Growthology

A Few Thoughts on Tyler Cowen's New Book

[Another guest post from Charles Johnson, one of our summer interns.]

Tyler Cowen's new book, Create Your Own Economy: The Path to Prosperity in a Disordered World is one of the more engaging books I've read recently. It rests comfortably in the niche between books about behavorial economics and social technology. Careful readers of this blog will note that Tyler Cowen was a participant in the Kauffman Economic Bloggers Forum in February. We prepared videos of the participants. You can see him on video discussing blogging here. Cowen is a seasoned blogger at his blog, Marginal Revolution. 

The thesis for Cowen's new book is that technology is allowing many of us to become autistic-like in our processing of information and consumption of entertainment and culture. We've moved into a "bits" culture where we can constantly be orienting and re-orienting our culture. This remix culture is evident in everything from iPods, to blogs, to delicious, and to Facebook. In a way, I took this part of the book as a kind of demonstration that we can all become renaissance men because the costs of such renaissance have plummeted. We don't need Jefferson's library when we have a worldwide web with easy information at our fingertips. 

Cowen's book can be read as an appeal, that, for the sake of society at large and the individuals in particular, we should embrace neurodiversity, or the different ways in which our brain is wired. (You can hear him discuss the book in an interview with John J. Miller of National Review here.)

I was struck by this paragraph about autism and the foundation of companies. We know that dyslexics tend to have high rates of firm creation. (See here for more details). But what about autistics? 

Here Cowen points to the work of Simon Baron-Cohen, who is a researcher of autism at the University of Cambridge. (Simon Baron-Cohen created an AQ test -- or autism quotient -- that you can take here to see if you might have autistic-like tendencies.) Cowen recounts that Baron-Cohen believes that there may be a lot more autistic high achievers than most people realize. On p. 24-25, Cowen writes about some of these high achievers. [The bolding is mine.] 

Craig Newmark, founder of the web forum Craigslist, has written on his blog that his history as a "recovering nerd" is connected to Asperger's. It is perhaps no accident that autistics are known for their attachment to lists as a means of processing, recording, and ordering knowledge. Bram Cohen, creator and former CEO of BitTorrent, also describes himself in terms of Asperger's syndrome. He founded the company at age twenty-nine and BitTorrent has been a pioneer in exchanging digital information over the web; one of his key insights was how BitTorrent could break up files into smaller bits and send through the bits rather than the whole file at once. Cohen mastered three programming languages by the age of sixteen and his work on BitTorrent is regarded as brilliant. The best-known example of an autistic high achiever is Temple Grandin, a woman who has pioneered commonly used improvements in animal treatment and slaughterhouses; her unique cognitive perspective has helped her understand when animals are afraid and how they can be made to feel more secure. 

I've yet to see a scientific paper or serious clinical discussion of the autistics who hold political office, work in Hollywood, start web 2.0 companies, or run major U.S. corporations or hedge funds.

If Baron-Cohen is right that there is the huge reserve of highly successful autistic achievers, I wonder why there hasn't been some kind of online, Craigslist-type sorting website that seeks to place autistic people with the things in which they specialize or some kind of wider texting that seeks to identify and help autistic people find their niches.  

I came upon this idea when I was spending time with my next door neighbor, who has Asperger's. He has an obsession with clocks and with taking them apart and putting them back together. Imagine the societal benefit if he could be placed with a clock making company. 

Indeed, if I could fault Cowen's book for one thing, it's that it doesn't take the ideas he's advocated and move towards policy. Still, perhaps policy is not one of those things for which Dr. Cowen is wired and I ought to respect his neurodiversity. 

When Education Becomes an Economic Burden

In their new book and in their prior work, Claudia Goldin and Lawrence Katz have convincingly demonstrated the enormous boost the U.S. economy received in the last sixty years from increasing investments in education. For the last two decades, anxiety has risen that the United States has reached some sort of education plateau or decline and that economic growth will accordingly suffer.

A new McKinsey report, highlighted by Thomas Friedman the other day, appears to prove that this is indeed the case. Had the United States kept pace with our own prior achievements and more recent stars like Finland and South Korea, our GDP today would be $1 to $2 trillion larger. That might seem like a drop in the bucket in a $14 trillion economy, but how much has the Federal Reserve spent thus far on its various firefighting moves? Oh, right, $1.2 trillion. And bailouts? Um, $1 to $2 trillion. 

OK, so what: surely we can make all this up through faster growth? Well, right, about that, see economic growth has become increasingly dependent on education over the past three decades. That knowledge-based economy everyone's always talking about? It's for real, and it requires concomitant investments in not just knowledge creation, but the ability of people to codify and, most importantly, use that knowledge. I just happened to be reading Dominique Foray's fabulous Economics of Knowledge when I ran across this McKinsey report. The juxtaposition is like finding out when McDonald's breakfast ends: "total mind blow." 

I'm not usually disposed to let one report or one apparent trend scare me, but considering the nature of knowledge in the abstract, the history of American education and growth, and the sorry state we find many of our schools in today--well, it's a tad daunting.

