Path dependence: a foundational concept for historical social science

Abstract

This introduction to the concept of path dependence, its pertinence for the development of historical social science, and its application in economic analysis and economic history, proceeds from intuitive general ideas about history and historicity in narratives. It provides precise definitions of what is meant by describing a dynamical process as being “historical.” Deterministic and stochastic formalizations of such dynamical systems are distinguished. The characterization of stochastic path dependent processes as “non-ergodic” is explained in non-mathematical language by reference to concepts in probability theory, and a variety of representations of such processes in formal models is surveyed (including the Polya urn-process, certain kinds of Markov chain models, branching processes, and reversible spin systems) to show that while all display path dependence, their properties in other respects are quite different. The diverse set of structural, micro-level conditions that can give rise to path dependence is examined, and a further distinction is drawn between the property of path dependence and the existence of so-called “QWERTY-effects”—characterized by decentralized competitive market failures and consequent “lock-in” to Pareto-inefficient equilibria. Concluding sections consider the implications of the existence of non-ergodic dynamics for the methods of economic policy analysis, and the nature of the guidance that can be obtained in regard to public policy affecting endogenous technological change and institutional evolution.

Bibliography: Works by P. A. David on Path Dependence, 1969–2006

A chronological listing of publications dealing explicitly with conceptual and methodological aspects of path dependence, macro-level irreversibilities and hysteresis in economic processes. (Co-authors’ names appear in boldface).

(1969), “Transport innovation and economic growth: Professor Fogel on and off the rails”, Economic History Review, 22 (3), December, pp. 506–25.

(1971), “The landscape and the machine: technical interrelatedness, land tenure and the mechanization of the corn harvest in Victorian Britain.”, in D. N. McCloskey (ed.), Essays on a Mature Economy, London: Methuen, pp. 145–205.

(1975), Technical Choice, Innovation and Economic Growth: Essays on American and British Experience in the Nineteenth Century, Cambridge: Cambridge University Press.

(1985), “Clio and the economics of QWERTY,”, American Economic Review, 75 (2), May, pp. 322–327.

(1986), “Understanding the economics of QWERTY: The necessity of history,”, in W. N. Parker (ed.), Economic History and the Modern Economist, London: Basil Blackwell.

(1987), “Some new standards for the economics of standardization in the information age,”, in P. Dasgupta and P. L. Stoneman (eds.), The Economics of Technology Policy, London: Cambridge University Press.

(1988a), “Path dependence: putting the past into the future of economics,” Institute for Mathematical Studies in the Social Sciences Technical Report 533, Stanford University, November.

(1988b), “The economics of gateway technologies and network evolution: lessons from electricity supply history,”, (with Julie A. Bunn), Information Economics and Policy, Vol. 3, Winter, 165–202. (French transl. published in Flux: Cahiers due recherché au des reseaux, 1989).

(1989), “When and why does history really matter?’ A Presidential Address to the Economic History Association, Delivered at the Smithsonian Museum of Science and Technology, Washington D.C., September. (Department of Economics Working Paper, Stanford University, October 1989).

(1990), “The economics of compatibility standards: an introduction to recent research,” (with S. Greenstein), in Economics of Innovation and New Technology, 1(1 & 2), Fall: 3–42.

(1991), “The hero and the herd: reflections on Thomas Edison and the ‘Battle of the Systems’,” in P. Higonnet, D.S. Landes and H. Rosovsky (eds.), Favorites of Fortune: Technology, Growth, and Economic Development Since the Industrial Revolution, Cambridge, MA: Harvard University Press.

(1992a), “Path dependence and economics,”, The 1991–1992 Marshall Lectures delivered at the University of Cambridge, April 28–29. Lecture I: ‘The invisible hand in the grip of the past’; Lecture II: ‘Models of non-ergodic economic dynamics, and their implications for policy’. (Center for Economic Policy Research Working Paper, Stanford University, August, 1992).

(1992b), “Path dependence in economic processes: implications for policy analysis in dynamical system contexts”, Background Paper – Rosselli Foundation Workshop on Path Dependence, Torino, Italy, 29–30 May. (Center for Economic Policy Research Working Paper, Stanford University, August, 1992; revised and published as David (2005a).

(1992c), “Heroes, herds and hysteresis in technological history,” Journal of Industrial and Corporate Change, 1(1): pp. 129–80.

(1993a), “Path dependence and predictability in dynamic systems with local network externalities: a paradigm for historical economics,” in Technology and the Wealth of Nations, D. Foray and C. Freeman, eds., London: Pinter Publishers. (French transl., in Technologie et la richesse des nations, Paris, 1993).

(1993b), “Historical economics in the long run: some implications of path dependence,” in Historical Analysis in Economics, G.D. Snooks, ed., London: Routledge.

(1993c), “Intellectual property institutions and the panda’s thumb: patents, copyrights, and trade secrets in economic theory and history,”, in M. Wallerstein, et al. (eds.), Global Dimensions of Intellectual Property Protection in Science and Technology, Washington, DC: National Academy Press.

