People Are Brains, Not Stomachs

Alex Tabarrok over at MR has a fantastic summary of some of the works of this year’s three Nobel Prize winners in Economics. This paragraph on one of Michael Kremer’s papers stood out to me:

My second Kremer paper is Population Growth and Technological Change: One Million B.C. to 1990. An economist examining one million years of the economy! I like to say that there are two views of humanity, people are stomachs or people are brains. In the people are stomachs view, more people means more eaters, more takers, less for everyone else. In the people are brains view, more people means more brains, more ideas, more for everyone else. The people are brains view is my view and Paul Romer’s view (ideas are nonrivalrous). Kremer tests the two views. He shows that over the long run economic growth increased with population growth. People are brains.

Here is the abstract from Kremer’s QJE paper:

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.

Read Tabarrok’s entire post here. Highly recommended.

Since Sunday I’ve been asking around if the Prize got any mention on local radio in Busia, Kenya — the cradle of RCTs, if you will, and where Kremer conducted field experiments. No word yet. Will report if I hear anything.

Cash transfers do not make the poor lazy

This is from the New York Times:

Abhijit Banerjee, a director of the Poverty Action Lab at the Massachusetts Institute of Technology, released a paper with three colleagues last week that carefully assessed the effects of seven cash-transfer programs in Mexico, Morocco, Honduras, Nicaragua, the Philippines and Indonesia. It found “no systematic evidence that cash transfer programs discourage work.”

A World Bank report from 2014 examined cash assistance programs in Africa, Asia and Latin America and found, contrary to popular stereotype, the money was not typically squandered on things like alcohol and tobacco.

Still, Professor Banerjee observed, in many countries, “we encounter the idea that handouts will make people lazy.”

Professor Banerjee suggests the spread of welfare aversion around the world might be an American confection. “Many governments have economic advisers with degrees from the United States who share the same ideology,” he said. “Ideology is much more pervasive than the facts.”

More on this here.