Which countries have the most human capital?

Here is a new Lancet paper by Stephen S. Lim, et.al., via the excellent Charles Klingman.  Finland is first, the United States is #27, and China and Russia are #44 and #49 respectively.  There is plenty of “rigor” in the paper, but I say this is a good example of what is wrong with the social sciences and more specifically the publication process.  The correct answer is a weighted average of the median, the average, the high peaks, and a country’s ability to innovate, part of which depends upon the market size a person has in his or her sights.  So in reality the United States is number one, and China and Russia should both rank much higher (Cuba and Brunei beat them out, for instance, Cuba at #41, Brunei at #29).  And does it really make sense to put North Korea (#113) between Ecuador and Egypt?  I’m fine with Finland being in the top fifteen, but I am not even sure it beats Sweden.  Overall the paper would do better by simply measuring non-natural resource-based per capita gdp, though of course that could be improved upon too.

Now, I did zero work on that one, and came up with a better result than the authors.  What does that tell you?

Addendum: You will note the first sentence of the paper’s background claims: human capital refers to “the level of education and health in a population”.  The first two sentences of the actual paper immediately contradict this: “Human capital refers to the attributes of a population that, along with physical capital such as buildings, equip­ment, and other tangible assets, contribute to economic productivity. Human capital is characterised as the aggregate levels of education, training, skills, and health in a population, affecting the rate at which technologies can be developed, adopted, and employed to increase productivity.”  The paper does an OK job of measuring the former, but absolutely fails on the latter.

Comments

A rare TC post where he criticizes the paper rather than merely report it... Anyway, machines will soon do all the intellectual work so human capital is overrated?

Until we get there it is important.

On a note related tangentially to the human capital debate, the news that the SEC is suing Elon Musk has my stomach turning today. I had hope with a Republican administration the activist SEC could be reigned in from its witch-hunts but I guess not. Very sad day for US high-tech and humanity.

This gets a +1 from me, in the end we Cuckservatives always bend over.

You aren't funny. You are a troubled individual, with a sad desire to say filthy things.

You probably have a much lower IQ than you think, and your excitement at the witty things you say is sad, sort of like makeup on a fat ugly girl.

Nasty-minded people like you have been trolling this blog for a long time. Look, you poor little creep, there are millions and millions of blog comments every day. You are not doing yourself any favors by saying nasty things that only show your low IQ and your excitement at saying stupid stuff.

You can do better.

in other words, please go away and do something else. You are boring and probably stupid. Try to be better.

The word is he rejected a wrist-slap settlement because he doesn't think he did anything wrong. Understandable, but maybe boneheaded. And definitely prideful.

The reality is men in the public eye need to armor up against the onslaught of people trying to take them down, and they need to be pragmatic about it. They need to learn to be robust and to survive in the character-assassination culture we've evolved. Twitter is not helping Musk. Lack of sleep is not helping Musk. Kavanaugh gives us the sense that there's nothing you can do to avoid being targeted or to defend yourself when they come for you, and there's an element of truth to that. But there's also no sense in self-harm, and "funding secured" is this generation's "mission accomplished."

I'm concerned by his lack of humility. For example, the purchase of Solar City, probably the worst thing Musk ever did to Tesla, was pride in action. He didn't want to admit "you know, land based, small scale solar is a bad idea that doesn't make economic sense." Sometimes you're wrong and you need to move on. Instead, he seriously worsened Tesla's debt outlook. At least he no longer needs to spend time thinking about that firm.

Tesla, while it will probably ride this out just fine, is not even where his real upside lies. The best case scenario for Tesla is that it does to cars what Apple did to mobile, sucking all the air out of the room and capturing substantially all the profit. But all the profit in a mature, some would say moribund, industry. It's a few hundred billion in market cap, best case. SpaceX is where the real money will come from. Keep your eyes on the prize, son! I do note that Apple did a lot of that after we lost Jobs, so maybe Tesla could do it without Musk, because the visionary leader got them on the right path and they just need a great manager to bring it home. But even with Shotwell (probably the highest upside woman in business), SpaceX isn't there yet. Doubly off topic, Shotwell for President 2040!

Musk has shown a number of times that it's easy to get under his skin. Trump has an element of that, but has the social media skills to turn it to his advantage. Musk is not that sophisticated. He needs to figure this out or he'll be torn down, and we'll all lose a lot for that.

Arrogant rich white guys who feel like they can do whatever they want whenever they want, believe themselves above the rules, and be proudly and openly unrepentant about it seem to be in high supply these days.

