Concepts and Categories, by Michael T. Hannan et. al. (preface)

CONCEPTS AND

CATEGORIES FOUNDATIONS FOR SOCIOLOGICAL AND CULTURAL ANALYSIS MICHAEL T. HANNAN GAËL LE MENS GRETA HSU BALÁZS KOVÁCS GIACOMO NEGRO LÁSZLÓ PÓLOS ELIZABETH PONTIKES AMANDA J. SHARKEY

Concepts and Categories FOUNDATIONS FOR SOCIOLOGICAL AND CULTURAL ANALYSIS

Michael T. Hannan Gaël Le Mens Greta Hsu Balázs Kovács Giacomo Negro László Pólos Elizabeth G. Pontikes Amanda J. Sharkey

Columbia University Press

New York

Preface

FOR MORE THAN A DECADE NOW, this group of coauthors has been studying how categorization affects economic activity. We have sought to understand the role of categories in markets by examining a diverse set of empirical phenomena, such as movie ratings, the entry of software firms into new lines of business, and investor reactions to accounting irregularities. Our research has consistently shown that categorization matters for important outcomes, such as the performance of products and the survival of firms. As a result of this line of work, as well as influential studies by researchers outside this group of coauthors, recognition of the fundamental role of categorization in market exchange has increased dramatically.

This extant work points to cognitive processes in explaining observed social behavior and market outcomes, but it does not delve deeply into the details of cognition. Rather, sociologists have tended to loosely invoke an understanding of categorization that scholars in fields such as cognitive psychology, anthropology, and linguistics have developed with greater clarity and precision. This loose approach was reasonable as a starting point for establishing that cognitive processes involving categorization influence market exchange. However, this research strategy has some drawbacks.

First, sociological work has avoided clearly defining what is meant by concept and category, often conflating the two. Concepts are mental representations by which people classify the entities that they encounter. A category is a set of objects that have been recognized as fitting a concept. How an object is categorized is the realization of a probabilistic process that depends on the set of concepts that the person holds. But this process also likely depends on social and environmental factors; as a result, people often have stable concepts that nonetheless yield varying categorizations of the same object in different situations. Analytically distinguishing between concepts

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and categories allows us, in our sociological analysis, to apply and extend the rich literatures from other fields. We develop a theory of social categories based on an explicit model of how humans use concepts.

Second, some sociological research on markets gives the impression that individuals, in roles such as consumer, critic, or investor, choose whether to rely on concepts to make sense of the entities that they encounter. These treatments suggest that they use concepts only when they lack more direct information on which to make inferences. This view runs at odds with research on cognition, which makes clear that people cannot avoid relying on concepts. Indeed, humans are hardwired for concept formation, as can be seen clearly in the research on the development of concepts in infancy. So we need to dispel the notion that reliance on concepts is somehow a second-best alternative to collecting and analyzing more detailed information. Concepts are foundational to human cognition and interaction, and relying on them represents a rational use of limited attention and working memory.1 Finally, although sociological analysis has prioritized the consequences of categorization, it also needs to examine the genesis and evolution of concepts and categories. We believe that answers to questions about emergence and change require taking the effects of social interaction into account and, in particular, obtaining a better understanding of how the concepts held by one individual evolve as a result of observing the everyday categorization behaviors of other individuals. The lack of a precise model of how categorization occurs at the individual level presents a barrier to understanding the dynamics of concepts. Although we do not treat such dynamics in this book, we think that the foundation we have built will support such important extensions.

With these issues as background, we began writing this book in an effort to better understand and clarify the cognitive foundations of our work on categorization in markets. Our goal is to build a model that formally specifies what concepts and categories are, stipulates how they are used, and draws out the implications for processes of sociological interest. We have learned from sociological applications that it is hard for readers to pin down many germane theoretical constructs, dealing as they do with inherently fuzzy interpretations. This motivated us to strive for clarity, and we devoted considerable attention to building a formal language with the right expressive power.

In undertaking this task, we turned to work in other relevant fields. We relied on three main strands of work for inspiration and specific arguments.

The first is the psychology of concepts, beginning with the work of Eleanor Rosch (1973, 1975). We are fortunate that Gregory Murphy (2002) produced a nuanced overview of the field fifteen years ago. This book allowed

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us outsiders to grasp the contours of the sprawling field. We also found the stream of research by James Hampton (1979, 1997) on typicality and conceptual combination to be extremely helpful.

