{"id":114925,"date":"2024-10-16T21:02:44","date_gmt":"2024-10-16T14:02:44","guid":{"rendered":"https:\/\/hotvideos24.online\/?p=114925"},"modified":"2024-10-16T21:02:44","modified_gmt":"2024-10-16T14:02:44","slug":"the-nobel-prize-for-economics-went-to-three-economists-whove-studied-what-makes-nations-rich","status":"publish","type":"post","link":"https:\/\/hotvideos24.online\/?p=114925","title":{"rendered":"The Nobel Prize for Economics went to three economists who\u2019ve studied what makes nations rich"},"content":{"rendered":"<p> <script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-3711241968723425\"\r\n     crossorigin=\"anonymous\"><\/script>\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-format=\"fluid\"\r\n     data-ad-layout-key=\"-fb+5w+4e-db+86\"\r\n     data-ad-client=\"ca-pub-3711241968723425\"\r\n     data-ad-slot=\"7910942971\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script><br \/>\n<\/p>\n<div id=\"zephr-anchor\">\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">The <a href=\"https:\/\/www.nobelprize.org\/prizes\/economic-sciences\/2024\/press-release\/\">Nobel Prize in Economics<\/a> awarded this week to Daron Acemoglu, Simon Johnson, and James Robinson allows a lot of people to feel like winners. (Especially those in the know who refer to the group by the acronym \u201cAJR.\u201d)<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">The general public wins in that all three have, unusually for academic economists, written extensively for lay audiences; Acemoglu and Robinson\u2019s 2012 book <a href=\"https:\/\/en.wikipedia.org\/wiki\/Why_Nations_Fail\"><em>Why Nations Fail<\/em><\/a> was a bestseller, and Johnson has had several prominent books on <a href=\"https:\/\/www.amazon.com\/13-Bankers-Takeover-Financial-Meltdown\/dp\/030747660X\">financial regulation<\/a> and <a href=\"https:\/\/www.amazon.com\/Jump-Starting-America-Breakthrough-Economic-American-ebook\/dp\/B07G73QHY5?ref_=ast_author_mpb\">innovation<\/a>. Economic historians get a win, in that Acemoglu, Johnson, and Robinson\u2019s most famous work was on historical <a href=\"https:\/\/www.aeaweb.org\/articles?id=10.1257\/aer.91.5.1369\">processes of development<\/a> in <a href=\"https:\/\/economics.mit.edu\/sites\/default\/files\/publications\/reversal-of-fortune.pdf\">former colonies<\/a>. Lefties win, in that Acemoglu has of late become a vocal proponent of <a href=\"https:\/\/equitablegrowth.org\/in-conversation-with-daron-acemoglu\/\">policies to expand worker power<\/a> and has mused about the possibility of \u201c<a href=\"https:\/\/www.project-syndicate.org\/commentary\/ai-central-planning-versus-decentralization-by-daron-acemoglu-2023-06\">AI-enabled communism<\/a>.\u201d<\/p>\n<\/div>\n<div class=\"duet--article--block-placement _80slsf2 _80slsf0 duet--article--article-body-component\">\n<div class=\"duet--article--highlight _1agbrixk _1lbxzst0\">\n<div class=\"_1lbxzst3\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0 _1lbxzst6\">Sign up <a href=\"https:\/\/www.vox.com\/pages\/future-perfect-newsletter-signup\">here<\/a> to explore the big, complicated problems the world faces and the most efficient ways to solve them. Sent twice a week.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">That said, you don\u2019t get to <a href=\"https:\/\/ideas.repec.org\/a\/aea\/aecrev\/v91y2001i5p1369-1401.html\">4,400 citations<\/a> without earning a few critics. The fairest hit against the three is that while their theories are elegant, the data underlying them are shaky at best, and the results don\u2019t hold up to scrutiny.<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">That\u2019s not as terrible as it might sound. All science progresses through new findings that themselves are later overturned. I think Acemoglu, Johnson, and Robinson are great economists and even flawed empirical findings can be important in advancing a field. The physicist JJ Thomson \u2014 another Nobel winner \u2014 famously and erroneously <a href=\"https:\/\/www.britannica.com\/science\/Thomson-atomic-model\">proposed<\/a> that atoms lacked a nucleus, but that doesn\u2019t make his previous discovery of the electron any less important. <\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">But this week, with considerable and mostly uncritical public attention on the Nobel winners\u2019 work, I think it\u2019s important to talk about its shortcomings, and the need to subject influential findings like theirs to further testing.