Economic Rockstar

Connecting Brilliant Minds in Economics and Finance

068: Daron Acemoglu on Why Nations Fail and Why Inequality Exists Between Countries

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068: Daron Acemoglu on Why Nations Fail and Why Inequality Exists Between Countries

Daron Acemoglu is the Elizabeth and James Killian Professor of Economics at Massachusetts Institute of daron acemoglu economic rockstarTechnology in Boston.

Daron’s principal interests are political economy, development economics, economic growth, technology, income and wage inequality, human capital and training, and labour economics.

Daron was the winner of the 2005 John Bates Clark Medal awarded to economists under forty judged to have made the most significant contribution to economic thought and knowledge.

His most recent works concentrate on the role of institutions in economic development and political economy.

Daron received his M.Sc. in Econometrics and Mathematical Economics and his Ph.D. from the London School of Economics.

Daron is co-author of ‘Why Nations Fail: The Origins of Power, Prosperity, and Poverty’ which can be found at whynationsfail.com

Markets are the foundation of long run economic growth but only if they are under guard by inclusive institutions – Daron Acemoglu

Economics: 

In this interview, Daron mentions: capitalism, marxism, inequality, inclusive institutions, extractive institutions, property, public finance,  rights, risks, cliometrics, econometrics, labor, technology, human capital, inequality, creative destruction and comparative advantage.

Economists: 

In this interview, Daron mentions: James Robinson, George Akerlof, Thomas Picketty, Douglass North and Joseph Schumpeter.

In this episode you will learn:

  • why nations fail and others prosper.
  • why Daron despises the term capitalism refereeing it as ‘and ugly term’.
  • why macro variables are second order to the type of institution when explaining the prosperity of a country.
  • why we should study political systems in an economics course.
  • how economic decisions get made.
  • if democracy is good for economic growth.
  • how Daron first became interested in institutions while growing up under a political dictatorship in Turkey.
  • if the political economy or the type of institution of a country explain inequality.
  • what explains inequality within a nation.
  • about Daron’s mixed views on philanthropy.
  • why empires, such as the Roman, Ottoman and British, collapse and whether we could witness the collapse of other institutions.
  • why China will ultimately fail in its present institutional form.
  • what China must do to maintain its economic growth.
  • about the Ireland and how its economy transitioned over the last 100 years.

I think, on the contrary, extractive institutions have great staying power – Daron Acemoglu

Books:

  • ‘Why Nations Fail: The Origins of Power, Prosperity, and Poverty’ by Daron Acemoglu.
  • Why the West Rules–for Now: The Patterns of History, and What They Reveal About the Future by Ian Morris.
  • War! What is It Good For? Conflict and the Progress of Civilization from Primates to Robots by Ian Morris
  • The Dynamics of Ancient Empires: State Power from Assyria to Byzantium by Ian Morris
  • The Secret of Our Success: How Culture Is Driving Human Evolution, Domesticating Our Species, and Making Us Smarter by Joseph Henrich

Where to Find Daron:

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052: Alex Tabarrok on Globalisation, Bounty Hunters and Leveraging Online Education

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052: Alex Tabarrok on Globalisation, Bounty Hunters and Leveraging Online Education

Alex Tabarrok is Associate Professor of Economics at George Mason University and co-founder (with Tyler Cowen) of Marginal Revolution University, an online platform for learning economics.Alex Tabarrok

Alex is Senior Fellow and former Research Director for The Independent Institute, Assistant Editor of The Independent Review, Bartley J. Madden Chair in Economics at the Mercatus Center and Director of the Center for Study of Public Choice.

Alex is the author or editor of a number of books including the introductory economics textbooks, Modern Principles, The Voluntary City and Changing the Guard: Private Prisons and the Control of Crime.

Alex is a TED speaker with over 640,000 views of his TED talk, How Ideas Trump Crises.

Alex received his Ph.D. in economics from George Mason University, and he has taught at the University of Virginia and Ball State University.

