Michael Kremer on Economists as Founders | Conversations with Tyler
In a riveting conversation with Tyler, Nobel laureate Michael Kremer delves into the intersection of economics and entrepreneurship, his work on global poverty, and his experience as a founder of multiple non-profits.
He explores the relationship between the experimental method in economics and the skills required to establish organizations.
Concept of Advanced Market Commitments
Advanced market commitments, where the public sector commits to buying a certain quantity of a product in advance, can encourage innovation.
However, their effectiveness may be limited for innovations that are not known to be needed until they are developed.
Significance of Deworming Programs
Deworming programs in regions like Kenya and India have substantially improved health, education, and living standards for millions.
However, the full potential of these programs is often hindered by political and behavioral challenges, which need to be addressed to maximize their benefits.
Boosting R&D with Advanced Market Commitments
Advanced market commitments could potentially boost R&D incentives in a wide variety of fields, not just vaccines.
Innovators often capture only a small fraction of the social value of their innovations, and boosting R&D incentives could help to address this issue.
Education in Developing Countries
In developing countries, curricula are often set at a high level, leaving many children behind due to various disadvantages.
Implementing remedial education systems or technology-aided systems that adapt to the child’s level can significantly improve educational outcomes.
Impact of Merit Scholarship Programs
Merit scholarship programs in developing countries can significantly impact school attendance and motivation.
For instance, a program in Kenya that covered school fees for students who performed well in sixth grade led to increased effort from both students and teachers.
Experimental Method and Entrepreneurship
The experimental method in economics, which involves testing hypotheses and learning from results, shares a strong correlation with the skills required to establish organizations.
Both processes necessitate a willingness to take risks, learn from failures, and adapt strategies based on what works.
Role of Technological Change in Economic Growth
Technological change is a fundamental driver of economic growth.
It is crucial for economists to focus on institutions that can enhance the rate of technological change and direct it towards addressing human needs.
Experimenting with new approaches to intellectual property and research funding institutions could potentially accelerate technological advancement.
Potential of Artificial Intelligence
Artificial intelligence (AI) holds the potential to create a virtuous cycle of technological advancement.
However, the focus should be on controllable factors, such as research funding and intellectual property institutions, as the impact of AI is still speculative.
Peer Effects on Education
Peer effects can significantly impact education.
Creating incentives for students to help each other can foster a culture of mutual support and achievement, leading to improved educational outcomes.
Cultural Aspects of Education
In some cultures, it’s not considered cool to do well in school.
Implementing a system of incentives and rewards could help address this issue and improve educational outcomes.
One insight is, from the study of growth, is a fundamental driver of growth in the long run is technological change. And so I think one thing that we economists should be thinking about more is what are the institutions to increase the rate of technological change and to try to direct it to human needs. – Michael Kremer
There’s just something fundamental about the progress of technology which means that it’s getting harder over time to have a constant growth rate of technology. We invent more technology, but we don’t increase the growth rate over time. – Michael Kremer
Understanding Cultural Context
Understanding the cultural context in which education and development take place is crucial.
This includes understanding local customs, traditions, and attitudes towards education.
Changing Patterns in Economic Growth
Since the 1990s, there has been a shift in economic growth patterns, with poor countries catching up to rich ones.
This global upliftment from poverty is a significant development.
However, the slowing down of total factor productivity and rates of innovation could potentially hinder future growth.
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