:

We also find substantial variation in management practices across organizations in every country and every sector, mirroring the heterogeneity in the spread of performance in these sectors. One factor linked to this variation is ownership. Government, family, and founder owned firms are usually poorly managed, while multinational, dispersed shareholder and private-equity owned firms are typically well managed.

I don't think this supports the claim made.

The second link points to a NBER article behind a paywall (for me). Looking at the abstract, however, it doesn't say anything about preferences for long-term vs short-term. The most relevant data point that I see is that private firms invest more (as % of assets) than public firms, but I'd want to see the details of the study before coming to a conclusion about what that means.

Comment author: gwern 02 August 2013 08:55:47PM 0 points [-]

I don't think this supports the claim made.

It certainly is consistent with the claim made, even if it is not as on-point as the second link I had been searching for, and so I included it.

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