“I hope to be teaching long after I’m dead” – Alex Tabarrok

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In this episode, you will learn:

  • how to ensure that criminals turn up of trial and to reduce the possibility of them becoming a fugitive.
  • how bounty hunters are more successful than the police in catching criminals.
  • why bounty hunters and bail bondsmen are the most best for the taxpayer.
  • why bounty hunters invited Alex Tabarrok to join them in a bounty hunting.
  • why a mother’s signature on a bail bond is the most effective way of making sure a criminal repays its  due.
  • how effective are the police in deterring crime.
  • how a police strike in Montreal in 1967 resulted in an spike in crime.
  • how the terror alert level results in an increase in police presence and results in a decrease in local crime.
  • whether we should reward the police for reducing crime and the problems that could arise from this reward system.
  • about the use of value-added tests for identifying teacher quality.
  • whether the best teachers have a positive impact on the future earnings of their students.
  • if a country can have a welfare state and open borders.
  • how the next generation of immigrants revert to the average of their adopted country including crime.
  • why immigrants to the United States are the most entrepreneurial.
  • why Alex co-founded Marginal Revolution University.
  • what Marginal Revolution University is about and who it’s for.
  • how to leverage the best teachers and leverage their experience.
  • how teaching will evolve into a format that’s similar to how plays evolved into movies with leading actors being paid millions of dollars and the production being created just once.
  • how artificial intelligence and computer adaptive learning programmes will be the next wave of teaching and learning.
  • what is the ideal length for a recorded educational video.
  • why universities will have to adapt to online technologies.
  • why parents and politicians want colleges to use online technologies.

Immigrants have lower crime rates, but the children of immigrants have about average crime rates. It’s unfortunate that the immigrants adopt our ways. They assimilate to American crime rates – Alex Tabarrok

Personal Habits:

I love doing what I do and that removes a lot of barriers. It gets you up in the mornings – Alex Tabarrok

Takeaway:

“Economics is fun. Economics brings in these world histories, things about climate, geography and history” – Alex Tabarrok

Economics:

In this interview, Alex mentions: crime, incentives, causality, elasticity, Baumol’s Cost Disease, rewards, redistribution, welfare, taxes, entrepreneurship, human capital, globalisation, public goods, free trade, structural unemployment and trade.

Economists:

In this interview, Alex mentions: Tyler Cowen, Greg Mankiw, Paul Krugman, Eric Callan, John Click, Milton Freidamn, John Nash, Bryan Caplan, Robin Hanson, Joseph Schumpeter, Adam Smith, David Hume and Richard Cantillon.

“This is a cliche, but Adam Smith really is great” – Alex Tabarrok

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Ted:

  • How Ideas Trump Crises by Alex Tabarrok
  • Comment: Solving Crises Through Innovation and Ideas or Creating Problems Through Marginalisation and Displacement by Frank Conway

My TED talk is 75% of my entire teaching. So that 15 minute talk has been seen by so many people that that’s the majority – the big majority of all my teaching in my life. – Alex Tabarrok

Podcasts:

Books:

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    022: Josh Angrist on Taking the Con Out of Econometrics – Kung Fu Style

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    022: Josh Angrist on Taking the Con Out of Econometrics – Kung Fu Style

    Master Joshway, better known as Josh Angrist, is the Ford Professor of Economics at MIT and a ResearchAssociate in the NBER’s programs on Children, Education, and Labor Studies. Josh received his B.A. from Oberlin College, spent time as an undergraduate studying at the London School of Economics and as a Masters student at Hebrew University. He completed his Ph.D. in Economics at Princeton.

    Angrist’s research interests include the effects of school inputs and school organization on student achievement; the impact of education and social programs on the labor market; the effects of immigration, labor market regulation and institutions; and econometric methods for program and policy evaluation.

    Josh is a Fellow of the American Academy of Arts and Sciences, The Econometric Society, and has served on many editorial boards and as a Co-editor of the Journal of Labor Economics.

    Josh is the author (with Steve Pischke) of Mostly Harmless Econometrics as well as Mastering ‘Metrics.

    Find out in this episode how Josh went from High School drop-out to Professor of Economics at MIT.

    Never forget that, at the most, the teacher can give you fifteen percent of the art. The rest you have to get for yourself through practice and hard work. I can show you the path but I can not walk it for you – Kung Fu Master Tan Soh Tin

    Economic Themes:

    In this interview, Josh mentions and discusses: econometrics, clinical trials, randomized trials, instrumental variables, regression, health insurance, longitudinal studies, selection bias, fairness, human capital, the quantity-quality trade-off, specification testing, robustness, time series, BLUE, Gauss-Markov, labor economics, regression, reverse causality, spurious correlation and data mining.

