Results for “michael kremer” 61 found
AcceleratingHT
I’ve been working with Michael Kremer, Susan Athey, Chris Snyder and others to design incentives to speed vaccines and other health technologies. AcceleratingHT is our website and now features a detailed set of slides which explain the calculations behind our global plan. The global plan is similar in style to the US plan although on a larger scale. The key idea is that the global economy is losing $350 billion a month so speed pays. One way to speed a vaccine is to invest in capacity for 15-20 vaccine candidates before any candidates are approved, so that the moment a candidate is approved we can begin production (one can store doses in advance of approval). Most of the capacity will be wasted but that is a price worth paying. As Larry Summer says if you will die of starvation if you don’t get a pizza in two hours, order 5 pizzas. Human challenge trials are another way to speed the process.
A global plan is ideal since there are significant benefits to coordination. If each country invests in vaccines independently they will each choose the vaccine candidates most likely to succeed but that means all our eggs are a few baskets. There are over 100 vaccine candidates and they have different scientific and production risks so you want to choose the 15-20 which maximize the probability of success for the portfolio as a whole. To do that efficiently you need countries to agree that ‘I will invest in lots of capacity (more than I need) in candidate X if you invest in lots of capacity (more than you need) for candidate Y’, even knowing that the probability that X succeeds may be less than that of Y.
Vaccine nationalism is making a global plan look unlikely but if each country invests in multiple candidates around the world, as Operation Warp Speed is doing, and if each country guarantees to uphold contracts, we can reach a similar solution.
At AcceleratingHT you can also find our Incentive Design App which computes the optimal vaccine program given user chosen parameters. A big shout out to Juan Camilo Castillo, a newly graduated PhD student from Stanford, who put in a lot of heavy lifting on the app. We have been working on these models under time pressure and I will never forget the late night/early morning zoom calls where Michael Kremer would call out, “I think we need to take into account factor X. What effect would that have?” and Camilo would respond “Give me 5 minutes!” and, as we debated other factors Y and Z, Camilo would hack-away changing parameters and rewriting code till he had an answer. Hire a rising star while you can!
Vaccines: Billions in Costs, Trillions in Benefits
Bloomberg: As sections of the global economy tip-toe toward reopening, it’s becoming clearer that a full recovery from the worst slump since the 1930s will be impossible until a vaccine or treatment is found for the deadly coronavirus.
Consumers will stay on edge and companies will be held back as temperature checks and distancing rules are set to remain in workplaces, restaurants, schools, airports, sports stadiums and more.
China — the first major economy consumed by the virus and the first to emerge on the other side — has been able to revive production but not demand. The lesson for other economies: it’ll be a stop-start path back toward normal.
There’s also the risk of new flare-ups. Some 108 million people in China’s northeast region have been put back under varying degrees of lockdown amid a new cluster of infections. Doctors there are also seeing the coronavirus manifest differently, suggesting that it may be changing in unknown ways.
In South Korea – where the virus was controlled without a hard lockdown – consumer spending remains weak as infections continue to pop up.…Harvard University professor Carmen Reinhart, who is the incoming chief economist of the World Bank, had a similar message. “We’re not going to have something akin to full normalization unless we (a) have a vaccine and (b) — and this is a big if — that vaccine is accessible to the global population at large,” she told the Harvard Gazette.
The virus is being beaten back and there are reasons for optimism but I agree with Reinhart that we won’t get full normalization without a vaccine. The world economy is on the order of $90 trillion and the IMF is projecting a 3% decline instead of an expected 3.3% increase so a loss to the world economy of around $6 trillion in 2020. Growth will probably return in 2021 and there will be some catchup but the IMF projects a cumulative loss of 9 trillion. Ending the pandemic early could generate hundreds of billions, even trillions, in output–that’s why Susan Athey, Nobel laureate Michael Kremer, Chris Snyder and myself advocate for going big on vaccines. It’s billions in costs and trillions in benefits. Warp speed ahead!
