conversableeconomist

Interview with Amartya Sen: Economics with a Moral Compass?

The just-released Annual Review of Economics (2020, volume 12, pp. 1-21) leads off with \”Economics with a Moral Compass? Welfare Economics: Past, Present, and Future,\” by Amartya Sen, Angus Deaton, and Tim Besley. It\’s mostly an interview of Sen (Nobel 1998) about his career, with Deaton (Nobel 2015) and Besley offering some gentle prompting.  A video of the nearly two hours of conversation is also available. I especially enjoyed a number of Sen\’s stories about economists he had known at Cambridge. Here are a few examples: 
On Joan Robinson: 

Angus Deaton: You showed up at Cambridge as an undergraduate for a quick degree, and became a graduate student quite young, and Joan Robinson actually supervised your thesis on the choice of techniques. You wrote about her [that] “she was totally brilliant but vigorously intolerant.” Given how gentle you usually are, these are are very strong words. Do you want to talk a little bit more about her? … 

Amartya Sen: That’s absolutely true. I don’t know how to describe a person as other than “vigorously intolerant” when she told me, as my PhD supervisor, that “I have read the first chapter and a part of the second, and it’s the kind of thing that will be praised by established economists, and you will have no difficulty in getting your PhD.” … She said, “I’m not going to read the rest of your thesis.” I said, “But you’re supposed to say that the thesis is fit to be submitted for the PhD.” She said, “I will say it.” So I asked her, “On what basis?” “On the basis of what I have read already.” The thesis had eight chapters, by the way. She said, “It’s good. Clearly, clearly, it’s good. Good in the way that these people understand it. But it’s not worthy of you. You have to promise me that someday you will come back to real economics.” … 

I had an odd relationship with her, but I liked her very much. …  Her view of left andright was, I thought, very peculiar … I remember on one occasion trying to tell her that if there is a downfall of capitalism, it won’t be because of some subtle mistake in capital theory; it will be because of, to quote A.C.Pigou (1920), the “mean streets” and “withered lives” that capitalism makes many people have. And that relates to welfare economics and social choice. This upset her very much. I don’t think she understood my take on capitalism at all, and she thought that a real critique of capitalism had to be connected with the understanding that capital could not be seen as a factor of production.  
On A.C. Pigou: 

I knew something about Pigou already in Calcutta. But when I arrived in Cambridge, I was
told that he was a right-wing economist, because he didn’t agree with John Maynard Keynes about the causes of unemployment! In fact, when I went to Stockholm after this Nobel stuff, they asked me in a public interview, “What’s your position in macroeconomics?” I said, “I don’t do macroeconomics.” I’ve never done it, and I took the liberty of quoting a common friend of ours, Frank Hahn, that the subject doesn’t really exist, because macro must be the totality of micro things. That didn’t go down well, and they asked me, “Surely, on Keynes versus Pigou, you are on the Keynesian side?” I said, “On the unemployment issue I may well be, but if I compare an economist like Keynes, who never took a serious interest in inequality, in poverty, in the environment, with
Pigou, who took an interest in all of them, I don’t think I would be able to say exactly what you are asking me to say.” Coming back to my student days, the ideas of Pigou helped me a lot.

On Maurice Dobb and Dennis Robertson: 

When he [Maurice Dobb] first moved to Trinity College, he was a member of the British Communist Party already. Dennis Robertson—who always described himself as a liberal, but in fact was a conservative—offered Dobb this job on behalf of Trinity. Maurice accepted it immediately. He was then a research student at Pembroke College. He went home, and being a good Englishman, he wondered, “Shouldn’t I have mentioned that I’m a member of the Communist Party?” Then he wrote a letter of apology to Robertson—a very English letter: “When you offered me this job, I was so overwhelmed with the prospect of becoming a teacher in Trinity that I overlooked to tell you, for which I apologize, that I’m a member of the British Communist Party, and if after knowing that, you decide that you want to withdraw your offer, I would like you to know that I would not hold that against you.”Dennis Robertson replied, “Dear Dobb, So long as you give us a fortnight’s notice before blowing up the chapel, it would be all right.”