    Economists:

    In this interview, Josh mentions: Gary Becker, Shoshana Grossbard, Marina Adshade, Steve Pischke, Chris Blattman, Matt Holian, Christopher Sims, Russell Roberts, Greg Mankiw, Amy Finkelstein, Nancy Qian, Erlich, Ed Leamer, Steven D. Levitt, Stephen J. Dubner, Phil Oriopolis, Alan Kreuger, Orley Ashenfelter, David Card, Whitney Newey, Guido Imbens, Gary Chamberlain, Allan Meltzer, Scott Richard and Daniel Hamermesh.

    On Mastering ‘Metrics: The intersection of the highway is a metaphor for causality. This is the theme of the book – ‘you’re facing a choice you’ll never know what the counterfactual was. You can imagine it’. The goal of econometrics is to reveal that in some way through statistical methods or experimentation. – Josh Angrist.

    Josh and Steve’s book, Mastering ‘Metrics, is Kung Fu themed and they use that as a vehicle for humour.

    MasterJoshwayMasterStevefu

    Find out:

    • about Master Joshway and Master Steveway – the Kung Fu Economists.
    • how Josh went from working in a mental hospital to working in MIT.
    • why and how the Kung Fu theme was adopted by Josh and Steve.
    • where the names Master Joshway and Master SteveFu came from.
    • why Josh is a critic of macroeconomics.
    • the difference between traditional applied micro and applied micro today.
    • Josh’s views on using assumptions in microeconomics.
    • how to design an microeconomics experiment using randomized trials.
    • about health insurance in the US.
    • about Obama Care or the Affordable Care Act.
    • the Oregon Health Experiment where health insurance was offered as a lottery.
    • about Ireland’s upcoming health insurance policy change.
    • about the ‘Furious Five’ – not Kung Fu Panda – but the core research methods.
    • what’s a good economics experiment for family size.
    • where babies come from – Storks?
    • what are the chances of US married couples having a 3rd child if the first two are the same gender.
    • if people who come from large family sizes have worse outcomes?
    • about Gary Becker’s quantity-quality trade-off and how it relates to family size in China.
    • if capital punishment deters homicide.
    • why and how econometrics and specification tests are better today than they were in the past.
    • why Freakonomics is a must read for students or potential students of economics.
    • why being born later in the year is good for your educational attainment.
    • about Josh’s lucky breaks in life.
    • why Josh dropped out of school at 16 and about his army sergeant stripes.
    • about Josh’s hyper Jim Kramer-like teaching style.
    • about an amazing list of economists that have personally influenced Josh.
    • what helps Josh clear his head and keep in shape.

    Macro v Micro

    “Macro is a very theory-driven, model-driven field. They don’t run enough regressions or collect enough data and look for good experiments” – Josh Angrist.

    “There’s nothing wrong with assumptions. That’s a misguided criticism. We have to simplify the world to learn anything about it. Otherwise you’re lost in the details.” – Josh Angrist.

    “Every research project begins with the question. I have to convince my students of this and sometimes my colleagues – it isn’t let data come first, even though we’re very data-driven people. The first step is the question where it’s likely to lead me to a good research design.”

    “In US census data, if you take married two-parent families who’d have at least two children, , the probability of having a 3rd child when they have a mixed sex is 0.37, and that goes to 0.43 or 0.44 when they either have two boys or two girls.”

    “Ed Leamer in his paper, Let’s Take the Con Out of Econometrics, stated that nobody takes anybody else’s data analysis seriously. Nobody believes anything anybody else does.” Steve Pischke and Josh Angrist, in their paper, argue that that’s no longer true.

    “The purpose of our book is to try to bring the way econometrics is taught in line with the way applied micro, at least, is done.” – Josh Angrist.

    The traditional econometrics canon is built around a heavy mathematical framework that focuses on technical concerns, assumptions and many issues that are second-order statistics concerns, like heteroskedasticity or whether the model is really linear, that makes little sense and has nothing to do with modern empirical practice.

    Recommended Books:

    Josh Angrist on Freakonomics: “ It’s so engaging and well written and covers such interesting questions that I think it wins us a lot of converts to studying economics. My daughter got interested in economics by reading Freakonomics and she majored in economics.”

    Papers:

    Datasets:

    Blog Posts:

    Podcast Episodes:

    Where To Find Josh Angrist:

    Resources Used in the Episode:

    www.incompetech.com Cartoon Battle Kevin McLeod Far East

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