That's the troll again for the record. He must have a sad life to have to emulate other people. to get attention.

I wondered as much. But I don't have the social media skills to control myself, I suppose...

At least you aren't a cuck like me!

Get some medical help, you dull boring loser, unless of course you are some Russian of Chinese bot, in which case, emigrate.

Here is a free idea to reduce the profitability of impersonation, while retaining the freewheeling comment system:

J.C.R. Licklider talked about the importance of color and the ability of humans to rapidly discriminate by color.

Have your programmer hash everyone's email address or IP into a color, and make names appear in that color.

Thus I, Anonymous might be a purple or green Anonymous, and anyone else who follows on with a new comment might be a red or orange Anonymous.

Good luck to anyone who tries to reverse-engineer that hash.

Damn, I like that idea.

He trolled you because you act like a cuck here. Knock that shhiitt out.

JWatts, +1

I thought the same thing when I heard about the SEC going after Musk, how ridiculous can you get, to attack a guy who is trying to do things that will benefit humanity if they work.
BTW while scam products abound, they should focus companies selling them.

This is definitely a week for "the law should not apply to my friends."

I think both posts saying the SEC should not have sanctioned Musk are fakes. That said, I agree with your comment.

It's awesome human capital when you can just announce what you think the outcome is, do no actual work, and then reward yourself for being cleverer than the actual authors that did some real work

This is a fine example of what Bryan Caplan considers GMU blogger culture, actually.

Well, it might be a fine example of general blogger culture but generally TC provides some rigor. (and some listening to 'other' people)

You're not a fan of the "smell test"?

I believe the approved term for Prof. Cowen's USA number 1 belief is called 'mood affiliation' here.

Is it really credible to claim that the US has less human capital than Greece, Belarus, Latvia and others, given its relative economic performance by any measure?

Germany also ranks below those countries, and essentially tied with the U.S., BTW. Which is equally absurd.

Yes, Tyler's analysis putting the U.S. at #1 is flippant, but the main point here is the criticism of the paper, which I think is correct.

'Is it really credible to claim that the US has less human capital than Greece, Belarus, Latvia and others, given its relative economic performance by any measure?'

Sure it is credible - though certainly subject to discussion. One of the four points used is educational attainment, 0-18 years, and yes, I do believe that Latvia, Belarus, Greece, Germany, and the US are roughly equal by that measure.

If we were measuring wealth, and using that as a replacement value for human capital (which is not an ungenerous way to restate 'non-natural resource-based per capita gdp'), then clearly the U.S. or Germany would be higher in the ranking than Belarus or Latvia.

To be honest, it is fair to say that this research and its rankings is at least as credible as anything put out by public policy institutes claiming to measure 'economic freedom.'

The U.S. and Germany have a per capita GDP three times higher than Belarus.

If Belarus really has higher human capital, the story must be something like "the institutions and general conditions in Belarus are so atrocious that their effect overwhelms the fact that Belarus's people have more potential to be productive".

But how can this possibly be true? If the conditions in country were that bad, how could it not have a huge negative impact on the development of human capital? If dysfunctional government is holding the economy back, the same dysfunctional government is providing a lot of the education. If the business environment is terrible, many of the productive people tend to leave, and people that stay are less motivated to develop skills, because such activity is not rewarded. etc.

I find the claim incredible on its face.

Years of schooling, number of degrees, etc. is NOT human capital. Saying it is so doesn't make it so.

It's like saying that the number of rosaries a person says is how holy they are.

Its how many rosaries you manufacture.

Paper's metric for "human capital": A complex composite of measures of health, education and life expectancy.

Alternate measures proposed in this post and comments:
1) Americans have the highest GDP per capita, so they must have the most human capital
2) TC's "extract GDP per capita from natural resources; the rest is human capital"
3) TC's "Select a bunch of measures of dispersal, with 'ability to innovate' as a fudge factor, then jury rig the weighting to the US is #1" (well, at least, it's better than proposing "openness" or "cultural diversity" as the fudge factor!).

Both of these are somewhat dodgy in their own ways, but the alternatives to the paper seem far worse; it brackets whatever economic structural forces lead to higher GDP/capita as "human capital", as a wastebin taxon with no value other than to allow high GDP/capita, low resource intensity nations to feel good about themselves.