<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">AJR\u2019s most famous was an intervention into one of the longest-running debates in economics: Why are some nations so rich and other nations so poor? <\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">The collaborators sought to rebut geographic determinists (notably Jared Diamond) who argued characters of the land were responsible for, say, Europe being richer than Africa. AJR\u2019s answer was that some countries had better, more \u201cinclusive\u201d institutions that allowed the fruits of economic growth to be broadly shared, whereas others had \u201cextractive\u201d institutions where a small cabal could capture all the gains. The former grow over the long run; the latter don\u2019t.<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">Their most famous paper, \u201c<a href=\"https:\/\/pubs.aeaweb.org\/doi\/pdfplus\/10.1257\/aer.91.5.1369\">The Colonial Origins of Comparative Development: An Empirical Investigation<\/a>,\u201d sought to measure the effect of inclusive versus extractive institutions. To do this, they had to find some factor that caused certain areas to have certain kinds of institutions, but that was otherwise unlinked to their economic development. In econometrics this is called an \u201cinstrumental variable,\u201d and the theory is that controlling for such variables lets you isolate the causal effect of the independent variable (in this case, institution type) that you\u2019re studying.<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">Their instrument was \u201chow often European settlers died.\u201d Think about Australia on the one hand and Nigeria on the other. Both were colonized by the United Kingdom; Australia has, I think it\u2019s fair to say, <a href=\"https:\/\/www.transparency.org\/en\/countries\/australia\">stronger, less corrupt institutions<\/a>. <\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">What AJR proposed was that Australia became Australia because it was reasonably hospitable terrain for the European colonizers, the many sharks and spiders notwithstanding; they could, and did, move there in large numbers. They then had incentives to build institutions that benefited white settlers.<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">In Nigeria, by contrast, diseases like malaria and yellow fever <a href=\"https:\/\/www.ncbi.nlm.nih.gov\/pmc\/articles\/PMC10021769\/\">killed off<\/a> huge numbers of British settlers, so a similar settlement project couldn\u2019t get off the ground. With comparatively few white settlers, the British didn\u2019t give a shit about building fair institutions, because they were effectively building them for Africans \u2014 and the British cared far less about black people\u2019s welfare than white people\u2019s.<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">Sure enough, AJR found that countries with high European settler mortality during colonization have lower per-capita incomes today, which they saw as evidence for their view that institution type is determinative. A nearly as-famous paper the following year, \u201c<a href=\"https:\/\/economics.mit.edu\/sites\/default\/files\/publications\/reversal-of-fortune.pdf\">Reversal of Fortune<\/a>,\u201d extended the argument, finding that among countries colonized by Europeans, those that were most successful in 1500 (where \u201csuccess\u201d is measured by urbanization or population density) are disproportionately poor today. <\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">Those results point against geographic explanations, AJR argued, and toward institutional changes wrought by European colonization.<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">There\u2019s a lot that\u2019s appealing about the AJR worldview. Government institutions do seem important; there\u2019s no other plausible reason why South Korea is <a href=\"https:\/\/www.imf.org\/external\/datamapper\/profile\/KOR\">one of the richest places<\/a> on Earth and North Korea is <a href=\"https:\/\/data.un.org\/en\/iso\/kp.html\">perhaps the poorest<\/a>. The theory is a hopeful one: While countries cannot change their geographies, they can adopt new, better institutions.