Tyler Cowen: belief

Transcript context

…That’s why I picked Ethiopia, because in a sense, they have. Again, they have their own path. But the thing is, their own path becomes so particular. I’m not saying that good policymaking is not feasible because we have lots of examples of good policymaking and lots of examples of bad policymaking, actually. But the good policymaking is so varied that at the scientific level, it becomes very quickly “Good things are good.” Because the path of Ethiopia — even the steps they had to take to carve out a place in international trade, for example, is very different from what a country like China had to do, just by virtue of China existing, et cetera, et cetera. I’m certainly not saying that good policymaking is not feasible. I’m just saying that we haven’t found — it seems to me, empirically — we haven’t found a series of prescriptions that we could give to countries, saying, “If you do this thing, it’s going to work out.” Similarly, now growth is slowing down in India. I don’t think . . . at least, I wouldn’t know what to tell them to do, what they are supposed to do now. I don’t think they themselves know. So that’s what has turned out to be difficult empirically. This is not me, actually. I’m not a macroeconomist, so I would not have the arrogance to say that we haven’t figured it out. But that seems to be what the macroeconomists have . . . the conclusion they’ve come to is they haven’t gotten a set of recommendations, even context-dependent recommendations, that they can run with. As you well know, there’s a number of papers that suggest human capital is a factor of overriding importance for economic growth. I think Mankiw, Weil, and Romer attribute 80 percent of growth to human capital. What’s your view of those theories? It seems as a gross accounting matter — which is, what’s the correlation between how much of the growth is explained by differences in human capital across country? — it does seem to be that human capital plays a big role, even though Mankiw, Weil, and Romer figures have gone down since then with the work of Khazali, for example. But it is important. Some of it is correlation, rather than cause and effect, that countries that have been good at increasing education have been good at doing other things. Also, countries that have grown fast also generate an incentive to invest in education. That’s an old paper by Bils and Klenow that nicely makes this point. But the bottom line is that I’m totally ready to believe that human capital, broadly defined — education in particular — plays a big role in growth. To tell you the truth, even if it didn’t, it seems it’s not a big bet to invest in education anyway because worse comes to worst, people would be educated, which seems to be a good end in itself. It’s not just a means to an end. I will totally agree with you that human capital is super important. In fact, it is what I think was the original impulse of Michael Kremer when he worked on the first RCTs. He was coming from growth, and he thought, “Wow, human capital plays a big role in growth.” Now, what’s human capital? Once you said education is important, you have to start unpacking this question. Is it years of education? Well, not really. Clearly if the kids learn nothing, that’s not so useful, so it has to be learning. Then you can start asking yourself questions on whether it’s cognitive skills or noncognitive skills or a mix of the two. Heckman is telling us that noncognitive skills is such a very important part of human capital. And then you want to ask yourself the question, how do cognitive skills get produced? How do noncognitive skills get produced? And that’s what willy-nilly lands you to much more specific policy advice and hence, potentially, things that you can start running RCT on.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.