Timur Kuran

Early life and education

Kuran was born in New York City in 1954, where his parents were graduate students at Yale University. They returned to Turkey, and he spent his early childhood in Ankara (where his father taught at the Middle East Technical University). The family moved to Istanbul while Kuran was a teenager, and, for a decade, he lived just off the campus of Boğaziçi University, where his father was president and professor of Islamic architectural history.

Kuran obtained his secondary education in Turkey, graduating from Robert College in Istanbul in 1973. He then studied economics at Princeton University, graduating magna cum laude in 1977. He went on to Stanford University where he obtained a doctorate in economics, supervised by Nobel laureate Professor Kenneth Arrow.

Career

Professor Kuran has written extensively on the evolution of preferences and institutions, with contributions to the study of hidden preferences, the unpredictability of social revolutions, the dynamics of ethnic conflict, perceptions of discrimination, and the evolution of morality. His best known theoretical work is Private Truths, Public Lies: The Social Consequences of Preference Falsification (Harvard University Press), which deals with the repercussions of being dishonest about what one knows and wants. Since its original publication in 1995, this book has appeared also in German, Swedish, Turkish, and Chinese.

Kuran has also written on Islam and the Middle East, with an initial focus on contemporary attempts to restructure economies according to Islamic teachings. Several of his essays on this topic are included in Islam and Mammon: The Economic Predicaments of Islamism (Princeton University Press), which has been translated into Turkish and Arabic. Since the mid-1990s he has turned his attention to the conundrum of why the Middle East, which once had a high standard of living by global standards, subsequently fell behind in various realms, including economic production, organizational capability, technological creativity, democratization, and military strength.

His thesis is that the economic and educational institutions of Islam, though well-suited to the era in which they emerged, were poorly suited to a dynamic industrial economy. These institutions fostered social equilibria that reduced the likelihood of modern capitalism emerging from within Islamic civilization. His recent articles have identified obstacles involving inheritance practices, contract law, procedures of the courts, the absence of corporations, the financial system, and the delivery of social services.

From 1990 to 2008 Kuran served as editor of an interdisciplinary book series published by the University of Michigan Press. This series was re-established at Cambridge University Press in 2009 under the title Cambridge Studies in Economics, Cognition and Society. He has served, or currently serves, on the editorial or advisory boards of numerous scholarly journals. He taught at University of Southern California between 1982 and 2007, where he held the King Faisal professorship in Islamic thought and culture from 1993 onwards. From 2005 to 2007, he was Director of USC's Institute for Economic Research on Civilizations, which he founded. In 1989–90 he was a member of the Institute for Advanced Study in Princeton; in 1996–97 he held the John Olin visiting professorship at the Graduate School of Business, University of Chicago; and in 2004–05 he was visiting professor of economics at Stanford University. He is currently a member of the Executive Committee of the International Economic Association.

Research

Four themes stand out in Timur Kuran’s works: preference falsification, the role of Islam in the economic performance of the Middle East, Islamic economics, and the political effects of Islam.

Preference falsification

In articulating preferences, individuals frequently tailor their choices to what appears socially acceptable. In other words, they convey preferences that differ from what they genuinely want. Kuran calls the resulting misrepresentation “preference falsification.” In his 1995 book, Private Truths, Public Lies, he argues that the phenomenon is ubiquitous and that it has huge social and political consequences. These consequences all hinge on interdependencies between individual decisions as to what preference to convey publicly. A person who hides his discontent about a fashion, policy, or political regime makes it harder for others to express discontent.

One socially significant consequence of preference falsification is thus widespread public support for social options that would be rejected decisively in a vote taken by secret ballot. Privately unpopular policies may be retained indefinitely as people reproduce conformist social pressures through individual acts of preference falsification.

In falsifying preferences, people hide the knowledge on which it rests. In the process, they distort, corrupt, and impoverish the knowledge in the public domain. They make it harder for others to become informed about the drawbacks of existing arrangements and the merits of their alternatives. Another consequence of preference falsification is thus widespread ignorance about the advantages of change. Over long periods, preference falsification can dampen a community’s capacity to want change by bringing about intellectual narrowness and ossification.

