We rely on experts for most of our knowledge. By “expert,” I mean someone who is paid for their opinion. Roger Koppl uses this definition in his 2018 book Professional Failureand I use the same definition in my research, which is based on his book. This definition is useful because it allows us to avoid an endless (and, frankly, pointless) discussion about who counts as an expert.
Therefore, we rely on experts for their opinions for most of our lives. We rely on weather experts, medicine, technical services like auto work, and so on. But organizations—both governments and private companies—also rely on experts. Often, they have their own internal teams of experts to help provide information and ideas. Expertise embedded in bureaucracy provides an interesting variable that I explore in a recent working paper, “Experts Whisper Below.”
When we deal directly with professionals (our doctor, our mechanic, our meteorologist), we can get the information firsthand. But in a large organization, there are often several layers of communication between the expert (the one who generates the idea) and the non-expert who uses the idea.
For example, let’s say the VP of Marketing wants to know how best to market a new product. He asks his boss to get the information he needs to make his decisions. That boss will also command his team. Assuming that this team is a source of information, it will go out, gather the necessary information, and then form an opinion. The team then summarizes their opinion to the manager, who in turn summarizes it to the VP of Marketing. The VP of Marketing then makes the decision, and their orders are relayed throughout the company. In a 1966 RAND Corporation paperAnthony Downs notes that there may be communication breakdowns as orders are passed down the chain of command. Downs calls this “authority leakage.” I point out that information is also lost as it is passed back down the chain of command. I call this “information leakage.” Key pieces of information may be lost, messages may be blocked, and the VP may make a decision based on misconstrued information.
It is also worth noting that asking for clarification to correct misconceptions is more expensive in offices because the non-expert does not have direct contact with the expert. Instead, both groups operate through formal organizational structures.
There are many issues that contribute to the problem of information leakage. First, there is the economic problem of scarcity. Everything is scarce, including time. When an expert summarizes a report, he or she must make decisions about what information to include and what not to include. There is also a trade-off between technical accuracy and insight; Jargon can be misunderstood by those untrained in the subject. But jargon is used for a reason: translating jargon into colloquial words can remove accuracy and lead to misunderstandings (I write about this problem. here).
In addition, people naturally communicate both literally and figuratively, rather than always speaking 100%. Take, for example, this satellite image of the record blizzard that dumped 40 inches of snow on Massachusetts this past February. Note the well-defined eye and swirling movement of the clouds. The storm produced sustained winds of 85 miles per hour. When I described this storm to my students in Louisiana (who have only seen real snow once, last year in a tropical storm), I described it as a “snowstorm.” As a direct statement, that is not true. Hurricanes have certain characteristics that define them as a hurricane, not the least of which is that the hurricane is a tropical storm. But, as a metaphor, it served its purpose: it conveyed to the students the seriousness of the storm.
Although it is intended to de-economicize communications, the storm metaphor can be lost in translation. A person who takes things literally can be misled and think that a snow storm is just a snow storm. Without context (and a little luck), it can be difficult to know if someone is speaking literally or figuratively.
So, the main lesson here is that the more layers there are between experts and non-experts, the more likely the expert’s message will be blocked. A phone game. (And that’s before we talk about any of the personal motivations of the people involved in those layers.)
Why should you put up with these bureaucratic problems? There is a trade-off: a bureaucracy can collect more information than a single person. Because of this advantage, non-specialists in the authorities still have access to more information than they would otherwise have, despite the fact that much of it is lost in the transmission process.
As expert control increases in size, the total amount of information collected increases, but the reliability of the information transmitted decreases. Thus, we have a theoretically correct level of professional bureaucracy. (What that exact level is is a question for another time.)
The second lesson I hope students will take away is about the nature of Public Choice. Public Choice scholars (myself included) often make the mistake of focusing too much on government/judiciary/voter behavior. But Public Choice was originally called “non-market decision making.” The same problems that affect government decision-making affect decision-making within firms and other non-governmental organizations. Individual firms are less efficient than governments, but when they do make mistakes, the mistakes are less likely to blow up because the market punishes wasteful behavior with financial losses. Therefore, for-profit organizations face an incentive to take corrective action. The same process does not precisely exist in government situations. However, non-market decision-making problems exist within the company.
