As I’ve argued on this blog before, standards are an important public good – and in the age of information, an increasingly important public good. Here’s some good evidence of the value of high quality standards.
The nascent market for “green” real estate in Beijing, by Siqi Zheng, Jing Wua, Matthew E. Kahnb, Yongheng Deng,
Abstract
In recent years, formal certification programs for rating and evaluating the sustainability and energy efficiency of buildings have proliferated around the world. Developers recognize that such “green labels” differentiate products and allow them to charge a price premium. China has not formally adopted such rating standards. In the absence of such standards, developers are competing with each other based on their own self-reported indicators of their buildings’ “greenness”. We create an index using Google search to rank housing complexes in Beijing with respect to their “marketing greenness” and document that these “green” units sell for a price premium at the presale stage but they subsequently resell or rent for a price discount. An introduction of a standardized official certification program would help “green” demanders to acquire units that they desire and would accelerate the advance of China’s nascent green real estate market.
The only difficulty, Nicholas, is that the setting of standards has nothing of itself to so with high standards. Indeed, standards based approaches can actually work against high standards.
Well most standards are not the optimum standard. But they’re almost invariably better than no standard at all. But by all means try to ensure that the standard that emerges is as high quality as you can.
Nicholas, there is a huge problem with the word standards. In the traditional standards environment, standards simple means fitness for purpose. It has nothing of itself to to with relative levels. Herein lies the problem. If we conflate the word standards with an implicit concept of high we get contused.
Thanks Jim, I think we’re misunderstanding each other. By standards I’m referring to standards like VHS v Beta and whatnot. By “high quality standards” I mean standards that are high quality as standards, not standards that necessarily require high quality. The problem with the Chinese standards from the abstract is that they are easily manipulated. Not that they’re too “low” necessarily, but that they are “low quality standards” in the sense that they lack integrity as standards and can be manipulated by choosing a standard, or designing a standard to make them look good. A maturing of the market will typically sort this problem out as consumers lose confidence in dodgy standards and head towards standards with more integrity. But this may not be inevitable and it may be able to be helped along by collective endeavour – for instance via governments, key users or some other interest.
Thanks, Nicholas. We were indeed. You put that distinction very nicely. But it also illustrates the problem we have with the use of the word standards. It’s often used as a universal, but the variety in meaning means that it has to be put in the context applying at the time. I have a particular concern with with what I perceive to be the misuse of the term in public policy. However, that does not detract from your point.