The first of these consequences is driven by people’s need for social approval, the second by their reliance on each other for information.

Kuran has applied these observations to a range of contexts. He has used the theory developed in Private Truths, Public Lies to explain why major political revolutions catch us by surprise, how ethnic tensions can feed on themselves, why India’s caste system has been a powerful social force for millennia, and why minor risks sometimes generate mass hysteria.

Unanticipated revolutions

The fall of East European communism in 1989 came as a massive surprise. Iran’s Islamic Revolution of 1978–79 stunned the CIA, the KGB, the Shah of Iran that it toppled, and even the Ayatollah Khomeini, whom it catapulted to power. The Russian Revolution of 1917 stunned Lenin, the deposed Romanovs, and foreign diplomats stationed in St. Petersburg. No one foresaw the French Revolution of 1789, not even the rioters who brought it about. In each of these cases, a massive shift in political power occurred when long-submerged sentiments burst to the surface, with public opposition to the incumbent regime feeding on itself. Preference falsification explains why the incumbent regime appeared stable almost until the eve of its collapse. People ready to oppose it publicly kept their opposition private until a coincidence of factors gave them the motivation and the courage to bring their discontents out in the open. In switching sides, they encouraged other hidden opponents to join the opposition themselves. Through the resulting bandwagon process, fear changed sides. No longer did opponents of the old regime feel that they would be punished for being sincere; genuine supporters of the old regime started falsifying their preferences, pretending that the turn of events met their approval.

Timur Kuran first identified this mechanism in an April 1989 article entitled “Sparks and Prairie Fires: A Theory of Unanticipated Political Revolutions,” which offered the cases of 1789, 1917, and 1978–79 as examples of revolutions that stunned the world. A few months later, the pattern was repeated in Eastern Europe. Kuran proceeded to explain why seasoned experts of the communist bloc were caught off guard in “Now Out of Never: The Element of Surprise in the East European Revolution of 1989,” published in 1991. These two papers, like related chapters of Private Truths, Public Lies, suggest that political revolutions and shifts in political opinion in general will catch the world by surprise again and again, because of people’s readiness to conceal their political proclivities under perceived social pressures.

Asked in an interview whether he thinks that revolutions or counter-revolutions are imminent in the Islamic Middle East, he responded that although most Middle Eastern regimes are unstable due to lack of genuine legitimacy, the required shifts in Middle Eastern public opinion are unpredictable. If Middle Eastern regimes do collapse like a house of cards, he adds, most observers will be stunned, though there will be no shortage of commentators who will say “I told you so.”

Ethnification and ethnic conflict

Through a series of articles published in the late 1990s, including "Ethnic Norms and Their Transformation through Reputational Cascades" (1998), Kuran applied the concept of preference falsification to ethnic relations, with a focus on "ethnification," the process whereby ethnic origins, ethnic symbols, and ethnic ties gain salience and practical significance. In most societies, he observes, ethnicity serves as a source of identity without preventing cooperation, exchanges, socializing and intermarriage across ethnic boundaries. Such societies generate social forces that preserve that condition. People with hatred toward other ethnic groups keep that hatred in check to avoid being punished for divisiveness. If political and economic shocks weaken those forces, a process of ethnification may get under way. Specifically, people may start highlighting their ethnic particularities and discriminating against ethnic others. The emerging social pressures will then lead to further ethnification, possibly leading to spiraling ethnic conflict.

Kuran uses this argument to explain how the former Yugoslavia, once touted as the model of a civilized multiethnic nation, became ethnically segregated over a short period and dissolved into ethnically based enclaves at war with one another.

An implication of Kuran's analysis is that similarly developed countries may exhibit very different levels of ethnic activity. Another is that ethnically based hatreds constitute by-products of ethnification rather than its mainspring.

