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Can anyone point me towards any references that attempt to formulate an economics of software development? In my own research, I discovered a book by Barry Boehm on this, but it seems very awkward and theoretical.

Dependency Structure Matrices seem to offer something worthwhile. Carliss Baldwin has used these in some work on modularization, boundaries, and transaction costs. A lot of it comes off as just common sense, though.

Also, economists have developed something called Behavioral Economics. Is there a "Behavioral Software Engineering" that addresses cognitive biases in developers or groups of developers?

Here's an interesting looking reference:
http://www.amazon.com/Knowledge-Sharing-Software-Development-Comparing/dp/3639100840/ref=sr_1_1?ie=UTF8&s=books&qid=1232979573&sr=1-1

Aziz Shaikh
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yacdmnky
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  • I think if anybody with a 3000-point rep actually understood your question, it would get closed down. – Dan Rosenstark Dec 28 '08 at 07:56
  • Object Thinking and Agile development methods both address coping with human deficiencies in our cognitive processes, enabling us to work better. – Matt Ellen Feb 15 '10 at 11:17

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Before Hal Varian became the Chief Economist at Google, he had worked on the economics of information technology at Berkeley, although he did not focus on software development per se. Nevertheless I would recommend a look at his paper on the more general topic from 2001. You can find a more complete list of his research work on his website. Hope that helps.

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Software as Capital wasn't a waste of time, though you won't find any math in it and it reads like a PhD thesis because it started as one.

Another review.

Darius Bacon
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I think that what you're looking for might fall under a sociology of software development... sociologists study all modern subjects, and from there you will no doubt find references to an economics of software development if there is one.

Dan Rosenstark
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  • thanks. seen this book a few years back. There doesn't seem to be an awful lot of academic interest in software dev economics. The topic gets kick started every few years, but never seems to gain traction. The Varian/Shapiro book seems to do the best job I've seen of explaining it. – yacdmnky Dec 30 '08 at 06:43
  • Also, titles from Dorset House Publishers are interesting, like Weinberg's classic The Psychology of Computer Programming. – yacdmnky Dec 30 '08 at 07:24
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Several years ago I taught an "Economics of E-Commerce" course using Varian's book INFORMATION RULES. His idea of lock-in, though, leads the reader almost towards a drug-addict model of purchaser behaviour and exploitation. This book is more of an economics of e-business than an analysis of the software development process.

In terms of actually making software, there are ideas in the Mythical Man Month well worth knowing about.

Paul
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The "Applied Information Economics" approach of Douglas Hubbard could be part of what you're looking for. If we assume software development is (often|always|sometimes|???) about supporting decision making by providing (better|more accurate|more up to date|whatever) information, then AIE helps as it's a technique for quantifying the value of better information. Read Hubbard's book How to Measure Anything for a good overview of the idea.

Also, the book Software By Numbers by Mark Denne and Jane Cleland-Huang provides a model for managing software projects by using something they call the "Incremental Funding Methodology". IFM is based on decomposing software projects into features based on the business value created, rather than decomposing them along technical boundaries. They then use a series of calculations based on Discounted Cash Flow (DCF), Net Present Value (NPV), Internal Rate of Return (IRR), etc. to show when in the project lifecycle the project will reach self-funding status, when it will reach "breakeven" and when it will generate a real positive cash return for the organization.

You might also find the Capability Cases book of interest. It doesn't strictly deal with any economic issues in detail, but it's an approach to software specification which attempts to more clearly map software capabilities to business strategy and business issues.

mindcrime
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Facts and Fallacies of Software Engineering by Robert Glass has some dollar amounts associated with some activities (or, at least, percentage of total budget). Don't know if that helps at all, but it's something.

Robert C. Barth
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