I am in the midst of writing about the evolution of business education and its heavy focus on quantitative research. Here is a fascinating piece from the Economist on the 50th anniversary of pioneering finance research project — the Center for Research in Security Prices — at the University of Chicago’s Booth School of Business and the deep effect of that project half a century later. (disclosure: I did graduate from Booth).
It is interesting to note that the year this research began (1960), is just after the famous ‘Foundation Reports’ on business education in America were released (both the Ford and Carnegie Reports were published in 1959). From the Economist:
IT ALL began with a phone call, from a banker at Merrill Lynch who wanted to know how investors in shares had performed relative to investors in other assets. I don’t know, but if you gave me $50,000 I could find out, replied Jim Lorie, a dean at the University of Chicago’s business school, in so many words. The banker, Louis Engel, soon agreed to stump up the cash, and more. The result, in 1960, was the launch of the university’s Centre for Research in Security Prices. Half a century later CRSP (pronounced “crisp”) data are everywhere. They provide the foundation of at least one-third of all empirical research in finance over the past 40 years, according to a presentation at a symposium held this month. They probably influenced much of the rest. Whether that is an entirely good thing has become a matter of debate among economists since the financial crisis.
Compiling the CRSP data was an arduous process in what were then the early days of computing. Up to 3m pieces of information on all the shares traded on the New York Stock Exchange between 1926 and 1960 were transferred from paper in the exchange’s archive to magnetic tape. A lot of time was spent adjusting prices to take account of share splits, dividends, delistings and so on. Lorie and his co-researcher, Lawrence Fisher, chose January 1926 as the start date because they wanted the data to span at least one complete business cycle.
That’s quite a big database with some incredible reach. This article highlights both the exceptional nature of American Higher Education — diverse sources of funding for research, sharing of data sets, continued advancement/evolution of lines of inquiry, use of technology.
On the other hand, its exposes the some of the dangers; monopolization of methods and citations in critical fields of inquiry, over reliance on quantitative and ‘scientific’ methods, ‘inertia of excellence’ among leading universities and researchers.
The Economist questions whether this influential research center and the trail it has blazed has been good or bad. I don’t know enough to comment, but it does highlight the value that is ascribed to research universities and their product and that the demand continues to grow. The campus brand and its vivid nouns– ie Professor, Dr., Director, Dean, research, analysis, R&D, etc. — give it great power across society — something we trace back to the Slosson, Flexner, the original AAU, and the foundations. See Rudolph and Phelin for more on these topics. The long and deep influence of CRISP attests to that as well.