I also liked this comment on Adam Smith: 

Angus Deaton: When I grew up in Edinburgh, he was a very obscure
figure. No one really paid much attention to Adam Smith, and that’s really changed quite a lot in recent years. They’re putting statues of—
Amartya Sen: When, many years ago, I arrived with my wife Emma in Kirkcaldy and tried to find Smith’s house, we couldn’t locate it (spotting it has become easier now with the marked directions that have been put up recently, mostly arranged by Gordon Brown, the former British Prime Minister—a great devotee of Smith). We went to Kirkcaldy’s tourism center and asked, “Could you tell me where Adam Smith’s house is?” They said, “Who is that you’re talking about?” I said, “Well, what is Kirkcaldy famous for?”
Angus Deaton: Linoleum is the answer.
Amartya Sen: Right, linoleum was indeed the answer.

There is also insightful discussion on the background of Sen\’s classic work on the economics of famines (which he claims a set of insights that were already well-known, but had not been translated into economics) and on welfare economics (where Sen says that he has not succeeded either in bringing serious philosophy into economics, nor in bringing serious economics into philosophy), and more. 

For those who would like more Sen, another recent interview by Isaac Chotiner, \”Amartya Sen’s Hopes and Fears for Indian Democracy,\” appeared in the New Yorker last fall (October 6, 2019). 

conversableeconomist

I Surpass Keynes: 33 Years Plus One

John Maynard Keynes served as Editor of the Economic Journal--the research journal of Britain’s Royal Economic Society–for 33 years plus one issue. He was appointed to the position as a 28 year-old in 1911, and finished with the April 1945 issue. He did have joint or assistant editors for periods of time–Francis Edgeworth (1919-26), D .H. Macgregor ( 1926-34) and Austin Robinson ( 1934-45)–who must have played an especially important role when Keynes was off advising the government. But “for 33 years and one issue Keynes played the central role in the development of the Journal’s character and reputation,”  as Donald Moggridge tells the story in “Keynes as Editor” (as chapter 7 in A Century of economics : 100 years of the Royal Economic Society and the Economic Journal, edited by John Denis Hey and Donald Winch, 1990, pp. 143-157).

The timeline is meaningful to me because with the publication of the Summer 2020 issue of the Journal of Economic Perspectives, I have now been Managing Editor of JEP for 33 years and one issue. For the first and in all probability the last occasion in my professional life, I have surpassed Keynes.  As I crack open a cold Diet Coke from the mini-fridge in my office to celebrate, the Moggridge essay also offers an opportunity to think about how academic journals and the role of their editors has shifted over time. To the modern eye, perhaps the most surprising aspect of a prominent economics journal from the first half of the 20th century is the informality and flexibility of the editorial process,

Most modern economics research journals have an editor (or group of editors) who send the paper to be evaluated by “referees,” who in turn offer recommendations of reject, accept, or revise-and-resubmit. In theory, at least, the process is “double-blind”: that is, the authors don’t know who the referees are and the referees don’t know who the authors are. Modern journals brag if their turnaround process for these referee comments is measured in “only” a few months. But the revisions requested are often nontrivial, and the author has other tasks (like figuring out how to teach online classes), so it may take a few months for the author to respond. At this point, the referees may get another crack at evaluating the paper, which can lead to an additional round of revisions. If and when a paper is accepted, it may then sit for additional months before it actually ends up being published in an issue.

The editorial process at the EJ under Keynes was much quicker and simpler.  Moggidge writes:

Ultimately, however, Keynes made the overwhelming majority of editorial decisions himself. He did not regard the job as onerous: indeed, by the 1930s it was one of those activities classed as ‘non­work’ and done after dinner (Kahn, 1984, 176). As in other areas of his life, he made decisions quickly. To take one example: Lionel Robbins submitted his ‘Interpersonal Comparisons of Utility: A Comment’ on 31 October 1938; Keynes accepted it on 3 November and the article appeared in the December issue. …  In fact, in most cases a month was the maximum time between initial submission and final acceptance, and this was exceptional, unless the article was to be subjected to substantial revisions and the whole process then became dependent on the time available to the author. He did not keep a backlog of articles in reserve: at worst an author might see only one issue of the Journal appear between the acceptance and the appearance of his article.