In the Race for a Coronavirus Vaccine, We Must Go Big
Today in the New York Times I have an op-ed with Susan Athey, Michael Kremer and Christopher Snyder. We argue for a big program to invest in vaccine capacity before any vaccine is tested and approved. We agree with Bill Gates that we want the vaccine factories to be warmed up by the time a vaccine is approved. We can’t leave it all to Gates, however. The US economy is hemorrhaging $150-$350 billion a month so the benefits of a vaccine to society are huge and we should go big.
Today, the U.S. government could go big and create a Covid-19 vaccine A.M.C., guaranteeing to spend about $70 billion on new vaccines — enough to make direct investments to support capacity installation or to repurpose capacity and to pay, say, $100 per person for the first 300 million people vaccinated.
An investment of that size can anticipate and overcome several challenges typical of vaccine development. If we want to achieve a 90 percent probability of success, we must take into account historical rates of success from publicly available data; doing that suggests that we need to actively pursue not two or three vaccine candidates, but 15 to 20.
…Usually, to avoid the risk of investing in capacity that eventually proves worthless, firms invest in large-scale capacity only after the vaccine has proved effective. But in the middle of a pandemic, there are huge social and economic advantages to having vaccines ready to use as soon as they have been approved. If we leave it entirely to the market, we will get too little vaccine too late.
An advance market commitment for Covid-19 should combine “push” and “pull” incentives. The “pull” incentive is the commitment to buy 300 million courses of vaccine at a per-person price of $100, for vaccines produced within a specified time frame. If multiple vaccines are developed, the A.M.C. fund will have authority to choose products to purchase based on efficacy, the availability of sufficient vaccine for timely vaccination or suitability for different population groups. So firms compete to serve the first 300 million people with the most attractive vaccines, and the “pull” component provides strong incentives for both speed and quality.
The “push” incentive guarantees firms partial reimbursement for production capacity built or repurposed at risk and partial reimbursement as they achieve milestones. The partial reimbursement ensures that manufacturers have “skin in the game,” while inducing them to build large-scale capacity before approval is certain.
More than usual, read the whole thing and please do help to circulate the ideas by posting and tweeting.
The op-ed draws on the work of a large team of economists and statisticians who have been working days and nights for weeks. You can find out more at AcceleratingHT where we will soon be posting additional analysis and tools.
It’s a great privilege for me to be working with this group. One day I will write the story but for now let me just say that I have never seen such a brilliant and dedicated group come together to apply their skills to a problem of such importance and urgency.
My spring 2020 Industrial Organization reading list and syllabus
It is long, do note that many topics are covered in the other half of the class, I tried to put this beneath the fold, but today WordPress software is not cooperating…
- Productivity
American Economic Review Symposium, May 2010, starts with “Why do Firms in Developing Countries Have Low Productivity?” runs pp.620-633.
Nicholas Bloom, Raffaella Sadun, and John Van Reenen, “Recent Advances in the Empirics of Organizational Economics,” http://cep.lse.ac.uk/pubs/download/dp0970.pdf.
Serguey Braguinsky, Lee G. Branstetter, and Andre Regateiro, “The Incredible Shrinking Portuguese Firm,” http://papers.nber.org/papers/w17265#fromrss.
Bloom, Nicholas, Raffaella Sadun, and John Van Reenen. “Management as a Technology?” National Bureau of Economic Research working paper 22327, June 2016.
David Lagakos, “Explaining Cross-Country Productivity Differences in Retail Trade,” Journal of Political Economy, April 2016, 124, 2, 1-49.
Dani Rodrik, “A Surprising Convergence Result,” http://rodrik.typepad.com/dani_rodriks_weblog/2011/06/a-surprising-convergence-result.html, and his paper here http://www.hks.harvard.edu/fs/drodrik/Research%20papers/The%20Future%20of%20Economic%20Convergence%20rev2.pdf
Tyler Cowen, The Complacent Class, chapter four, “Why Americans Stopped Creating,” 2017.