TC might right, but he hasn't actually demonstrated that. In particular, it's been a very long time since the size of the market correlated with the size of the country for most countries. (unless this is a sly mood affiliation against globalism - which isn't justification per se)

Tyler's personal ranking may not be 100% correct, but he's certainly correct that this paper's conclusions are bullsh*t, which is his main point. You can't measure education and population health and then proceed to claim that you have accurately or meaningfully measured the attributes of a population that lead to economic productivity. There are completely absurd pair orderings in that list basically disproving their methodology, not to mention that their methodology is obviously flawed from it's basic description.

Just as a general matter, it's basic good practice (in business and should be the case in research) to be able to detect bullsh*t claims without doing any real work. And this is completely independent of how much work the researchers did you put together the bullsh*t. It can be a lot of work to put together some good sounding bullsh*t. Successful and productive organizations are ones who can sniff it out and shove it the side without wasting more time regardless. If you have to spend just as much time as the people producing the bullsh*t to prove it's bullsh*t, then you have already lost this battle. I guess many academics don't understand this.

Great comment.

Well, this is disturbing - 'Taiwan (province of China).'

'So in reality the United States is number one' - of course it is, no need to question decades of advocating those small steps to a much better world. Though why listen to anyone from a different background, as that is not career enhancing.

'What does that tell you?' That the U.S. should be number 1, instead of slipping from place 6 in 1990 to place 27 in 2016?

Why not? There is so money in solding our friends out to Red China.

Both the "People's Republic of China" (capital: Beijing) and the "Republic of China" (official capital: Nanking; provisory capital since 1949: Taipei) consider Taiwan a province of China - the disagreement between the PRC and the RoC is about who is the legitime ruler of mainland China+Taiwan and who is the gang of thugs who illegally control some parts of the Chinese territory, not about the frontiers.

Sort of - that polite fiction is breaking down as the native Taiwanese gain more political power, to China's extreme disquiet.

Hong Kong was never in a position to declare independence - Taiwan (potentially) is.

Too much info, after all I’m just an old cuck.

Go away, boring loser.

You make poor Vox - or whatever little hero you have who likes to use the word cuck - look stupid with your antics.

Are you just trolling!? Their definition of human capital is in the first sentence of the Abstract: "Human capital is recognised as the level of education and health in a population". If your definition is more something like "a country’s ability to innovate" that's fine but beside the point. "Now, I did zero work on that one, and came up with a better result than the authors. What does that tell you?" - probably that you are making a fool of yourself for making this claim.

Tyler's main point is that their definition of human capital is bad.

Also, it's clear from the paper that the goal is to produce a measure of something like "a country's ability to innovate", or be economically productive, and then use that measure as a basis for major policy decisions. So I think his criticism is entirely on point.

good point!
as Professor Cowen points out
their definition of human capital
is actually 2 different definitions of human capital.
lancet used to be medical journal

Seems like the authors are thinking in per capita terms, while Tyler is thinking in aggregates.

There is the measurement issue, though, where each masters degree issued in critical lesbian theory gets counted in the educational statistics for a nation, but in reality probably represents a net subtraction from human capital.

If a population is highly educated and very healthy it will be reflected in what they do. Otherwise the measurements are wrong.

OK, but behind the old iron curtain, we were told that education, particularly technical education like engineering, was very good. In those cases, it seems like the system was able to develop human capital ok, but it couldn't deploy it effectively on account of a moronic economic system.

Is this a sort of "high human capital, but not reflected in what they do" situation? At the end of the day, I'm not sure what the point is in developing human capital if it's not deployed.

Yeah, but people love lists & rankings - some fancy news site might even cite them and if it sets off in a major way - boom, baby! Easy way to become a science star.
Okay - no disrespect, but I think it's understandable that researchers with medical background may concentrate on a less-economic side of the human capital. Even if it seems a little awkward, but I think they tried to give a qualitative measure of a country's workforce, which is then used with differing efficency by the labor market.

So if US not number 1, then it is wrong. Oww Tyler, tyler, this is a really low point of your blogging … or was this written by Tyrone??

I think this is a high point. More angry Tyler, please!

USA at #1 is not what this is about.

Depends on how one reads what Prof. Cowen wrote - 'The correct answer is a weighted average of the median, the average, the high peaks, and a country’s ability to innovate, part of which depends upon the market size a person has in his or her sights. So in reality the United States is number one, and China and Russia should both rank much higher .... '

Seems earnestly written, not flippant, but that is from a non-Straussian perspective.

"I did zero work on that one, and came up with a better result than the authors."

Any study that ranks North Korea between Ecuador and Egypt in “the level of education and health in a population” should be politely ignored.

If you have Capital Capital, you can collect capital gains, dividends, and interest without working. But if all you have is Human Capital, ya gotta work for a living.

