Nonrival Goods After 25 Years

Joshua Gans has a generous post that notes the 25th anniversary of the publication of my 1990 JPE article. I could not agree more with his observation that “there is more to be done …” in understanding the economics of ideas. His post helped me see how to respond to a conversation I had this summer. I’ll use the excuse of the anniversary to focus for the month on such basics as the meaning of the phrase nonrival good.

~3 minutes

Let them come and they will build it

In an op ed last week, Steve Hilton, a former advisor to the government in the UK, boiled the policy dilemma in Europe down to its essence: Policy paralysis over the refugee crisis is convulsing Europe: Of course we want to help, but if we’re too generous, more will come. To understand what Hilton means, it helps to use a model, an abstract representation that captures the essence of a complicated situation.

~5 minutes

Botox for Development

In a talk at the World Bank that I gave last week, I repeated a riff that I’ve used before. Suppose your internist told you: The x-ray shows a mass that is probably cancer, but we don’t have any good randomized clinical trials showing that your surgeon’s recommendation, operating to remove it, actually causes the remission that tends to follow. However, we do have an extremely clever clinical trial showing conclusively that Botox will make you look younger.

~3 minutes

The Transcendent Differences of Politics

An article in The New York Times Magazine has a nice quote from a beltway insider about how politics works: ‘‘Diplomacy is about minimizing differences,’’ he told me. ‘‘ ‘Pol Pot and the Pope — surely there’s something they can agree on.’ A political campaign is exactly the opposite. It’s about taking a minor difference and blowing it up into something transcendent.’’ In my paper on mathiness, the human pattern of interaction that I set in opposition to politics was not diplomacy but science.

~2 minutes

An Indicator of Tribalism in Macroeconomics

Consider these two statements: The model in Lucas (1972), Expectations and the Neutrality of Money, made a path breaking contribution to economic theory. It is comparable in importance to the Solow model and the Dixit-Stiglitz formulation of monopolistic competition. The model in Prescott and Kydland (1982), “Time to Build and Aggregate Fluctuations," has no scientific validity. Next, consider these two statements: Einstein’s model of the universe based on his theory of General Relativity, made a path breaking contribution to theoretical physics, even though in his first application, Einstein built a model of a steady state universe.

~3 minutes
MORE POSTS