Ufuk Akcigit and Sina T. Ates, “Ten Facts on Declining Business Dynamism and Lessons from Endogenous Growth Theory,” NBER working paper 25755, April 2019.
Syerson, Chad “What Determines Productivity?” Journal of Economic Literature, June 2011, XLIX, 2, 326-365.
Michael Kremer, “The O-Ring Theory of Economic Development,” Quarterly Journal of Economics, August 1993, 108, 3, 551-575.
Song, Jae, David J. Price, Fatih Guvenen, and Nicholas Bloom. “Firming Up Inequality,” Federal Reserve Bank of Minneapolis working paper 750, April 2018. Do not bother with the very long appendix.
Nicholas Bloom, Raffaella Sadun, and John Van Reenen, the slides for “Americans do I.T. Better: US Multinationals and the Productivity Miracle,” http://www.people.hbs.edu/rsadun/ADITB/ADIBslides.pdf, the paper is here http://www.stanford.edu/~nbloom/ADIB.pdf but I recommend focusing on the slides.
Tyler Cowen and Ben Southwood, “Is the rate of scientific progress slowing down?”, https://docs.google.com/document/d/1cEBsj18Y4NnVx5Qdu43cKEHMaVBODTTyfHBa8GIRSec/edit
Patrick Collison and Michael Nielsen, “Science is Getting Less Bang for its Buck,” Atlantic, November 16, 2018, https://www.theatlantic.com/science/archive/2018/11/diminishing-returns-science/575665/
Decker, Ryan and John Haltiwanger, Ron S. Jarmin, and Javier Miranda. “Where Has all the Skewness Gone? The Decline in High-Growth (Young) Firms in the U.S. National Bureau of Economic Research working paper 21776, December 2015.
Furman, Jason and Peter Orszag. “A Firm-Level Perspective on the Role of Rents in the Rise in Inequality.” October 16, 2015.
2. Competition and monopoly
Bresnahan, Timothy F. “Competition and Collusion in the American Automobile Industry: the 1955 Price War,” Journal of Industrial Economics, 1987, 35(4), 457-82.
Asker, John, “A Study of the Internal Organization of a Bidding Cartel,” American Economic Review, (June 2010), 724-762.
Tim Sablik and Nicholas Trachter, “Are Markets Becoming Less Competitive?” Economic Brief, Federal Reserve Bank of Richmond, June 2019.
Susanto Basu, “Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence,” Journal of Economic Perspectives, Summer 2019, 33, 3, 3-22.
Esteban Rossi-Hansberg, Pierre-Daniel Sarte, and Nicholas Trachter, “Diverging Trends in National and Local Concentration,” NBER Working Paper 25066, Septemmber 2018.
David Autor, David Dorn, Lawrence Katz, Christina Patterson, John Van Reenen, “The Fall of the Labor Share and the Rise of Superstar Firms,” https://economics.mit.edu/files/12979, make sure you get the Oct. 2019 version, not the earlier NBER paper.
Whinston, Michael D., “Antitrust Policy Toward Horizontal Mergers,” Handbook of Industrial Organization, vol.III, chapter 36, see also chapter 35 by John Sutton.
Jan De Loecker and Jan Eeckhout, “The Rise of Market Power and its Macroeconomic Implications,” http://www.janeeckhout.com/wp-content/uploads/RMP.pdf. My comment on it is here: https://marginalrevolution.com/marginalrevolution/2017/08/rise-market-power.html and see also me on intangible capital, https://marginalrevolution.com/marginalrevolution/2017/09/intangible-investment-monopoly-profits.html.
Chang-Tai Hsieh and Esteban Rossi-Hansberg, “The Industrial Revolution in Services, September 20, 2019, on-line.
Klein, Benjamin and Leffler, Keith. “The Role of Market Forces in Assuring Contractual Performance.” Journal of Political Economy 89 (1981): 615-641.
Breit, William. “Resale Price Maintenance: What do Economists Know and When Did They Know It?” Journal of Institutional and Theoretical Economics (1991).
