At a conference attended the other day by your reporter, a distinguished academic economist (who had better remain nameless) cited the "QWERTY" layout of the standard typewriter keyboard as a clear example of how markets "can make mistakes". It may have been the millionth such reference. Many a textbook cites this case as proof of a certain kind of market failure -- that associated with the adoption and locking-in of a bad standard. For years, if you cited an example of a "pure public good" (another kind of market failure), it had to be a lighthouse. If you needed a case of "positive externalities" (yet another), you would very likely go for beekeeping. In its field, QWERTY has achieved the same iconic eminence.
Which is only apt, because the tale of QWERTY is a myth -- just like those other two cases. More than 25 years ago, Ronald Coase, a Nobel laureate, showed that when lighthouses were first built in Britain they were provided by private enterprise; tolls were collected when ships reached port. So lighthouses are not pure public goods. At about the same time Steven Cheung examined beekeeping and apple-growing in the state of Washington. He found that apple-growers paid beekeepers for their bees' pollinating endeavours; those services were not, in fact, an unpriced "externality".
Mr Cheung's article was called "The Fable of the Bees". That is why the paper on QWERTY published a mere nine years ago by Stan Liebowitz of the University of Texas at Dallas and Stephen Margolis of the University of California, Los Angeles, was called "The Fable of the Keys". It tells you plenty about the history of the typewriter -- but what every economist should have concluded from it was that another example of "locking in" had better be found. QWERTY simply will not do.
The myth goes roughly as follows. The QWERTY design (patented by Christopher Sholes in 1868 and sold to Remington in 1873) aimed to solve a mechanical problem of early typewriters. When certain combinations of keys were struck quickly, the type bars often jammed. To avoid this, the QWERTY layout put the keys most likely to be hit in rapid succession on opposite sides. This made the keyboard slow, the story goes, but that was the idea. A different layout, which had been patented by August Dvorak in 1936, was shown to be much faster. Yet the Dvorak layout has never been widely adopted, even though (with electric typewriters and then PCs) the anti-jamming rationale for QWERTY has been defunct for years.
Why has the bad design endured? Because, the story continues, that first inefficient standard became locked in. Even though the costs of new keyboards and retraining for the Dvorak layout would be quickly recovered, typists won't switch unless others do so as well; likewise, the keyboard manufacturers refuse to move first. There is a co-ordination failure -- that is, a market failure.
A fine tale, but largely fiction. The paper by Messrs Liebowitz and Margolis shows, in the first place, that the first evidence supporting claims of Dvorak's superiority was extremely thin. The main study was carried out by the United States Navy in 1944 (doubtless a time when every second counted in the typing pools). The speed of 14 typists retrained on Dvorak was compared with the speed of 18 given supplementary training on QWERTY. The Dvorak typists did better -- but it is impossible to say from the official report whether the experiment was properly controlled. There are a variety of oddities and possible biases: all of them, it so happens, seeming to favour Dvorak.
But then it turns out -- something else the report forgot to mention -- that the experiments were conducted by one Lieutenant-Commander August Dvorak, the navy's top time-and-motion man, and owner of the Dvorak layout patent.
In 1956 a carefully designed study by the General Services Administration found that QWERTY typists were about as fast as Dvorak typists, or faster. Interest in Dvorak among companies and government agencies had lately been increasing, but it came to an end with that finding. Since then, as "The Fable of the Keys" explains, there have been a variety of other experiments and studies. They find that neither design of keyboard has a clear advantage over the other. Ergonomists point out that QWERTY's bad points (such as unbalanced loads on left and right hand; excess loading on the top row) are outweighed by presumably accidental benefits (notably, that alternating hand sequences make for speedier typing).
Which is all very interesting, but the point is this: if you have learned to type on a QWERTY keyboard, the cost of retraining for Dvorak (however modest) is not worth paying. This implies, in turn, that the QWERTY standard is efficient. There is no market failure.
Undaunted by the resilience of the QWERTY myth, Messrs Liebowitz and Margolis devote the first chapter of a forthcoming book on supposed market failures, technology and Microsoft (Winners, Losers, and Microsoft: Competition and Antitrust in High Technology, which will be published in May by the Independent Institute) to the fable of the keys. They go on to argue that the fashion for finding new kinds of market failure (lock in, path dependence, network effects, and so on) in high-tech industries is misconceived: QWERTY is just one example among many. Their views on this larger question are for another article. For now, merely note that the failure illustrated by the QWERTY myth has more to do with the study of economics than with markets. For some reason, economists seem to adopt bogus anecdotal histories and then get locked in.