I make no claims to be an education expert, and I know I keep coming back to this, but I simply can't help thinking about the "high school movement" with regard to these issues. Goldin and Katz are again the authorities here. The nature of knowledge, in general terms, hasn't really changed in the last century, but it's economic importance, the way we use it, and the way we propagate it, have changed radically. This should have clear implications for our educational system.

What those are, I'm not in a position to say, but it becomes more obvious every day that we need some serious institutional innovation in the realm of education, akin to the rise of secondary schools that arose with the industrial economy. Technology has a role to play here; alternative models like KIPP, too.

Any brilliant ideas out there?

Then Again, No Thanks

Interesting developments in New York City today: teachers at the KIPP Infinity and Academy schools have asked that they be dissociated from the United Federation of Teachers, the union. From the press release:

We, the undersigned teaching staffs of KIPP Academy and KIPP: Infinity, feel the success we have attained to this point in our schools is largely because of the close relationship between all those interested in our students' well-being, from students to families to school staff.  While we have nominally been unionized, the collective bargaining agreement has never been a prominent factor in deciding what is best for our students, our team, and our family.  Rather, we solve problems using communication among staff members and working collaboratively with administration to best serve the needs of our students and families.  We have found that this method of problem solving has fit our situations well, and we plan to continue following this model of open, positive communication among students, families, and staff in the future. 

KIPP schools are on the cutting edge of education all over the country, and these two schools have been among the best-performing schools in New York City. Given that one hundred percent of the teachers signed this petition, this could get very interesting. As I said the other day, we seem to be either on the cusp of or in the midst of a vast education transformation. The thing about such shifts, however, is that they rarely occur along the conventional avenues of power and activity.

Short-term Backstop, Long-term Transformation

Out here in suburban Kansas, enrollment at the local community college has been increasing: Johnson County Community College (a fantastic institution, by the way) is experiencing its highest totals ever for a spring semester. The most popular fields of study? Health and entrepreneurship.

That, in and of itself, is unsurprising: higher education often sees a spike in times of recession. Yet in a larger sense, JCCC and other similar institutions around the country may augur a broader shift in the higher education landscape. At least, I hope they do. Enrollment at JCCC is now around 20,000, comparable to some of the country's best state universities--include continuing education, and the number rises. The school expects to benefit, too, from the Johnson County Education and Research Triangle.

In the early decades of the twentieth century, the "high school movement" transformed the relationship between the citizenry, the education system, and the emerging industrial economy. Undoubtedly, a similar transformation is taking place today--community colleges like JCCC, the increasing use of technology in education, completely new ways of teaching, etc etc.

The nature of these transformations is such that, while the federal government will play an unavoidably large role (just given its size and sway in education these days), we won't even be able to coherently outline the future of education until it's already upon us. The only things we can say for sure is that it will be a far more structurally diverse system than today, and it will be much more substantive than simple calls for more money.

This Sounds Familiar . . .

"When you go to the United States or Europe, there isn't much opportunity. You are going to get a menial job, with barely enough to send home. But here we don't have jobs. We set ourselves up."

That's one of the thousands of African immigrants generating massive amounts of entrepreneurial energy in Guangzhou, China.

There's been a lot of noise about the U.S. losing (and turning away) high-skilled immigrants, a highly unfortunate turn of events. Just as important, however, are the thousands of migrants who probably wouldn't qualify as high-skilled but who have been no less important to the American tradition of entrepreneurship. 

Leadership and Growth

In Why Globalization Works, his fabulous book on political economy, Martin Wolf quotes Nobel-laureate Kenneth Arrow: "truly among man's innovations, the use of organization to accomplish his ends is among both his greatest and his earliest."

Numerous elements, and the innumerable interactions among them, go into generating economic growth. Some, like population growth and demographic change, contribute to what Joseph Schumpeter called the "circular flow." Others, such as technological innovations, war, and institutional change, are more discontinuous in their impact and, at least according to some schools of thought, are what really drive progress.

Per Arrow above, it seems logical that the quality of a society's organizations--their effectiveness, their structure, their growth--should also be an important growth factor. To the extent this is true, it would mean that the way these organizations are managed or lead is a key ingredient in growth. 

This is what an astute colleague pointed out to me yesterday, and that, therefore, a site about economic growth should also cover leadership. According to her, our economic future depends on our ability to produce effective leaders and that the extant leadership literature is of, um, marginal relevance. 

Let this post thus initiate a continuing dialogue on the subject of leadership and growth. I don't quite know what that means yet, but it seems fruitful, so I invite Tim and Bob and readers to weigh in. Conjecturing, this dialogue might end up covering Max Weber, philosophy, Warren Bennis, behavioral economics, and much, much else.

Weight Loss (Aversion)

Economists and psychologists are making amazing discoveries, and one of the most interesting is the cornerstone of "prospect theory" based on research by Nobel prize recipients Kahneman and Tversky. This theory suggests that people tend to have a greater aversion to losses than they have attraction to making gains. And now we see more policies and programs rooted in good theory.