Bogdan Genchev, and Julie Holland Mortimer. “Empirical Evidence on Conditional Pricing Practices.” NBER working paper 22313, June 2016.
Sproul, Michael. “Antitrust and Prices.” Journal of Political Economy (August 1993): 741-754.
McCutcheon, Barbara. “Do Meetings in Smoke-Filled Rooms Facilitate Collusion?” Journal of Political Economy (April 1997): 336-350.
Crandall, Robert and Winston, Clifford, “Does Antitrust Improve Consumer Welfare?: Assessing the Evidence,” Journal of Economic Perspectives (Fall 2003), 3-26, available at http://www.brookings.org/views/articles/2003crandallwinston.htm.
FTC, Bureau of Competition, website, http://www.ftc.gov/bc/index.shtml, an optional browse, perhaps read about some current cases and also read the merger guidelines.
Parente, Stephen L. and Prescott, Edward. “Monopoly Rights: A Barrier to Riches.” American Economic Review 89, 5 (December 1999): 1216-1233.
Demsetz, Harold. “Why Regulate Utilities?” Journal of Law and Economics (April 1968): 347-359.
Armstrong, Mark and Sappington, David, “Recent Developments in the Theory of Regulation,” Handbook of Industrial Organization, chapter 27, also on-line.
Shleifer, Andrei. “State vs. Private Ownership.” Journal of Economic Perspectives (Fall 1998): 133-151.
Xavier Gabaix and David Laibson, “Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets,”http://papers.ssrn.com/sol3/papers.cfm?abstract_id=728545.
Strictly optional, most of you shouldn’t read this: Ariel Pakes and dynamic computational approaches to modeling oligopoly:
http://www.economics.harvard.edu/faculty/pakes/files/Pakes-Fershtman-8-2010.pdf
http://www.economics.harvard.edu/faculty/pakes/files/handbookIO9.pdf
III. Economics of Tech
Farrell, Joseph and Klemperer, Paul, “Coordination and Lock-In: Competition with Switching Costs and Network Effects,” Handbook of Industrial Organization, vol.III, chapter 31, also on-line.
Weyl, E. Glenn. “A Price Theory of Multi-Sided Platforms.” American Economic Review, September 2010, 100, 4, 1642-1672.
Gompers, Paul and Lerner, Josh. “The Venture Capital Revolution.” Journal of Economic Perspectives (Spring 2001): 145-168.
Paul Graham, essays, http://www.paulgraham.com/articles.html, to browse as you find useful or not.
Acemoglu, Daron and Autor, David, “Skills, Tasks, and Technologies: Implications for Employment and Earnings,” http://econ-www.mit.edu/files/5607
Robert J. Gordon and Ian Dew-Becker, “Unresolved Issues in the Rise of American Inequality,” http://www.people.fas.harvard.edu/~idew/papers/BPEA_final_ineq.pdf
Browse through the first issue of Nakamoto.com on blockchain governance, read (or not) as you find useful.
IV. Organization and capital structure
Ronald Coase and Oliver Williamson on the firm, if you haven’t already read them, but limited doses should suffice.
Gibbons, Robert, “Four Formal(izable) Theories of the Firm,” on-line at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=596864.
Van den Steen, Eric, “Interpersonal Authority in a Theory of the Firm,” American Economic Review, 2010, 100:1, 466-490.
Lazear, Edward P. “Leadership: A Personnel Economics Approach,” NBER Working Paper 15918, 2010.
Oyer, Paul and Schaefer, Scott, “Personnel Economics: Hiring and Incentives,” NBER Working Paper 15977, 2010.
Tyler Cowen chapter on CEO pay in big Business, to be distributed.
Ben-David, Itzhak, and John R. Graham and Campbell R. Harvey, “Managerial Miscalibration,” NBER working paper 16215, July 2010.
Glenn Ellison, “Bounded rationality in Industrial Organization,” http://cemmap.ifs.org.uk/papers/vol2_chap5.pdf
Miller, Merton, and commentators. “The Modigliani-Miller Propositions After Thirty Years,” and comments, Journal of Economic Perspectives (Fall 1988): 99-158.