Capital Capital is Capital

What about physical capital?

*The one where Tyler went a bit USA! USA!*

The second defintion doesn't say they're measuring the ability of a country to adopt and develop technology to increase productivity. It says they're measuring the *human elements* that affect the ability to adopt and develop technology to increase productivity.

Tyler's critique seems to thiknk they're just measuring the ability to develop and adopt technology in total.

From a closed economy perspective Tylers approach might make sense, as to develop technology having more people and bigger markets plays a role, although it's strange to call this human capital. (And he still hasn't wouldn't have explained it properly)

We're in a global economy though and they're looking at human capital per capita. Which doesn't seem a ridiculous thing to look at.

Less USA! USA! please Tyler, you're better than that... I think ;-)

I think that TC wants to re-define "human capital" to include also what some times is called "the residual", the fraction of economic growth that it is not explained by natural resources, physical capital, human capital and quantity of labour (for me, "human capital" is more "quality of labour", but this is besides the point)..

No, I think not, what the "residual" is measuring is typically Total Factor Productivity (TFP). I think Tyler did not like the paper due to non-economic reasoning by physicians. Usually doctors are not that good with science or statistics I have found, so TC's stance is not unfounded.

Seems that IQ scores, or PISA results (more internationally comparable) would be the best proxy of human capital.
Most everything else is a question of how effectively that human capital can be utilized.

Wouldn't Israel win, then?

I'd think Human Capital is a little bit broader than raw IQ. There's cultural values and social trust which should also be part of any business decision.

Wow an avowedly negative critique by Tyler. You don’t get those very often from him!

Amazing Tyler proclaims USA probably number one, his critics in the comments get all pissy about it, yet they do nothing to overturn his original assertion that the US is number 1 in terms of human capital.

Getting pissy is not a counter argument. Again, impossibly difficult to say that Finland has more human capital than the USA-just impossible.

You would almost have to say something like “human capital refers to the level of education and health.” So it Sergei Brin or Elon Musk have heart disease does that mean the US human capital score goes down?

Since the authors used GDP/capita as part of their comparison, the human capital results are given in /capita measurements as well. It's not there, but the data screams it.
As for health: if you were a company, would you prefer to employ obese people with cardiovascular problems or fit and healthy ones - ceteris paribus? I think health is a key factor in human capital even if the likes of USA or UK manage to overcome this obstacle and exploit their national human capital far better then those welfare countries leading the list. It's just underrated by economists, because we aren't interested in it.

The Belarusians have clearly not attained our level of body mass index. Step it up, slackers!

And institutionally they’ve yet to have a major political party issue a challenge to due process.

Funny to see Americans behave like little children whose favorite toy got taken away when somebody claims that they are not first in an international comparison on economic outcomes.

Also not understandable from a non-US perspective, as international indicators of education, e.g. PISA, find a roughly pattern similar to the one in the study referred, i.e. USA not on the top, Finland Top 5 (and much better than Sweden).

https://www.oecd.org/pisa/pisa-2015-results-in-focus.pdf

So let's say an American company is setting up its European headquarters. Let's say it's B2B or high tech so there are no concerns about the size of the consumer market in the country- the biggest question by far is finding talented employees. Finland's a decent choice, but #1?

Now let's say a European company is setting up its headquarters in the Americas. Does the US lose to Canada, and anything short of trounce Cuba?

"What does that tell you?"

That Stephen S. Lim, et.al. spent lots and lots of time to no good effect.

Boring, but here is a story that bites a bit harder at the question of American leadership and how we are managing it:

"Apple Inc persuaded a federal appeals court on Friday to throw out a $234 million damages award in favor of the University of Wisconsin’s patent licensing arm for infringing the school’s patent on computer processing technology."

How the heck did we put ourselves in a position where our public universities are not out there first and foremost creating public knowledge and human capital, but instead are blockers and rent seekers in the marketplace?

Were Economists and Libertarians involved?

Or you could say for a country with moderate human capital the USA does GREAT!

Indistinguishable from what a "ranking of high IQ populations with high levels of ethnic homogeneity" list would look like. What a surprise.

The Authors are biased social-democrats who dislike the US ;)

No they just dislike you.

Irrespective of whether Cowen’s criticism is right or not (it looks sensible to me, but I wouldn’t know), I think he’s wrong to use this one paper as evidence for a systemic problem. Academic research is supposed to be hard, 90% of it is supposed to be wrong. Wacky results that jolt you out of your perspective are a feature, not a flaw *including when they turn out to be wrong*.

Comments for this post are closed