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The article in Discover is mostly a rehash of things that have kicked
around for some time. Diamond appears to draw on the Navy study for
some of what he is saying, but seems not to have dug in to the
problems with that study. He also is unaware of the GSA study or a
number of ergonomic simulations that contradict claims made in favor
of the Dvorak keyboard.
We wrote to Diamond a few weeks ago, but so far have not been able to
get a response. We had hoped that he would write a correction. But
if we don't hear from him soon, we'll try to get something in
Discover ourselves.
For more on this, you might have a look at The Fable of the Keys, our
article in the April 1990 Journal of Law and Economics. If I'm not
mistaken, Stan has that up on his web page (utdallas.edu). In the
meantime, here's something to consider.
The economic significance of the qwerty story is that it constitutes
what economists call a "coordination falure." The social concern is
that there might be instances in which we would all be better off if
we took some action, but that none of us are better off taking the
action by ourselves. This concern suggests a kind of market
failure in which socially beneficial reallocations do not occur under
decentralized decision making. The Navy study claims that retraining
on the Dvorak keyboard pays for itself ten days after the typist has
returned to regular duties. This would constitute a rate of return
of 2200%. Now companies conduct training programs for their
employees in everyting from welding to typing to grammar to CPR. Do
we really think that a company would pass up an opportunity to make
an investment that would earn 2200%? If the Navy study were correct,
it would clearly pay for companies to act, even if they had little
expectation that other would follow. Further, if it were true,
companies could reasonably expect that others would follow.
In the fifties, there was considerable interest in Dvorak, which
prompted the GSA study. A number of companies looked at this issue
then, and a few have looked at it since. IBM has looked at
keyboard issues fairly broadly and concluded that the Dvorak
arrangement was not particularly promising.
By the way, your own company offers some of the best examples to
illustrate our argument. The usual path dependence argument asserts
a logic of individual choice that goes something like this: "I know
that Dvorak (or Beta or McIntosh) is better, but those who have
committed before me have chosen QWERTY (or VHS or Windows) so I had
better do that too." By this logic, the installed base dominates
people's current decisions. We have argued in print that on the
contrary, people are forward looking. They try to anticipate where
markets will move and act accordingly. When the 486 chip was selling
at a discount relative to the Pentium (TM), people might have thought
as follows: "There are large numbers of 486 machines out there that
are doing plenty of work. The software products now in the market
are written for the 486, so a 486 will run all the products that I
might buy. So the pentium offers little advantage over a fast 486.
Furthermore, everyone is going through the same thought process, so
they'll buy 486s too, so there is little prospect that the Pentium,
though better, will come to be the standard." Notice that this is an
echo of the "qwerty reasoning" above. But people clearly didn't
reason this way. They looked at the alternatives, observed that the
Pentium processor was better, concluded that the market would go in
that direction, ignored the fact that the installed base was
overwhelmingly in 486s, and purchased 586's like crazy. In short,
they look forward, not backward. This bit of history repeats itself
over and over again in the computer industry. There are other good
examples elsewhere. (The true story of the Beta-VHS contest is that
although Beta had almost a two year head start, people ignored the
installed base of Beta machines and selected to VHS. At the time, VHS
offered significantly longer recording times, an advantage that
was important to many consumers.)
So, in addition to lessons about political economy, there is a
business lesson here. Do companies predict better and make
better decisions when they assume consumers are backward
looking? Or should companies give consumers a bit more credit than
that?
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