Myers, Stewart. “Capital Structure.” Journal of Economic Perspectives (Spring 2001): 81-102.
Hansemann, Henry. “The Role of Non-Profit Enterprise.” Yale Law Journal (1980): 835-901.
Kotchen, Matthew J. and Moon, Jon Jungbien, “Corporate Social Responsibility for Irresponsibility,” NBER working paper 17254, July 2011.
Strictly optional but recommended for the serious: Ponder reading some books on competitive strategy, for MBA students. Here is one list of recommendations: http://www.linkedin.com/answers/product-management/positioning/PRM_PST/20259-135826
Furman, Jason. ”Business Investment in the United States: Facts, Explanations, Puzzles, and Policy.” Remarks delivered at the Progressive Policy Institute, September 30, 2015, on-line at https://m.whitehouse.gov/sites/default/files/page/files/20150930_business_investment_in_the_united_states.pdf.
Scharfstein, David S. and Stein, Jeremy C. “Herd Behavior and Investment.” American Economic Review 80 (June 1990): 465-479.
Stein, Jeremy C. “Efficient Capital Markets, Inefficient Firms: A Model of Myopic Corporate Behavior.” Quarterly Journal of Economics 104 (November 1989): 655-670.
V. Sectors: finance, health care, education, international trade, others
Gorton, Gary B. “Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007,” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1401882, published on-line in 2009.
Erel, Isil, Nadault, Taylor D., and Stulz, Rene M., “Why Did U.S. Banks Invest in Highly-Rated Securitization Tranches?” NBER Working Paper 17269, August 2011.
Healy, Kieran. “The Persistence of the Old Regime.” Crooked Timber blog, August 6, 2014.
More to be added here, depending on your interests.
Public health is no longer an O-Ring production function
In the bad old days, health care in poor countries was just terrible. It wasn’t only the poverty, lack of hospitals and pharmaceuticals, and unsanitary conditions. In addition, doctors gave very bad advice and they also didn’t work very hard, as outlined in this paper. Citizens suffered accordingly.
Those conditions have improved somewhat, but actual health outcomes have improved a lot. You still can’t trust the local medical advice in Tanzania, but guess what? You have much better vaccines, greater access to antibiotics, more NGOs running health clinics, and better health care information, sometimes through the internet. If your kid has diarrhea, let the kid drink water, even unclean water! As for antibiotics (NYT):
Two doses a year of an antibiotic can sharply cut death rates among infants in poor countries, perhaps by as much as 25 percent among the very young, researchers reported on Wednesday.
In other words, the quality of the most important part of health care treatments bypassed the rest of the problems in poor economies and grew rapidly, even in countries with only so-so economic growth. The rate of reduction in child mortality has tripled in many countries since the 1990s, and by no means are those locales major economic winners as say Singapore and South Korea were.
Therein lies one of the most important (and under-reported) global changes in the last twenty years. It is now possible to have a decent public health system in a country with poor or mediocre political and economic institutions.
In other words, public health is no longer such an O-Ring service, an O-Ring service being one where everything has to go right for the service to be of decent quality. And advances are much, much easier when the O-Ring structure no longer rules.
The O-Ring citation is to a famous Michael Kremer paper — a trip to the moon is definitely an O-Ring process, because if one step is off the whole mission probably is a failure. But tasty fish curry is not — you can get a splendid version in some pretty dumpy countries, maybe even a better version in poorer places.
Electricity, however, it seems is still an O-Ring service, as evidenced by the recent power blackouts in South Africa.
What else is likely to become less of an O-Ring good or service in the next few decades to come? And what can we do to hasten such progress? Is there any chance of quality software production making that same kind of transition? Or might some goods and services return to a greater connection with the O-Ring model?
For this post I am very much indebted to a conversation with Garett Jones.