Part of the reason for such quick turnarounds was that Keynes, with relatively few outside reviewers, was the judge of quality.

As far as contributors other than himself were concerned, Keynes was generally sparing in his use of external referees. He did, of course, use them, particularly in cases where he had doubts about the submission. On several occasions, however, he sent the submission to the referee with a copy of his own draft letter of rejection — or at the least a strong hint of his own views.

However, there are also numerous cases where Keynes provided extensive comments to authors. Moggridge cites one paper that involved 30 pages of correspondence, and many letters of five pages or more. Keynes also was willing to choose only one part of a much longer paper as deserving of publication, and would sometimes accept a paper but with suggestions that would cut the length by two-thirds. After Keynes retired from the EJ, his successors offered florid praise for the quality of his editorial feedback in the April 1945 issue, where they wrote:

That editing has been far more than a nominal control of what was to be published. A whole generation of economists would testify to the influence which he exercised with his meticulous, but always constructive, criticism. None but the authors in the secrecy of their own hearts (and perhaps not even they) can know how much of what was ultimately printed was their own, and how much had sprung from the lively ingenuities of his mind. It was to the young and promising that he was particularly lavish with his help, and today (no longer so young) they remember that aid with gratitude.

In part, this may be the kind of fulsome praise lavished upon those as they leave a job, but it probably has some intermixture of honest feeling as well.

Perhaps the best-known stories about Keynes as an editor have to do with his rather loose rules about publishing his own work. or publishing his comments on the work of others in same issue as the original paper, as well how he phrased some of his negative reactions. Moggridge writes:

Unlike some modern editors, Keynes himself had few inhibitions about placing his own articles in his own journal. While he was editor, his only publications in other English language professional journals, other than seven replies to critics of which only two were over a page in length, number two: his November 1914 invited contribution to the Quarterly Journal of Economics, ‘The City of London and the Bank of England, August 1914’ (JMK, XI, 278-98), and his 1936 Jevons centenary allocution to the Royal Statistical Society which appeared in that Society’s Journal (JMK, X, 109-50). He was not even inhibited from using his position as editor to reply to articles by others in the same issue in which they appeared, going so far as to place his own comments immediately after the piece that had irked him. However, in later years he became slightly more restrained in this, informing one contributor with whom he was in dispute over some points prior to publication that: ‘It is a mistake for an editor to quarrel with contributors.’ As far as I can tell from the records, he submitted none of his own contributions to an external referee. Nor could he have done so in some cases, for the articles themselves were only finished at the last possible date.

Perhaps the most famous Keynesian editorial put-down was in writing to a referee about a proposed article by Kalecki:

I am inclined to return to the opinion that the article is pretentious, misleading, inconclusive and perhaps wrong. I would rather have cheese to a weight equal to the paper it would occupy in 5,000 copies of the Journal.

Or he once wrote to an author:

[I]t seems to me clear that your article, in its present shape, is half-baked and not fit for publication. I have not been able to spare time to read it carefully enough to know whether there is anything in it at the bottom. But I find it a bit of a rigmarole, of which I fear the reader would make little or nothing. It is neither clear what you are driving at nor where you arrive. And behind all that lies my doubt as to whether the method you are employing is capable of helping much with this particular problem. Also do you not in many cases use symbols where words would do as well and be much clearer? Sorry to be so critical. But I felt I owed it to you to explain why it is I cannot take it for the Journal.

Or in yet another case, he turned down an article partly for dullness, and partly because Americans should go publish in American journals:

It strikes me as a competent academic exercise which any competent analytical economist could accomplish if he wanted to. I did not find it interesting or really relevant to anything that matters. I do not see any ground for an American econom­ist to occupy a large number of pages in the Journal with it. Why should he not publish it in America? I did not find myself making any criticisms, but felt, as I have said, that it is just an academic exercise.

