Michael Kremer: recommendation

Transcript context

…That’s remarkable. I didn’t know that was allowed. Yes, I know. We have to go through certain precautions, but I’m speaking to you from my new office at the University of Chicago. Chicago, obviously, has a wonderful tradition in economics. One of the things that I was very excited about was to talk to President Zimmer here, president of the University of Chicago. You talked about experience as a founder, and I’ve talked about technological change and the need for changes in technology, by which I mean gadgets, but I don’t just mean gadgets. I mean institutional change, innovation, and policies as well. I think what we’ve seen is, there’s a lot of potential to generate that. University of Chicago made a big commitment to development economics in general. I hope we’ll be hiring more people over time, and certainly the slots will be there for that, and to create a development innovation lab, which will use the tools of economics to create practical innovations that can improve people’s lives, and to work closely with partners to develop and refine and iterate on those innovations so that they can be scaled up. What I’ve been seeing in my own research, what’s true with a lot of research of J-PAL Poverty Action Lab at MIT, and what I’ve seen in the USAID’s Development Innovation Ventures is, when you invest in that type of technology — anytime you’re investing in innovation, most innovations don’t succeed. They don’t take off, but you get a few. If you’re a venture capitalist and you invest in a Google or Facebook, it’s fine if a lot of your other investments don’t work. I think the same thing in investing in development and innovation. When we did an analysis of the rate of return, we tried to get a lower bound on the rate of return for the early investments at Development Innovation Ventures at USAID, and we’re getting a 5:1 lower bound. It’s a super conservative lower bound. I think we’ll have a much higher rate in our next iteration of this. Just to be clear what a lower bound this is, we had 41 innovations in our early portfolio. We couldn’t quantify the benefits for all of them, but of the 9 or 10 that reached over a million users, we could quantify the benefits for 4. If you take the benefits of those 4 and set them against the cost of our investments in all 41, the ratio is 5:1. And I think that that will grow over time. I just think there’s a huge, huge reward to invest in innovation. There’s also a scientific reward. University of Chicago’s making a big commitment in that area, and that’s a big part of why I came here. You were tempted by the ability to found a new institution?…

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