More Sex is Safer Sex
I had forgotten that Steven Landsburg’s More Sex is Safer Sex (link to the 1997 NYTimes version, book here) was inspired by a paper by new Nobelist Michael Kremer. Here’s the recap:
You’ve read elsewhere about the sin of promiscuity. Let me tell you about the sin of self-restraint.
Consider Martin, a charming and generally prudent young man with a limited sexual history, who has been gently flirting with his coworker Joan. As last week’s office party approached, both Joan and Martin silently and separately entertained the prospect that they just might be going home together. Unfortunately, Fate, through its agents at the Centers for Disease Control, intervened. The morning of the party, Martin happened to notice one of those CDC-sponsored subway ads touting the virtues of abstinence. Chastened, he decided to stay home. In Martin’s absence, Joan hooked up with the equally charming but considerably less prudent Maxwell – and Joan got AIDS.
When the cautious Martin withdraws from the mating game, he makes it easier for the reckless Maxwell to prey on the hapless Joan. If those subway ads are more effective against Martin than against Maxwell, they are a threat to Joan’s safety. This is especially so when they displace Calvin Klein ads, which might have put Martin in a more socially beneficent mood.
If the Martins of the world would loosen up a little, we could slow the spread of AIDS. Of course, we wouldn’t want to push this too far: if Martin loosens up too much, he becomes as dangerous as Maxwell. But when sexual conservatives increase their activity by moderate amounts, they do the rest of us a lot of good. Harvard professor Michael Kremer estimates that the spread of AIDS in England could plausibly be retarded if everyone with fewer than about 2.25 partners per year were to take additional partners more frequently.
And here is Kremer’s original paper (with Charles Morcom). Landsburg suggests that a subsidy for condoms would be optimal in this situation. Read the whole thing.
Addendum: I later pointed out that the Kremer model appears to fit what happened in Thailand quite well.
The O-Ring Model of Development
Michael Kremer’s Nobel prize (with Duflo and Banerjee) reminded me of his important paper The O-Ring Theory of Development. I also rewatched my video on this paper from Tyler’s and my online class, Development Economics. This was from our powerpoint and iPad days so there are no fancy graphics but the video holds up! Mostly because it’s a great model with lots of interesting implications not just for development but also for the structure of the US economy. See also Jason Collins on Garett Jones’s extension of the model.
Population Growth and Technological Change: One Million B.C. to 1990
That is an older paper by the excellent Michael Kremer, worth keeping in mind, here is the abstract:
The nonrivalry of technology, as modeled in the endogenous growth literature, implies that high population spurs technological change. This paper constructs and empirically tests a model of long-run world population growth combining this implication with the Malthusian assumption that technology limits population. The model predicts that over most of history, the growth rate of population will be proportional to its level. Empirical tests support this prediction and show that historically, among societies with no possibility for technological contact, those with larger initial populations have had faster technological change and population growth.
This bears on my earlier Bloomberg column, today cited by Mike Lee, suggesting that having more children is likely to help out on the climate change issue.
Who will win the Nobel Prize in economics this year?
I’ve never once gotten it right, at least not for exact timing, so my apologies to anyone I pick (sorry Bill Baumol!). Nonetheless this year I am in for Esther Duflo and Abihijit Banerjee, possibly with Michael Kremer, for randomized control trials in development economics.
Maybe they are too young, as Tim Harford points out, so my back-up pick remains an environmental prize for Bill Nordhaus, Partha Dasgupta, and Marty Weitzman.
What do you all predict?
A simple theory of some current basketball surprises
Apply a dose of science and big data to a team sport such as basketball. The big gains will come in cooperation. Who should take the next shot?, when is a “corner three” worthwhile?, who should play with the second unit, how good is the pick and roll against this opponent?, and so on. Big data also will bring some gains at the individual level, such as from better training regimens, but those moves were easier to spot in the first place. The issues involving cooperation are those where simple intuitive observation, of the old school style, will miss a lot of potential improvements.