Keynes also had the power to solicit articles, rather than just wait for submissions to come in, something he did throughout his editorial career. The Journal of Economic Perspectives, where I work as Managing Editor, is highly unusual among current economics journals in that we solicit the articles that we publish–but then we comment on and edit the articles extensively before publication.

Overall, how good was Keynes as an editor? Moggridge writes:

Contemporaries were generally satisfied. Even a critic such as Edwin Cannan could remark in a memorandum of 1 February 1934 to a committee looking for a successor to D.H. Macgregor as Joint Editor:

He may not be exactly the ideal editor, who is, I suppose, one who has no ideas of his own and a great respect for those of other people, but his most hostile critic cannot say that the Society has not prospered during his editorship.

In Keynes own estimation of his editorial performance, he apparently claimed that he “Never rejected what deserved publishing; have published much that wasn’t.” Moggridge also reports a comment from Keynes to Edwin Cannan on 5 January 1934:

Of course, I print quite a number of articles which in my personal opinion are not up to much, but I have to compromise as best I can between those which I fancy myself on their merits and those which, on one ground or another, have some sort of claim to appear. I feel much clearer, however, about the de-merit of the articles I reject than I do about the merit of most of those which are included. I have always tried to find space for anything which seemed to have a claim of any substantial sort and the somewhat numerous articles which I reject would, I declare, make a shocking show on any standard, if they were to be assembled.

As one might expect, what I do as Managing Editor of JEP is in many practical ways a quite different set of tasks from what Keynes did when he edited the EJ. After all, the EJ relied mostly on pickng and choosing among the submissions, while the JEP relies mostly on commenting and editing on solicited papers. But there are also basic differences in process.

In particular, JEP was started in 1986 with the idea of taking advantage of this newfangled technology called a “floppy disk,” where authors could actually send us a Federal Express package with the disk. Next, we would write up comments, which for me also included doing a hands-on edit of the paper for length and clarity. We would then Fed-Ex the floppy disk back to the author, who could revise further, before mailing the floppy disk back to us. We even sent floppy disks directly to the typesetter, rather than paper copies! In the long-ago days before cheap photocopying, there was often literally one copy of a given paper in circulation–with usually a carbon copy saved up by the author. That single copy then needed to be circulated to editor and reviewer, and was perhaps even marked up by hand before going back to the author for revisions. Back in 1986 when starting JEP, we definitely felt we were on the bleeding edge of technology.
conversableeconomist

Summer 2020 Journal of Economic Perspectives Online

I am now in my 34th year as Managing Editor of the Journal of Economic Perspectives. The JEP is published by the American Economic Association, which decided about a decade ago–to my delight–that the journal would be freely available on-line, from the current issue all the way back to the first issue. You can download it various e-reader formats, too. Here, I\’ll start with the Table of Contents for the just-released Summer 2020 issue, which in the Taylor household is known as issue #133. Below that are abstracts and direct links for all of the papers. I will probably blog more specifically about some of the papers in the next week or two, as well.

______________________________
Symposium: Productivity Advantages of Cities
\”The Economics of Urban Density,\” by Gilles Duranton and Diego Puga
Density boosts productivity and innovation, improves access to goods and services, reduces typical travel distances, encourages energy efficient construction and transport, and allows broader sharing of scarce urban amenities. However, density is also synonymous with crowding and makes living and moving in cities more costly. We explore the appropriate measurement of density and describe how it is both a cause and a consequence of the evolution of cities. We then discuss whether and how policy should target density and why, in practice, the tradeoff between its pros and cons is unhappily resolved by both market and political forces.
Full-Text Access | Supplementary Materials