Perseverance of India’s caste system

India’s caste system is often cited as an example of cultural petrification. For more than two millennia it has divided Indian society into ranked occupational units known as castes, surviving invasions as well as the spread of Islam and Christianity. Although discrimination against low-ranked castes is now illegal, caste norms remain a powerful force in Indian life.

Observing that the caste system survived for centuries with remarkably little use of force, Kuran attributes the persistence to preference falsification driven by the threat of ostracism. Because various castes were economically interdependent, individual castes could not break away from it, and individuals who challenged it were punished by all segments of society, including their fellow peers.

A related puzzle is the Hindu doctrine of karma, which posits that a low-caste person will move into a higher caste in his next life if he accepts his deprivation and patiently fulfills the duties of his caste. Conversely, he will move down in rank if he rebels and fails to perform. Kuran attributes the ideological hold of the karma doctrine to distortions in relevant discourses induced by the knowledge falsification that accompanies preference falsification. Indian public discourses treated anticaste ideas as unthinkable, inducing people with egalitarian views to conceal from others their doubts about Hindu tenets.

This thesis provides a unified explanation for caste restrictions and caste ideology. Three chapters of Private Truths, Public Lies develop the full argument.

Availability cascades and risk regulation

“Availability cascade” is a concept that Timur Kuran developed jointly with Cass Sunstein, initially through a 1999 article entitled “Availability Cascades and Risk Regulation.” An availability cascade is a process of collective belief formation whereby an expressed perception triggers reactions that make that perception seem increasingly plausible through its rising availability in public discourse. The driving mechanism ordinarily involves a combination of informational and reputational motives. Individuals endorse the perception partly because they base their own beliefs on the apparent beliefs of others. The other motivation is social acceptance, which individuals achieve through preference falsification.

Kuran and Sunstein observe that availability entrepreneurs – activists who aim to control the content of public discourse – engineer availability cascades to further their own agendas. Their availability campaigns may do great harm. Many popular scares about innocuous products and insignificant dangers have been driven by campaigns that combine the spread of misinformation with the intimidation of doubters. Once public discourse turns in favor of the initiated agenda, fear feeds on itself, as expressed perceptions of danger shape the perceptions of others, and doubters silence themselves. Episodes of mass hysteria have lasting consequences for public policy and the law.

Illustrating how availability cascades influence the regulation of risks associated with production, consumption, and the environment, Kuran and Sunstein have also proposed reforms to alleviate their adverse effects. These include new institutions to give policy makers better insulation against sudden mass demands for new market restrictions. They also include the implementation of product disparagement laws and the creation of an easily accessible scientific database to reduce people’s dependence on popular perceptions for information on risks whose accurate measurement requires advanced scientific techniques.

Other contributions

Econ Journal Watch, in September 2009, published a series of four introspective essays on preference falsification in the economics profession.

Economist David R. Hakes confessed to intentionally complicating a piece of research with excessive equations and proofs in order to obtain publication in an academic journal. The article had previously been rejected on grounds that the results were too "self-evident"; but after increasing the level of mathematical complexity and leaving the conclusions the same as before, the article was accepted for publication. Hakes' confession exposes the prevalence of preference falsification and is evident of the current status quo in academic economics.

Stephen Kinsella argues that teaching in the college classroom what one does not believe is another example of preference falsification. Having to conform to the predetermined curriculum is problematic for a professor who believes the theories presented in that curriculum to be greatly flawed and socially destructive if acted upon. This type of practice, Kinsella argues, is very familiar to many economists, and increased efforts to maintain academic freedom are necessary. He suggests a judicious use of course descriptions that preserves the widely accepted essential theories and allows preferential choice on theories where no general consensus exists.

William Patrick Leonard, a higher education administrator, writes of preference falsification in the balancing of university budgets. The common measures are enrollment and tuition increases, with little emphasis on cost-containment measures. He argues this is a result of opposition from faculty, who fear that cost-containment measures could threaten long standing traditions. This is subsequently met by little pressure from boards to contain costs.