Cooperative gains are more fragile, however, because everyone has to get the strategy right to reap the benefits (think of Michael Kremer’s O-Ring model). So the previous champion, San Antonio, has fallen off dramatically because Leonard is injured and Tony Parker is playing like his age (32). Atlanta suddenly had all the pieces gel, and they now, to the surprise of almost everyone, have the best record in the East. (They have learned the ball movement and shooting style which San Antonio perfected last year during their championship run, but Atlanta has no big stars.) Golden State is a positive surprise too, with the best record in the league. Cleveland has attempted to do “cooperation” (ha) on the terms of its stars, not on the terms of the data, and that experiment has fallen flat.
In Panama I watched an old Lakers game from the 1980s (vs. Portland) and was struck by how tall everyone was, compared to today. There were fewer surprises that year, and I believe those facts are related. The three-point shot has made players shorter and more cooperative and arguably increased the value of the coach and his assistants.
Some of these arguments should apply to areas other than basketball, so perhaps a higher value for data-driven cooperation will mean more surprises in the world in general.
Pandemics and public goods, and why we are failing at both
Here is my latest New York Times column, which has a specific part on how to address pandemics and a more general section on the evolving role of government in American society. In neither area are matters running especially well.
Here is one initial point, namely that it is difficult to commit to allow high prices upfront:
Research and development grants are a way to pay potential innovators up front — an important move, as an innovator can’t always charge high-enough prices for the value of its remedies when they’re actually needed.
That will lead to institutional failure, rooted in a mix of government and market failure. Therefore other rewards are needed, since the prospect of high prices does not adequately motivate. I thus call for some key drugs to be rewarded with prizes and for government to buy out the patent rights, if need be:
If anyone doubted a government pledge to pay big money for the rights to remedies, the patent’s value could be established by a competitive auction. Michael Kremer, a Harvard economics professor, outlined the procedure for such an auction in his research paper “Patent Buyouts.”
The larger problem is this:
OVER all, the American government seems to be turning its back on its traditional role of producing and investing in national public goods. If there is any consistent tendency in recent government spending, it is that spending on entitlements like Social Security and Medicare — which provide mostly private benefits — is rising and that investment and spending on national public goods is falling.
Do read the whole thing. I also suggest that (non-paternalistic) public health could be a suitable health care issue for Republicans, who presumably should be looking for alternatives to the status quo.
There are by the way two points which did not make the final cut for reasons of space. First, the current coronavirus in Saudi Arabia has not gone away as a source of potential problems. Second, the Bush Administration (43) did take some notable steps to return vaccine capacity to the United States, through both regulatory forbearance and HHS procurement. These are likely good policies since in a pandemic one cannot expect to rely on free international trade in a remedy but rather export controls are to be expected.
Handicapping the 2012 Nobel
This article mentions Alvin Roth, Bob Shiller, Richard Thaler, Robert Barro, Lars Hansen, Anthony Atkinson, Angus Deaton, Jean Tirole, Stephen Ross, and William Nordhaus.
I’ll predict a triple prize to Shiller, Thaler, and Eugene Fama. Fama clearly deserves it, can’t win it solo (too strongly EMH in an age of financial crisis), but can be bundled with two people from behavioral finance and irrational exuberance theories.
Barro will get it, but not in an election year. Hansen and Ross are good picks but I don’t see them getting it before Fama does. Paul Romer deserves mention but this is probably not his year because of politics in Honduras.
William Baumol cannot be ruled out. A neat idea — but unlikely — is Martin Feldstein and Joseph Newhouse for their pioneering work in health care economics, plus for Feldstein there is public finance too.
Tirole and Nordhaus are deserving perennials, with various bundlings (e.g., Oliver Hart, or for Nordhaus other names in environmental). I hope the Krueger-Tullock idea is not dead but I would bet against it, same with Armen Alchian and Albert Hirschman. Dale Jorgensen has a shot.
I believe Duflo and Banerjee (and possibly Michael Kremer too, maybe even Robert Townsend) will get it sooner than people are expecting, though not this year as they just presented in Stockholm. Next year I think.