\”How Close Is Close? The Spatial Reach of Agglomeration Economies,\” by Stuart S. Rosenthal and William C. Strange
This paper considers the attenuation of agglomeration economies. Put another way: how close is close? The paper presents evidence of agglomeration effects operating at various levels of spatial aggregation, including the regional, metropolitan, and neighborhood scales. In fact, agglomeration effects also seem to operate below the neighborhood level, including within buildings and organizations. These effects attenuate, with nearby activity exerting the strongest effects. The attenuation of agglomeration economies has implications for urban spatial structure, the microfoundations of agglomeration economies, and commercial real estate. It also affects the ability of governments and businesses to internalize agglomeration economies.
Full-Text Access | Supplementary Materials

\”Tech Clusters,\” by William R. Kerr and Frederic Robert-Nicoud
Tech clusters like Silicon Valley play a central role for modern innovation, business competitiveness, and economic performance. This paper reviews what constitutes a tech cluster, how they function internally, and the degree to which policy makers can purposefully foster them. We describe the growing influence of advanced technologies for businesses outside of traditional tech fields, the strains and backlash that tech clusters are experiencing, and emerging research questions for theory and empirical work.
Full-Text Access | Supplementary Materials

\”Internal Mobility: The Greater Responsiveness of Foreign-Born to Economic Conditions,\” by Gaetano Basso and Giovanni Peri
In this article, we review the internal geographic mobility of immigrants and natives in the United States in the recent decades, with a focus on the period since 2000. We confirm a continuing secular decline in mobility already pointed out by the existing literature, and we show that it persisted in the post great recession period. We then focus on foreign-born and establish that, on average, they did not have total mobility rates higher than that of natives. However, their mobility response to local economic conditions was stronger than the response of natives in the period from 1980 to 2017. A review of recent research reveals that the higher elasticity of mobility of immigrants to economic conditions is a combination of lower sensitivity to local prices, higher propensity to move in the early years after immigration, and strong economic success of cities that were immigrant enclaves in the 1980s.
Full-Text Access | Supplementary Materials

Symposium on Place-Based Policies

\”Using Place-Based Jobs Policies to Help Distressed Communities,\” by Timothy J. Bartik
Place-based jobs policies seek to create jobs in particular local labor markets. Such policies include business incentives provided by state and local governments, which cost almost 50 billion USD annually. The most persuasive rationale for these policies is that they can advance equity and efficiency by increasing long-term employment rates in distressed local labor markets. However, current incentives are not targeted at distressed areas. Furthermore, incentives have high costs per job created. Lower costs can be achieved by public services to business, such as manufacturing extension, customized job training, and infrastructure. Reforms to place-based jobs policies should focus on greater targeting of distressed areas and using more cost-effective policies. Such reforms could be achieved by state and local governments acting in their residents\’ interests or could be encouraged by federal interventions to cap incentives and provide aid to distressed areas.
Full-Text Access | Supplementary Materials

\”Place-Based Policies and Spatial Disparities across European Cities,\” by Maximilian v. Ehrlich and Henry G. Overman
Spatial disparities in income levels and worklessness in the European Union are profound, persistent and may be widening. We describe disparities across metropolitan regions and discuss theories and empirical evidence that help us understand what causes these disparities. Increases in the productivity benefits of cities, the clustering of highly educated workers and increases in their wage premium all play a role. Europe has a long-standing tradition of using capital subsidies, enterprise zones, transport investments and other place-based policies to address these disparities. The evidence suggests these policies may have partially offset increasing disparities but are not sufficient to fully offset the economic forces at work.
Full-Text Access | Supplementary Materials