<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">But do the specific empirical claims AJR made hold up? It doesn\u2019t seem like it. Economist David Albouy offered the <a href=\"https:\/\/www.aeaweb.org\/articles?id=10.1257\/aer.102.6.3059\">most persuasive reply<\/a> to their 2001 \u201cColonial Origins\u201d paper by digging into the actual data. AJR used a sample of 64 countries, but only had real data for 28 of them. The other 36 had data that were assigned based on \u201cconjectures the authors make as to which countries have similar disease environments.\u201d<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">As you might expect, making up data on settler mortality for places where we have no data is difficult, and Albouy finds serious flaws in how AJR do it; for six countries, he finds, their estimates \u201care based on an incorrect interpretation of former colonial names for Mali.\u201d <\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">Once you only look at the 28 countries with non-synthetic data, there\u2019s no relationship between settler mortality and present-day economic outcomes. Worse, even the real data tends to be about soldiers rather than civilian settlers, and soldiers are <a href=\"https:\/\/www.ncbi.nlm.nih.gov\/pmc\/articles\/PMC5421788\/\">more likely to die<\/a> from disease when actively fighting than civilians are. <\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">This biases the results in AJR\u2019s favor, and makes the underlying relationship they posit (that places with higher death rates developed worse institutions) much weaker. <\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\"><a href=\"https:\/\/scholar.harvard.edu\/files\/shleifer\/files\/do_institutions_cause_growth.pdf\">Another reply<\/a>, by Ed Glaeser, Rafael La Porta, Florencio L\u00f3pez de Silanes, and Andrei Shleifer noted that AJR\u2019s data doesn\u2019t distinguish between the effects of institutions and the effects of human capital: Settler colonies like Australia and Canada didn\u2019t merely get more inclusive institutions, but also settlers who were generally much richer and better-educated (at least from a modern capitalist vantage point) than native inhabitants. The researchers conduct their own tests and argue that human capital does a better job explaining growth trajectories than institutions. That doesn\u2019t necessarily make for a bleaker story than AJR (countries can invest in schools and boost human capital), but it\u2019s a <em>different<\/em> story.<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">Glaeser and co. also highlight problems with the measure of \u201cexpropriation risk\u201d (the risk that the government takes all your stuff) used in AJR\u2019s work. This is an important indicator for AJR of whether institutions are inclusive or extractive, but it turns out to just be a subjective 0 to 10 ratings system AJR took from the private firm Political Risk Services, and one with huge problems. \u201cIn 1984, the top ten countries with the lowest expropriation risk include Singapore and the USSR,\u201d Glaeser et al note. Are we really expected to believe that your risk of getting your stuff taken by the government was low in the Soviet Union?<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">AJR\u2019s claim of a \u201creversal of fortune,\u201d with the leading nations of 1500 becoming laggards today, has similarly withered under scrutiny. <\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">Areendam Chanda, C. Justin Cook, and Louis Putterman <a href=\"https:\/\/www.aeaweb.org\/articles?id=10.1257\/mac.6.3.1\">reevaluated the claim<\/a> but measured what happened to the descendents of those actual 1500s people, not just the geographic places where they lived. There have been huge movements of people from 1500 to the present, and it doesn\u2019t strictly make sense to compare the Incan Empire to Peru today given how wildly different the people in each were. Chanda et al find that fortune has not reversed, but persisted when you account for population movements: People descended from countries thriving in 1500 were doing better in the 21st century. That\u2019s evidence, they conclude, for the Glaeser et al claim that human capital rather than institutions is the crucial factor here.<\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">Again, my takeaway here is not \u201cAcemoglu, Johnson, and Robinson, Nobel-winning economists, are useless.