Bruce L. Benson, Distinguished Professor at Florida State University, offers a narrative of his academic career, highlighting his shifting personalities of mathematical model-builder, econometrician, and political economist. In an introspective account, he draws out how a self-serving desire early in his career to be published in mainstream journals caused him to direct much effort toward the first two identities at the expense of the third. It took him 25 years to finally escape the influence of his preference falsification and embrace his truly preferred identity as a narrative political economist.

Islam and economic development of the Middle East

The Middle East was once an economically advanced region of the world, as measured by standard of living, technology, agricultural productivity, literacy, or institutional creativity. Subsequently, it failed to match the institutional transformation through which western Europe vastly increased its capacity to pool resources, coordinate productive activities, and conduct exchanges. In a 1997 article entitled “Islam and Economic Underdevelopment: An Old Puzzle Revisited,” Kuran critiqued the leading explanations offered since the nineteenth century, and he has proceeded to develop a thesis of his own. His thesis centers on the role of Islamic institutions.

The economic institutions of the Middle East were well suited to the Middle Ages, argues Kuran, and they never became frozen. However, during the second millennium in certain areas central to economic modernization changes were minimal, at least in relation to the structural transformation of the West. In eighteenth-century Cairo and Istanbul, credit practices hardly differed from those of the 10th century. Likewise, investors and traders used atomistic enterprise forms essentially identical to those prevalent eight centuries earlier.

Several mechanisms contributed to the Middle East’s economic retardation, Kuran argues. Certain distinctly Middle Eastern institutions, including ones rooted in Islam, unintentionally blocked the transition to the modern economy. The institutions that generated evolutionary bottlenecks include: (1) the Islamic law of inheritance, whose egalitarian character inhibited capital accumulation, (2) the strict individualism of Islamic law and its lack of a concept of corporation, which hindered organizational development and contributed to keeping civil society weak, and (3) the waqf, Islam’s distinct form of trust, which locked vast resources into inflexible organizations that tended to become dysfunctional over time. None of these institutions posed an economic disadvantage at the time of their emergence. Nor did they ever cause an absolute decline in economic activity. They turned into handicaps by perpetuating themselves during the long period when western Europe took the lead in developing the institutions of the modern economy.

Kuran’s article “Why the Middle East Is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation” (2004) develops the overall argument succinctly. The individual mechanisms receive detailed treatments in “The Islamic Commercial Crisis: Institutional Roots of Economic Underdevelopment in the Middle East” (2003), “The Absence of the Corporation in Islamic law: Origins and Persistence” (2005), and “The Provision of Public Goods under Islamic Law: Origins, Impact, and Limitations of the Waqf System” (2001).

The Long Divergence

In 2011, Kuran published "The Long Divergence: How Islamic Law Held Back the Middle East" summarizing his arguments on the institutional roots of the Middle East's economic stagnation. As the blurb states:

"In the year 1000, the economy of the Middle East was at least as advanced as that of Europe. But by 1800, the region had fallen dramatically behind—in living standards, technology, and economic institutions. In short, the Middle East had failed to modernize economically as the West surged ahead. What caused this long divergence? And why does the Middle East remain drastically underdeveloped compared with the West? The Long Divergence provides a new answer to these long-debated questions.

The book argues that what slowed the economic development of the Middle East was not colonialism or geography, still less Muslim attitudes or some incompatibility between Islam and capitalism. Rather, starting around the tenth century, Islamic legal institutions, which had benefitted the Middle Eastern economy in the early centuries of Islam, began to act as a drag on development by slowing or blocking the emergence of central features of modern economic life, including private capital accumulation, the corporation, large-scale production, and impersonal exchange. By the nineteenth century, modern economic institutions began to be transplanted to the Middle East, but its economy has not caught up. And there is no quick fix today. Low trust, rampant corruption, and weak civil societies—all characteristic of the region’s economies today and all legacies of its economic history—will take generations to overcome."

