Tyler Cowen: belief

Transcript context

…Another example here is this is something your colleague Alex Tabarrok talks about a lot, is that innovators don’t internalize most of the gains they give to society. So here’s another example. The entrepreneur compared to one of his first employees, is he that much better off for taking the extra risk and working that much harder? What does this tell us? It’s a marvelous insight that we’re actually more risk-seeking than it’s selfishly good for us. That was Reuven Brenner’s claim in some of his books on risk. Again, I think you have to distinguish between different parts of the distribution. So it seems there’s a very large number of people who foolishly start small businesses. Maybe they overly value autonomy when they ought to just get a job with a relatively stable company. So there, part of the thesis is correct, and I doubt if there’s really big social returns to whatever those people do, even if they could make a go of it. But there’s another part of the distribution, people who are actually innovating or have realistic prospects of doing so. Where I do think those social returns are very high. Now, that 2% figure that’s cited a lot, I don’t think it’s really based in much real. It’s maybe not a crazy seat of the pants estimate, but people think like, oh, we know it’s 2% and we really don’t. So look at Picasso, right? He helped generate cubism with Braque and some other artists. How good is our estimate of Picasso’s income compared to the spin-offs from Picasso? We just don’t really know. Right? We don’t know. It’s 2%. It could be 1%, it could be 6%. How different do you think it is in art versus, I don’t know, entrepreneurship versus different kinds of entrepreneurship? There are different industries there as well, right?…

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