Not once in the past have I been right about this.
Addendum: Here is the talk from Northwestern.
Assorted links
1. Five boom towns in Africa, what do you conclude?
2. Sony Kapoor on the euro summit, there are further points here, and the big winners are explained here.
What do we know about population and technological progress?
Bryan Caplan writes:
The more populous periods of human history–most obviously the last few centuries–clearly produced more scientific, technological, and cultural innovations than earlier, less populous periods. More populous countries today produce many more scientific, technological, and cultural innovations that less populous countries… Here’s a challenge for you: Name the most credible measure of idea production that isn’t at least moderately positively correlated with population.
Is this about the absolute number of ideas generated or ideas as a percentage contributor to economic growth? If we are estimating the costs and benefits of greater population, or the future of economic growth rates, the latter is arguably the more important variable. In any case, most plausible theories of economic growth imply that higher populations should lead to higher rates of ideas generation, as measured in terms of value. Ideas are non-rival and can be enjoyed by the entire group, thus yielding a higher social rate of return. There are also larger markets to pay for the ideas or award more fame to the inventors.
Here is a famous Michael Kremer paper arguing for a version of Caplan’s position. That all said, it is far from obvious that Caplan is correct:
1. The measured rate of technological progress, as it contributes to gdp, seems to have peaked in the 1930s. At that time total population, including the population of scientists, was much lower than today. “Effective” total population was yet lower, given the backward nature of transportation and communications and trade at the time, compared to today.
2. A recent paper by Ashraf and Galor (it’s also worth reading for other reasons) concludes: “…population density in pre-industrial times was on average higher at latitudinal bands closer to the equator.” Yet the countries closer to the equator did not end up being the drivers of industrial progress, even though they sometimes had higher rates of progress in agricultural times. Northern Europe, with the exception of the Dutch Republic, was never the star for population density. This paper also indicates that technology drives population growth — more than vice versa — and that “time elapsed since a region’s neolithic breakthrough” predicts later technological progress fairly well.
If you add an extra baby to most societies, ceteris paribus, the rate of expected idea generation does indeed go up in theory. But how important a factor is that, compared to other influences on ideas generation?
Or: at very gross time scales (“the last few hundred years” vs. “the dark ages”) a positive relationship holds between population and ideas production, or at very gross numerical comparisons (“one million people” vs. “ten people”). But viewed at finer granulations (by the way, the evidence in the Kremer paper is quite gross; e.g., pp. 710-712), the relationship isn’t nearly as strong as one might expect. In the time series, it’s been largely a negative relationship for the last eighty years or so, as mentioned above.
What model might give you a positive relationship between population and innovation at grosser scales but not finer scales? Let’s say there are various technological “platforms,” such as “fire,” “agriculture,” and “fossil fuels,” and maybe someday “uploads.” At any point in time, growth rates depend on how much a region has exhausted the potential of its current platform. This is largely independent of current population. That said, larger population areas may have a greater chance of progressing to the next platform, so there is a long-term, gross correlation between population size and levels of technology. Furthermore, if all regions have more or less exhausted the current platform, the larger region has a greater chance of leading the next breakthrough and thus being first to have the new and higher growth rate, even if most of the time it doesn’t have a higher growth rate for technological progress. That view is hardly anti-population, but it explains why you will find screwy population-innovation correlations all over the place. Finally, further breeding, as a recipe for progress, is an extreme lottery ticket and it only works at some special margins.
Assorted links
1. On right-wing economists and health care plans, John Goodman responds.
2. Should you stuff your little kid full of learning?
3. One hypothesis as to why they are selling expiring ebooks to libraries.
4. How to end the Great Stagnation there is no Great Stagnation.
5. File under “unlikely to prove expansionary for the global economy.”
6. Scott Sumner on Japan and the yen.
7. What kind of economic arguments work on TV? (pdf)
8. Dilbert markets in everything.
9. The forthcoming change in Japan’s working age population.
10. Michael Kremer symposium on development economics, RCTs, etc.