(1993d), “Percolation structures, Markov random fields and the economics of EDI standards diffusion,” (with Dominique Foray), in Global Telecommunication Strategies and Technological Change, G. Pogorel, ed., Amsterdam: Elsevier Science Publishers.

(1994a), “Dynamics of technology diffusion through local network structures,”, (with Dominique Foray) in Evolutionary Economics and Chaos Theory: New Developments in Technology Studies, L. Leydesdorff, ed., London: Pinter Publishers.

(1994b), “Positive feedbacks and research productivity in science: reopening another black box,” Ch. 8.in Technology and Economic Change, O. Grandstrand ed., Amsterdam: Elsevier.

(1994c), “Les standards des technologies de l’information, les normes de communication et l’état: un problème de biens publics,” Ch. 10 in L’analyse économique des conventions, A. Orleans, ed., Paris: Presses Universitaires.

(1994d), “Why are institutions the ‘carriers of history’? Path dependence and the evolution of conventions, organizations and institutions”, Structural Change and Economic Dynamics, 5 (2): pp.205–20.

(1997a), “Making use of treacherous advice: cognitive progress,” Bayesian adaptation and the tenacity of unreliable knowledge’, (with Warren C. Sanderson), Ch. 12 in Frontiers of the New Institutional Economics, J. V. Nye and J. Drobak, eds., San Diego, CA: Academic Press, chapter 12.

(1997b), “Path dependence and the quest for historical economics: one more chorus of the ballad of QWERTY,” University of Oxford Discussion Papers in Economic and Social History, No. 20 (November). [Available at: <http://www.nuff.ox.ac.uk/economics/history/pap20>]

(1998a), “Marshallian externalities and the emergence and spatial stability of technological enclaves,” (with Dominique Foray and Jean-Michel Dalle), Economics of Innovation and New Technologies (Special issue on Economics of Localized Technical Change, ed. C. Antonelli), 4(2&3):147–82.

(1998b), “Communication norms and the collective cognitive performance of “invisible colleges,” in Creation and Transfer of Knowledge: Institutions and Incentives, G. B. Navaretti, P. Dasgupta, K.-G. Maier and D. Siniscalco, eds., Berlin-Heidelberg: Springer-Verlag.

(1998c), “From the economics of QWERTY to the millennium bug”, Stanford University Economics Department Newsletter, Stanford CA, Fall 1998.

(1999a), “At last, a remedy for chronic QWERTY-skepticism!,” Discussion Paper for the European Summer School in Industrial Dynamics (ESSID), held at l’Institute d’Etudes Scientifiques de CargPse (Corse), France, September. [Available at: http://www-econ.stanford.edu/]

(1999b), “Krugman’s Economic Geography of Development: NEGs, POGs and Naked Models in Space,” International Regional Science Review, 22(2), August 1999:162–172.

(2000a), “Path dependence and varieties of learning in the evolution of technological practice,” Ch. 10 in Technological Innovation as an Evolutionary Process, John Ziman, ed., Cambridge, Eng.: Cambridge University Press.

(2000b), “‘Just-in-time’ for Y2K, and next, ...for irreversible global warming?”, Invited Economic Memoranda for the President of the United States, White House Office of Communications, 3 March.

(2000c) “Path Dependent Learning, and the Evolution of Beliefs and Behaviours,” in The Evolution of Economic Diversity, U. Pagano and A. Nicita, eds., London: Routledge Publishers.

(2001) “Path Dependence, its Critics, and the Quest for ‘Historical Economics,” in Evolution and Path Dependence in Economic Ideas: Past and Present, eds. P. Garrouste and S. Ioannides. Cheltenham, Glos., UK: Edward Elgar.

(2003a) “Thinking Historically About Economic Challenges: Editors’ Introduction,” (with M. Thomas), in The Economic Future in Historical Perspective, P.A. David and M. Thomas, eds., Oxford University Press for The British Academy: pp. 1–27.

(2005a) “History Matters – QWERTY Matters,” The Tawney Lecture for the Economic History Society, presented at the EHS Conference in Glasgow, Scotland, 1 April, 2001. (Revised 15 July 2005; expanded version under preparation for publication).

(2005b) “Path Dependence in Economic Processes: Implications for Policy Analysis in Dynamical Systems Contexts,” in The Evolutionary Foundations of Economics, Kurt Dopfer, ed., Cambridge, England: Cambridge University Press, Spring 2005.

(2005c) “Path Dependence and Historical Social Science: An Introductory Lecture.” An Invited Lecture to the Symposium on Twenty years of ‘QWERTY-effects’ and path dependence studie, held at State University-Higher School of Economics, Moscow, 13 May, 2005. SIEPR Policy Paper No. 04–022 [Available at: http://siepr.stanford.edu/papers/pdf/04–22.pdf].

(2006) “Europe's Universities and Innovation—Past, Present and Future,” SIEPR Discussion Paper, Standford University (March). [Available at: http://siepr.stanford.edu/papers/pdf/06–10.html].