The second source is work on the geometry of concepts. This comes mainly from computational linguistics. We relied on book-length treatments

by Dominic Widdows (2004) and Peter GaĚˆrdenfors (2004, 2014). Although our approach differs in significant ways from theirs, this work has helped guide our approach to representing the universe of concepts in a way that is amenable to empirical analyses of the types of data to which sociologists typically have access.

The third---perhaps most important---source of inspiration is Bayesian work on categorization as optimal statistical inference (Anderson, 1991; Ashby and Alfonso-Reese, 1995; Tenenbaum and Griffiths, 2002; Feldman, Griffiths, and Morgan, 2009; Sanborn, Griffiths, and Shiffrin, 2010). Following the Bayesian turn in cognitive science has allowed us to build a unified treatment of a variety of topics that have been developed in more or less separate silos in much previous research on concepts and categorization.

We were struck by the seeming isolation of these three strands of work. We hope that this book illustrates some of the potential gain from integrating aspects of the research streams, as well as investigating concepts and categories non-experimentally with the methods developed by sociologists.

Guide to Reading This Book We focused this book on issues that arise in sociological research and social science research more broadly. For readers from these fields, we offer two suggestions about how to approach the book.

As one progresses through the chapters, the treatment becomes more formal, especially in its reliance on probability theory. Because the theoretical notions are elusive, we do not see any way around such technical exposition. Nonetheless, we have included substantial textual expositions of the key ideas. We think that these will suffice for those who prefer not to decode the formulas.2 Readers will find that the early chapters focus heavily on cognitive science.

We think that it would be a mistake to think that this material is irrelevant to sociological concerns. In an effort to make the relevance to sociology clear throughout, we have included introductions to each part of the book that deal explicitly with the connections with sociological theory and research.

We also illustrate the basic relations with original experiments tuned to social science applications and with analyses of observational data taken from cultural domains.

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By the same token, researchers in cognitive science might find our focus on contextual factors and processes unfamiliar. Cognitive science is interested in studying the mind, and psychological work in this area often develops context-free hypotheses and uses controlled laboratory experiments.

We share some features and methods of this approach, but we also follow the general idea that cognition occurs in the context of other people, social relationships, and social group memberships. In cognitive science, when the relation between the mind and the social and cultural context is taken into account, as in the situated cognition approach, the physical body is involved in intensive moment-to-moment interaction with its immediate environment.

Our attention to context is distinctive and sociological. The processes of conceptualization and categorization studied here depend on abstractions such as roles that individuals play in social settings or the social acceptance (legitimacy) that concepts have gained within a group. Although this approach might be uncommon for them, cognitive scientists might find in it some new connections to their work.

PRAISE FOR CONCEPTS AND CATEGORIES “Social classification—the establishment of categories and the sorting of entities into those categories—is the critical juncture at which cognition and social organization intersect. As such, it is a central topic that cuts across many fields of sociology and other social sciences. This volume integrates work from the most productive and promising program of theory and research on social classification into a coherent statement that will inform sociological thinking for years to come.”

PAUL DIMAGGIO,

New York University

“This formal foundation of categorization processes represents a massive step forward in our theoretical understanding of categories, their evolution, and their influence on decisions. The authors do an excellent job of motivating these cognitive foundations in terms of their relevance to sociological questions of interest.”

OLAV SORENSON , Frederick Frank ’54 and Mary C. Tanner Professor of Management, Yale School of Management

“Concepts and Categories is at once foundational and generative—the kind of book in which you will fill the margins with new learnings and insights.

I highly recommend it both to newcomers to the sociology of markets as well as to established scholars looking for their next novel idea.”

DAMON PHILLIPS , Lambert Family Professor of Social Enterprise, Columbia

Business School

“Hannan and collaborators have produced a masterful interdisciplinary intervention, the first to bridge research on the nature of concepts in cognitive psychology and sociological work on organizational and market categories. The book provides solid theoretical foundations tightly linked to formal measurement tools that should prove foundational to future advancements in the field.”

OMAR LIZARDO , LeRoy Neiman Term Chair Professor of Sociology, University

of California, Los Angeles ISBN: 978-0-231-19272-9

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