Nathan Nunn: uncertainty

Transcript context

…But doesn’t this get us back to some problems with the persistence idea? Korea, like most places, has multiple pasts. It has a past of extreme poverty, a past of extreme sophistication. You can always pick out one or the other path and explain, through persistence, a present. You could pick out the past of extreme poverty and explain North Korea as a persistence of that. But ideally, you want to know if there’s persistence on net in the whole dataset, and then you’ve got to line up all the pasts. But the Jeff Sachs point that we’re just not very good at predicting which countries will do well next — shouldn’t that just make us outright skeptical about persistence? If you go back to 1960, who predicted then which countries would do well? Even knowing ex post which ones did well, it’s very hard to find measures that will predict that, even knowing the winners. I think one important thing here is thinking about levels or growth rates. Jeffrey Sachs’s statement, it sounds like, is about growth rates. We can’t predict which is going to be the next country that’s going to grow successfully over the next 10 years, though I don’t know if that’s true, but let’s say that that’s true. If you had money, I’m sure you would bet on certain countries having a higher level of income over 10 years from now than others. I think we have a pretty good sense of which countries will have higher levels of income. So the persistence isn’t about growth rates. I don’t know of any actual studies that look at growth rates in the past and growth rates today because you’re going to have convergence and all these sorts of things. But it’s about levels. The way you think of it in the Solow model, it’s underlying characteristics which are going to change the steady-state level of per capita income in different societies. Hopefully that makes sense. I think we can predict which society is going to have higher levels of per capita income 20 years from now. Last question. This is a quotation from you. I’ll read it off. “I’ve done a lot of different jobs, working at a range of places, including automotive stores (stock boy), newspaper (editor/photographer), freight company (laborer), paint factory (filled paint and made paint), ski hill (worked in the office), book publisher (laborer), and private tutoring.” How has that shaped your worldview? Not everyone who teaches at Harvard has that background, right?…

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