My Email Quoted by the Financial Times

The Financial Times quoted accurately the following sentence from an internal email that I wrote: “Imagine a field of science in which people publish research papers with data that are obviously fabricated. …” Some readers mistakenly assumed that this sentence was supposed to convey a hidden meaning. To be clear, I am not aware of a single instance in which someone at the Bank published fabricated data, most certainly not “obviously fabricated” data. (Revised to make it clear that the FT quoted me accurately and did not imply the misreading that I’m attributing to some readers. PMR 3:48 pm)

I meant the sentence literally. It sets up a thought experiment. The thought experiment was designed to illustrate a general point. Science makes progress toward truth only if individual participants value, hence cultivate, a reputation for personal integrity. Communicating clearly is essential for anyone who wants to signal a commitment to personal integrity.

In the spirit of continuous improvement, every organization should aspire to do better. At this point, any discussion about how the World Bank can do better should take place internally, not via the press, blogs or social media. This is the best way forward because World Bank Group does more than provide support for scientific research.

As the world moves toward competition between countries of comparable economic power, the Bank Group and its sister treaty-based organizations will be asked to take on more responsibility for preventing the type of inefficient outcome that could emerge. The “tragedy of the commons” captures the essence of the risk that the world faces. (In our professional jargon, the risk is of inefficient equilibria in a non-cooperative game between nations.)

The World Bank Group is one of the few organizations that can facilitate cooperative outcomes that are better for every nation. It can address a range of problems that lie outside the mandate of the IMF and the WTO.

To provide this service, the World Bank Group must operate in the world of diplomacy. This creates an inevitable tension between the domains of science and diplomacy. These domains require communication using a different tone and vocabulary. They establish different norms about which actions by participants are morally right or wrong. In particular, the most important goal of diplomacy is agreement. Ambiguity can help establish agreement. Clarity can sometimes undermine agreement. Once an agreement has been established, it is not helpful for anyone to challenge it.

If all the World Bank Group did was support science, a discussion about how best to do so could take place out in the open. But because the group must also operate in world of diplomacy, further discussion about how best to balance the competing demands of science and diplomacy can best take place internally, quietly.

I wish the best for the participants in these discussions. I have faith in them. From a selfish perspective, I also wish the best for the World Bank Group as an institution. It already plays a very important role in the system of international relations that supports the global economy. It might be asked to contribute even more in the years and decades to come, perhaps for centuries to come.

My Unclear Comments about the Doing Business Report

In a conversation with a reporter, I made comments about the Doing Business report that gave the impression that I suspected political manipulation or bias. This was not what I meant to say or thought I said. I have not seen any sign of manipulation of the numbers published in Doing Business report or in any other Bank report.

What I did want to say is something many of us in the Bank believe–that we could do a better job of explaining what our numbers mean.

In the production of the Doing Business report, we changed our methods for solid reasons. These changes were carefully considered. But when we implemented the changes, we could have explained more clearly why, for example, Chile’s ranking fell.

We already made DB 2018 easier to understand by sticking with the methods of DB 2017. To be more transparent, we have also published more the underlying data and more of the details behind the calculations.

There will, of course, always be room to explain ourselves more clearly. I’m sorry that in my attempt at promoting clarity, I myself was not clear.

Congratulations to Dick Thaler on Winning the Nobel Prize!

Someone from at the World Bank wrote to ask what I thought about the Nobel Prize for Dick Thaler. Here’s my reply:

I think it’s terrific that Dick got the prize. He deserves lots of credit for pushing forward the research agenda of behavior economics, and doing so with good cheer, despite the disdain it provoked from many quarters.
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Letter from an Aspiring Macroeconomist (with response)

Dear Professor Romer,

I am writing you about your recent working paper The Trouble with Macroeconomics that generated lots of reactions.

I have simple question. I am a graduate student in economics. I am going to begin a PhD program in economics next year. I always loved macro, and I will probably specialize myself in this field. My question is:
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