\u201d They\u2019re incredibly useful, and greatly amplified the prestige of these kinds of tough economic history questions within the economics profession. <\/p>\n<\/div>\n<div class=\"duet--article--article-body-component\">\n<p class=\"duet--article--dangerously-set-cms-markup duet--article--standard-paragraph _1agbrixh lg8ac51 lg8ac50 xkp0cg0\">But I also think their work is a reminder of the old academic clich\u00e9 that you can either learn something very small about something very big, or something very big about something very small. They were tackling a very big topic, and seemed for a second to grasp something very big about it. Upon inspection, though, it looks a great deal smaller.<\/p>\n<\/div>\n<aside class=\"_1tzd3in0 _1agbrixx\">\n<p class=\"_1tzd3in1\">You\u2019ve read <!-- -->1<!-- --> article<!-- --> in the last month<\/p>\n<div class=\"_1tzd3in2\">\n<div class=\"_1tzd3in3\">\n<p class=\"_1tzd3in4\">Here at Vox, we believe in helping everyone understand our complicated world, so that we can all help to shape it. Our mission is to create clear, accessible journalism to empower understanding and action.<\/p>\n<p class=\"_1tzd3in4\">If you share our vision, please consider supporting our work by becoming a <i>Vox Member<\/i>. Your support ensures Vox a stable, independent source of funding to underpin our journalism. If you are not ready to become a Member, even small contributions are meaningful in supporting a sustainable model for journalism.<\/p>\n<p class=\"_1tzd3in4\">Thank you for being part of our community.<\/p>\n<\/div>\n<div class=\"_1tzd3in5\"><img alt=\"Swati Sharma\" loading=\"lazy\" width=\"59\" height=\"69\" decoding=\"async\" data-nimg=\"1\" style=\"color:transparent\" srcset=\"\/_next\/image?url=%2Fstatic-assets%2Fheadshots%2Fswati.png&amp;w=64&amp;q=75 1x, \/_next\/image?url=%2Fstatic-assets%2Fheadshots%2Fswati.png&amp;w=128&amp;q=75 2x\" src=\"https:\/\/www.vox.com\/_next\/image?url=%2Fstatic-assets%2Fheadshots%2Fswati.png&amp;w=128&amp;q=75\"\/><\/p>\n<div class=\"_1tzd3in7\">\n<p class=\"_1tzd3in8\">Swati Sharma<\/p>\n<p class=\"_1tzd3in9\">Vox Editor-in-Chief<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/aside>\n<\/div>\n<p><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-3711241968723425\"\r\n     crossorigin=\"anonymous\"><\/script>\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-format=\"fluid\"\r\n     data-ad-layout-key=\"-fb+5w+4e-db+86\"\r\n     data-ad-client=\"ca-pub-3711241968723425\"\r\n     data-ad-slot=\"7910942971\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script><br \/>\n<br \/><div data-type=\"_mgwidget\" data-widget-id=\"1660802\">\r\n<\/div>\r\n<script>(function(w,q){w[q]=w[q]||[];w[q].push([\"_mgc.load\"])})(window,\"_mgq\");\r\n<\/script>\r\n<br \/>\n<br \/><a href=\"https:\/\/www.vox.com\/future-perfect\/378007\/why-some-economists-are-skeptical-of-this-years-nobelists\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Nobel Prize in Economics awarded this week to Daron Acemoglu, Simon Johnson, and James Robinson allows a lot of people to feel like winners. (Especially those in the know &hellip; <a href=\"https:\/\/hotvideos24.online\/?p=114925\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8629],"tags":[],"class_list":["post-114925","post","type-post","status-publish","format-standard","hentry","category-u-s","entry"],"_links":{"self":[{"href":"https:\/\/hotvideos24.online\/index.php?rest_route=\/wp\/v2\/posts\/114925","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hotvideos24.online\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hotvideos24.online\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hotvideos24.online\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/hotvideos24.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=114925"}],"version-history":[{"count":0,"href":"https:\/\/hotvideos24.online\/index.php?rest_route=\/wp\/v2\/posts\/114925\/revisions"}],"wp:attachment":[{"href":"https:\/\/hotvideos24.online\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=114925"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hotvideos24.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=114925"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hotvideos24.online\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=114925"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}