Symposium on Cities in Developing Countries

\”Urbanization in the Developing World: Too Early or Too Slow?\” by J. Vernon Henderson and Matthew A. Turner
We describe patterns of urbanization in the developing world and the extent to which they differ from the developed world. We consider the extent to which urbanization in the developing world can be explained by conventional models of spatial equilibrium. Despite their relative poverty, developing world cities are relatively highly productive and often provide good access to safe water, improved sanitation, schooling, and inoculations. In some parts of the world, they are home to a surprisingly small number of factory workers and a surprisingly large number of farmers. Developing world cities seem to do less well at protecting their residents from lifestyle diseases and crime, their female residents from domestic violence, and their children from illness. In thinking about these facts, we note that one strand of the literature focused on structural transformation has suggested that urbanization in the developing is occurring \”too early,\” while another strand argues that urbanization is occurring \”too slow\” to be consistent with conventional models of spatial equilibrium. Despite many differences between developing and developed world cities, our new results combined with those in the literature suggest that models of spatial equilibrium can be adapted as a useful guide to understanding the urbanization process in the developing world.
Full-Text Access | Supplementary Materials

\”Urban-Rural Gaps in the Developing World: Does Internal Migration Offer Opportunities?\” by David Lagakos
This article provides an overview of the growing literature on urban-rural gaps in the developing world. I begin with recent evidence on the size of the gaps as measured by consumption, income, and wages, and argue that the gaps are real rather than just nominal. I then discuss the role of sorting more able workers into urban areas and review an array of recent evidence on outcomes from rural-urban migration. Overall, migrants do experience substantial gains on average, though smaller than suggested by the cross-sectional gaps. I conclude that future work should help further explore the frictions—in particular, information, financial, and in land markets—that hold back rural-urban migration and may help explain the persistence of urban-rural gaps.
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Articles

\”How You Can Work to Increase the Presence and Improve the Experience of Black, Latinx, and Native American People in the Economics Profession,\” by Amanda Bayer, Gary A. Hoover and Ebonya Washington
Recently in economics there has been discussion of how to increase diversity in the profession and how to improve the work life of diverse peoples. We conducted surveys and interviews with Black, Latinx and Native American people. These groups have long been underrepresented in the economics profession. Participants were at various stages along the economics career trajectory, or on the trajectory no longer, and used their lived experience to reflect on what helps and hurts underrepresented minorities in economics. We heard a few consistent themes: bias, hostile climate, and the lack of information and good mentoring among them. Respondents\’ insights and experience point toward action steps that you can take today to increase the presence and improve the work life of underrepresented minorities in the economics profession.
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\”Facts and Myths about Misperceptions,\” by Brendan Nyhan
Misperceptions threaten to warp mass opinion and public policy on controversial issues in politics, science, and health. What explains the prevalence and persistence of these false and unsupported beliefs, which seem to be genuinely held by many people? Though limits on cognitive resources and attention play an important role, many of the most destructive misperceptions arise in domains where individuals have weak incentives to hold accurate beliefs and strong directional motivations to endorse beliefs that are consistent with a group identity such as partisanship. These tendencies are often exploited by elites who frequently create and amplify misperceptions to influence elections and public policy. Though evidence is lacking for claims of a \”post-truth\” era, changes in the speed with which false information travels and the extent to which it can find receptive audiences require new approaches to counter misinformation. Reducing the propagation and influence of false claims will require further efforts to inoculate people in advance of exposure (for example, media literacy), debunk false claims that are already salient or widespread (for example, fact-checking), reduce the prevalence of low-quality information (for example, changing social media algorithms), and discourage elites from promoting false information (for example, strengthening reputational sanctions).
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\”Venture Capital\’s Role in Financing Innovation: What We Know and How Much We Still Need to Learn,\” by Josh Lerner and Ramana Nanda
Venture capital is associated with some of the most high-growth and influential firms in the world. Academics and practitioners have effectively articulated the strengths of the venture model. At the same time, venture capital financing also has real limitations in its ability to advance substantial technological change. Three issues are particularly concerning to us: 1) the very narrow band of technological innovations that fit the requirements of institutional venture capital investors; 2) the relatively small number of venture capital investors who hold and shape the direction of a substantial fraction of capital that is deployed into financing radical technological change; and 3) the relaxation in recent years of the intense emphasis on corporate governance by venture capital firms. While our ability to assess the social welfare impact of venture capital remains nascent, we hope that this article will stimulate discussion of and research into these questions.
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\”Recommendations for Further Reading,\” by Timothy Taylor
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