My first update
Greetings patrons,
Hopefully you are healthy and safe in these uncertain times. I never thought I would be writing my first research update during a global pandemic. But life is full of surprises.
My family and I are hunkered down in Toronto. Fortunately we have a house with a large yard and a garden. Going outside is keeping us sane. If you’re hunkered down at home, I hope you have a similar sanity outlet.
As my family is safe and healthy (and I continue to get paid by the school board where I substitute teach), I’ve been able to continue my writing and research. Here’s what’s on the docket.
Papers in peer review
My paper How the Rich Are Different: Hierarchical Power as the Basis of Income Size and Class currently sits in peer review at the Journal of Computational Social Science. I’m hopeful that it will be accepted, but not holding my breath. The paper has been rejected at 3 previous journals, largely on ideological grounds. Economists don’t take kindly to the main hypothesis, which is that both personal and class-based income can be explained largely by control over subordinates within a hierarchy. We’ll see what reviewers at CSS think.
Studying Patreon
I’ve started a new project that’s going to study the distribution of income on Patreon. This project was inspired by an article by Brent Knepper called No one makes a living on Patreon. Knepper argues that most creators on Patreon earn almost no income, and that only a few top creators earn a decent living.
Scientist that I am, I wanted to see the data for myself. So I wrote a script to scrape the Patreon database. I’m only in the initial stages of analysis, but the results are interesting. For instance, do you want to guess want the Gini index for the distribution of patrons is (the number of patrons supporting each creator)? It’s a whopping 0.96. Given that 1 is the maximum Gini index (the greatest inequality possible), that’s pretty unequal. The vast majority of creators have no patrons at all. Only a tiny minority have more than 10 patrons.
Aside from analyzing the Patreon data, I’m going to test a model of networks call preferential attachment. Here’s the idea. Think of Patreon as a network between creators and patrons. According to the preferential attachment model, the likelihood of a creator gaining a new patron should be proportional to the number of patrons the creator already has. When this assumption holds, the growth of patrons will be ‘scale free’ — the growth rate doesn’t change as the number of patrons grows.
This all sounds academic, but it has real-world implications. When growth rates are scale free, we get runaway inequality. This type of scale-free growth is a basic property of capitalism, and is a big reason why income is so unequally distributed. I’m going to see if it applies to Patreon.
Testing the corporate ‘separation hypothesis’
My colleague Troy Cochrane has asked me to join him on a project that is going to study the corporate ‘separation hypothesis’. What’s that, you ask? The separation hypothesis is an idea that dates back to the rise of corporate capitalism in the early 20th century. In large public corporations, ownership is often diluted among many small investors. Because of this dilution, the separation hypothesis proposes that capitalists (i.e. investors) cede control of the corporation to managers (i.e. CEOs). So managers run firms for their own benefit, not the benefit of investors.
Troy and I are going to test this hypothesis by looking at corporate returns in two kinds of companies: (1) those in which managers own a large stake; (2) those in which managers own a small stake. We want to see if there’s any difference in the average returns in these two types of companies.
The main hurdle here is getting data — we need access to the Bloomberg terminal. Luckily Troy has just started a post doc at York, so we’ll be able to use York’s subscription to Bloomberg. (Side note: not having subscriptions to paywalled data is one of the big downsides of being an independent researcher.) This is a big project, so it will take some time to come to fruition. Stay tuned.
Thank You
That’s it for this research update. If you have any questions or comments, don’t hesitate to email me. Thanks again for your support!
Cheers,
Blair Fix, PhD
economicsfromthetopdown.wordpress.com
patreon.com/blairfix