There is a discussion forum for this book on Facebook. Reviews include: "The Crescent and the Company," by Schumpeter in the Economist; "Is Islam the Problem?" by Nicholas Kristof of the New York Times; "The Long Divergence," by Ziauddin Sardar in the Independent; "Prophet Motive," by John Cassidy in the New Yorker; "Selling Out the Koran," by Chris Berg in the National Times of Australia; "Long Divergence," by L. Carl Brown in Foreign Affairs; "What Made the Middle East Fall Behind the West?," by Şahin Alpay in Today's Zaman; "Timur Kuran," by Tyler Cowen in the Marginal Revolution. Some answers to common questions on Nicholas Kristof's blog: "Questions from My Islam Column." Kai Ryssdal's radio interview on Marketplace: "Historical Roots of Middle Eastern Uprisings." An essay summarizing key arguments: "Legal Roots of Economic Underdevelopment in the Middle East," European Financial Review (Feb–Mar 2011): 10–11. Peter Passell provides a review and long excerpt in the Milken Institute Review, 13 (2011): 59–76.

Islamic economics

Islamic economics is a modern doctrine that claims to offer an alternative to economic systems developed in the West, including capitalism and socialism. Its most visible practical achievement has been the establishment of Islamic banks meant to avoid interest. Islamic economics has also promoted Islamic norms of economic behavior and founded redistribution systems modeled after early Islamic fiscal practices.

Timur Kuran argues that the doctrine of Islamic economics is simplistic, incoherent, and largely irrelevant to present economic challenges. Few Muslims take it seriously, he writes, and its practical applications have had no discernible effects on efficiency, growth, or poverty reduction. In any case, its real purpose has not been economic improvement but, rather, the cultivation of a distinct Islamic identity to resist cultural globalization. It has served the cause of global Islamism, known also as “Islamic fundamentalism,” by fueling the illusion that Muslim societies have lived, or can live, by distinct economic rules.

These arguments are developed in a series of papers, most published between 1983 and 1998. A comprehensive statement is in his 2004 book Islam and Mammon.

Islamic banking

The most visible achievement of Islamic economics has been Islamic banking, which differs from conventional banking in its aversion to interest. Islamic banks are supposed to avoid interest, on the ground that the Koran bans all forms of interest categorically. Since the 1970s, more than 60 countries have established Islamic banks.

Following Fazlur Rahman, Kuran argues that the Koran bans the pre-Islamic practice of riba, which involved the compounding of the debt of a borrower unable to make payment on schedule. Riba was a source of political instability, because it tended to push defaulters into enslavement. The interest that a modern bank charges on a loan, or that it offers to a depositor, involves no such danger. In any case, Kuran holds, interest is indispensable to economic life; it serves to allocate capital and risks efficiently. That is why no society, past or present, has managed to eradicate interest. Efforts to eliminate interest from financial transactions are futile, he says.

Several Kuran articles published in the 1990s documented that although many Islamic banks are profitable, they all give and take interest routinely, using ruses to make interest appear as a return to risk. Many of these ruses have roots in medieval practices. On this basis, he suggests that the significance of Islamic banking lies almost entirely in its symbolism and in the boost it gives to the global movement of Islamism.

Kuran’s thoughts on Islamic banking are developed most fully in his articles “The Economic Impact of Islamic Fundamentalism” (1993) and “Islamic Economics and the Islamic Subeconomy” (1995).

Islam and political underdevelopment

Kuran has recently taken up the puzzle of why most Middle Eastern countries are governed autocratically. In a 2009 paper, “The Rule of Law in Islamic Thought and Practice: A Historical Perspective,” he explores whether Islam, the region’s dominant religion, promotes a variant of the rule of law, defined to encompass government accountability, equal access to justice and the political process, efficient judicial and political systems, clear laws, generally stable laws, and the protection of fundamental human rights. He reaches three conclusions. First, various early Islamic institutions were meant, in some respect, to serve one or more rule of law principles. Second, the institutions in question lost effectiveness over time. Finally, the relevant Islamic institutions are now generally out of date.

Main publications