Results for “kremer”
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Who will win the Nobel Prize in Economics this coming Monday?

I’ve never once nailed the timing, but I have two predictions.

The first is William Baumol, who is I believe ninety-four years old.  His cost-disease hypothesis is very important for understanding the productivity slowdown, see this recent empirical update.  Oddly, the hypothesis is most likely false for the sector where Baumol pushed it hardest — music and the arts.

Baumol has many other contributions, but the next most significant is probably his theory of contestable markets, plus his writings on entrepreneurship.

The other option is a joint prize for environmental economics, perhaps to William Nordhaus, Partha Dasgupta, and Martin Weitzman.  A prize in that direction is long overdue.

The “Web of Science” predicts Lazear, Blanchard, or Marc Melitz, based on citation counts.  Other reasonable possibilities include Robert Barro, Paul Romer, Banerjee and Duflo and Kremer (joint?), David Hendry, Diamond and Dybvig, and Bernanke, Woodford, and Svensson, arguably joint.  I still am of the opinion that Martin Feldstein is deserving, don’t forget he did empirical public finance, was a pioneer in health care economics, and built the NBER.  For a dark horse pick, how about Joseph Newhouse (RCTs and the Rand health care study)?

There are other options — what is your prediction?

Who will win the economics Nobel Prize this year?

Diane Coyle mentions some possible picks:

Environmental economics: Partha Dasgupta, William Nordhaus

Update: Twitter folks strongly recommend adding Martin Weitzman in this category.

Growth: Paul Romer, Robert Barro

Inequality: Anthony Atkinson, Angus Deaton

Innovation (and much else): Will Baumol (now 93!)

Econometrics: David Hendry

All good guesses.  I’ll add Diamond and Dybvig for banking, and possibly an early grant to Banerjee, Duflo, and Kremer for development and RCTs.  That would make economics look scientific, for a year at least.  I expect Bernanke, Woodford, and Svensson to get a prize as well for monetary economics, although probably not right now.  It is too close to Bernanke’s memoir and Svensson’s tenure at the Swedish central bank.

Here is a WSJ list.  What do you think?  Since I’ve never once been right about a particular year, trying to pick someone would only curse them.  The award will come this Monday of course.

Saturday assorted links

1. Profile of Terry Tao.

2. Did Medicare D affect outcomes?

3. Is drinking a countercyclical asset in Greece?

4. Drug testing is coming to e-Gaming.

5. Interview with William Vollmann.  I still think the “By the Book” series in the NYT is the single best thing on the web these days.

6. One billion earths in our galaxy alone?  Uh-oh.  I don’t regard all that frozen water on Pluto as good news either.

7. Kremer and Miguel respond on the worm wars (pdf).

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.

Should the U.S. destroy its stockpile of ivory?

Here is one of the latest developments in economic policy:

The US government hopes to send a crushing message to anyone involved in the illegal ivory trade — by decimating a 6-ton stockpile of seized elephant ivory.

In an announcement posted online, the US Fish and Wildlife Services (FWS) describes plans to “pulverize” a cache of ivory on November 14th. All of the ivory was obtained, the agency notes, from law enforcement efforts to crack down on trafficking over the last two decades. “Destroying this ivory tells criminals who engage in poaching and trafficking that the United States will take all available measures to disrupt and prosecute those who prey on, and profit from, the deaths of these magnificent animals,” reads a statement on the FWS website.

There is more here, via Viktor Brech and Bruce Ryan and Kaushal Desai.

Bruce suggests the government announce it has created an artificial form of ivory, to lower expected prices and discourage future poaching.  If they can get away with that lie, great.  Otherwise, we all know the 2000 Kremer and Morcom piece entitled simply “Elephants”:

Many open-access resources, such as elephants, are used to produce storable goods. Anticipated future scarcity of these resources will increase current prices and poaching. This implies that, for given initial conditions, there may be rational expectations equilibria leading to both extinction and survival. The cheapest way for governments to eliminate extinction equilibria may be to commit to tough antipoaching measures if the population falls below a threshold. For governments without credibility, the cheapest way to eliminate extinction equilibria may be to accumulate a sufficient stockpile of the storable good and threaten to sell it should the population fall.

That emphasis is added.  Sell it, not destroy.

The (gated) AER version of the paper is here.  The Montclair State version is here.  A few comments and responses are here.

In other words, our government is pursuing symbolic value but at the same time implementing the wrong incentives.

Here is a piece on elephant music-making.

Thomson Reuters predicts the 2013 Nobel Laureate in economics

Their leading candidates are:

Joshua D. Angrist, David E. Card, Alan B. Krueger, Sir David F. Hendry, M. Hashem Pesaran, Peter C.B. Phillips, Sam Peltzman, and Richard A. Posner, all very good possible picks in my view.

My personal prediction (which never once has been correct, at least not in the proper year) is for an early “shock” prize to Banerjee, Duflo, and Kremer, in part to show (try to show?) that economics really is an actual science.

In any case the above link offers Reuters picks for the science prizes as well.  Here are some other speculations for the science prizes as well.

For the pointer I thank Michelle Dawson.

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.

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.

Assorted links

1. More on why it is hard to get tough on bank creditors.

2. Scott Sumner: "It's complicated."

3. Active Duty Army Ranger named #3 pastry chef in the world.

4. Roger Garrison's Powerpoints for macroeconomics.

5. How women want to be wanted.

6. U.S. will resume deportations to Haiti.

7. Economic History blog is back.

8. al-Qaeda in Iraq, 2005-2006, turned a profit but paid low wages.

9. The hazards of nerd supremacy; some observations on Wikileaks.

10. Michael Kremer's program leads to actual vaccines.

11. How to shut down a libertarian summit.

Michael Clemens on the Millennium Village project

It's hard to summarize, so read the whole thing.  But he is calling for a closer look at the evidence and the application of RCT [randomized control trial] standards.  Here is an excerpt:

First, the fact that a technology has been scientifically proven in isolation–such as a certain fertilizer proven to raise crop yields–does not mean that it will improve people’s well-being amidst the complexities of real villages. Recent research by Esther Duflo, CGD non-resident fellow Michael Kremer, and Jonathan Robinson shows that fertilizer use is scientifically proven highly effective at raising farm yields and farmers’ profits in Kenya. But for complex reasons very few farmers wish to adopt fertilizer, even those well trained in its use and usefulness. This means that this proven technology has enormous difficulty raising farmers’ incomes in practice. The gap between agronomy and development is very hard to cross.

Second, it is not sufficient to compare treated villages to untreated villages that were chosen ex-post as comparison villages because they appear similar. Many recent research papers have shown this conclusively. A long list of studies conducted over decades showed that African and other children learned much more in schools that had textbooks than in schools that appeared otherwise similar but did not have textbooks. Paul Glewwe, Michael Kremer, and Sylvie Moulin evaluated a large intervention in some of the neediest schools in Kenya (ungated version here, published here). Schools that received textbooks were randomly chosen from an initial pool of candidates. The problem: Children did not learn more in the treated schools than in the untreated schools.

Chris Blattman comments.

*What Works in Development?*

The subtitle is Thinking Big and Thinking Small and the editors are Jessica Cohen and William Easterly.  Usually essay collections are of low value but this is the single best introduction (I know of) to where development economics is at today.  Contributors include Dani Rodrik, Simon Johnson, Michael Kremer, Lant Pritchett, Ricardo Haussmann, and Abhijit Banerjee, among others.  Even better, there are two published (short) comments on each essay, a practice which should be universal in every collection, if only to establish context.  My favorite piece was Banerjee's on why development economics should "think small" rather than just doing macro issues.  Recommended.