To wit, if someone paid you to lose weight with your own money, would that get you to pump iron? Beter phrased, what if they withheld payments if you gained weight, would that affect you? The latest research says yes.

"[Researchers] said weight-loss programs that reward people with money -- and remind them of the cash they stand to lose if they fail -- provided a powerful incentive to lose weight compared with more conventional approaches.

. . .

[Volpp the main researcher] said many weight-loss programs fail because people are being asked to make sacrifices now for rewards in the future.

"We wanted to create a reward system which gave them rewards in the present," said Volpp, whose study appears in the Journal of the American Medical Association.

Volpp and colleagues studied two kinds of incentive programs for weight loss. One was a lottery-based design in which participants played a lottery and were allowed to collect their winnings if they met their weight-loss target.

The lotteries were running daily, and people were told what their winnings would have been if they had met their weight-loss target.

"There is a very strong sense of loss aversion," the theory that people are highly motivated to avoid losses, Volpp said in a telephone interview.

"The idea was to create a mechanism where loss aversion would help drive people's motivation," he said.

Ph.D. migration reveals innovation patterns

This may be old news, but a paper by Dr. Paula Stephan in NBER's Innovation Policy and the Economy, Vol 7 (2006) just came to my attention. I count at least two very interesting observations derived from the analysis of Ph.D. migration patterns in the U.S.

1. Confirmation of what I call the Broadway Joe Problem. (i.e. QB Namath was not from New York)

Indeed, seven of the top 20 institutions education PhDs to work in industry are located in the Midwest. ... The state stay rate for PhDs working in industry is now 37 percent. ... Purdue's PhDs now overwhelmingly leave the state [of Indiana] to take employment elsewhere .... It is risky as a nation to continue to rely on the "kindness" of Midwestern states to publicly educate the high-quality S&E workforce that heads out of state upon graduation.  ... [A]lmost one out of ten new PhDs going to work for industry heads to San Jose.

2. R&D focus underemphasizes entrepeneurial innovation.

Only ten of the top 20 R&D firms appear on the top 20 hiring list.

Finally, our data suggest that small firms play a larger role in innovation than R&D data would suggest. For example, while the top 200 R&D firms expend more than 70 percent of all R&D in the U.S., they hire only 39 percent of all new PhDs.

Pay Teachers More!

We have an incessantly shallow debate about education in America - one side calls for more money, the other calls for structural reform. Whatever you believe, one central breakdown in public schools is the quality of teachers: bad ones can stay indefinitely while good ones often (not always) get frustrated and leave the profession. The heart of the problem is articulated in this New York Times essay by teacher Christine Gralow:

When I see promising teaching colleagues quit because they simply can’t afford to live in Manhattan on their salaries, and I see staff shortages and inexperienced teachers at the city’s highest needs schools, it’s clear a new model is needed. So far this school year, I’ve seen one good teaching colleague quit to pursue a higher paying job. Teachers realize we’re not going to become wealthy when we choose this profession, and low salaries may in some way be a test for those truly committed to the job, but there’s no doubt that low pay also keeps a lot of well-educated, talented Americans out of the classroom. Good teachers also regularly leave the city for higher paying jobs in nearby counties, and low teacher pay has created serious teacher shortages in math, science and special education, particularly in low-income communities.

Christine's essay is inspired by a wonderful initiative to pay teachers $125,000 at a new charter school in New York. The principal will make just $90,000 and there will be no vice principal. So refreshing.

After visiting the school’s Web site and reading a New York Times article about the school, I realized it was not only legit, but potentially revolutionary in terms of education reform. So this school year, in addition to my regular special education teaching job, I’ve decided to get involved in the creation of this new school.

The Equity Project Charter School (TEP) will open in September 2009 in Manhattan’s Washington Heights community, and it will aim to enroll middle school students at risk of academic failure.

We should remember that if we want to pay teachers more then we have to ask where the money will come from.  What are the opportunity costs? Cutting down on counselors, trainers, district administrative staff is the most likely answer. Are there any examples of schools that have tried the high-pay for teachers approach?

Rhee's education incentives

The mayor of Washington, DC, Democrat Adrian Fenty, appointed a policy innovator to run the DC school system. DC is famous for having some of the worst performing students and schools in the nation, while also spending more per pupil than most other districts. Rhee has overcome huge bureaucratic obstacles to implement some exciting incentive-based reforms:

Last week, D.C. Schools Chancellor Michelle A. Rhee unveiled a pilot program in which middle school students will be paid to meet academic and behavioral goals. Starting in October, 3,000 students -- half of the middle school population -- will be able to earn as much as $100 every two weeks (officials expect the average will be $50 every two weeks) as part of a $2.7 million program being offered with Harvard University. 

Hat tip: WaPo.

My question: Why aren't there more experiments like this?  Whether it works or not, it seems to me that the path to progress in education is having entrepreneurial districts not national standards, or to have empowered teachers not accredited teachers, or to have education markets not education mandates.