What does PG stand for? I did intend this feedback to be very positive. :)
I am claiming that causing economic improvements today could affect the future in 200+ years. The economic history literature provides many examples of events a few hundred years ago
that cause surprisingly long-term, large, and diffuse effects today. That includes effects on governance, culture, and other aspects of “institutions”; improving these could plausibly reduce
existential risk. I see this historical research as a proof of concept that very long-term effects might be possible, and I would love to see more economic historians and development
economists trying to figure out whether modern changes have such long-term effects, and how.
Here’s some reading suggestions; if you want to look into this yourself, good keywords are “economics” plus one of “persistence,” “institutions,” or “path dependence”. Full disclosure, I have not looked into this stuff since 2013.
Papers in the vein of “long-ago economic events had a big effect on the present”:
“The Colonial Origins of Economic Development”, Acemoglu, Johnson, and Robinson (2001),
has been cited 14k . The authors argue that the way countries were colonized
in the early 1800′s had a large effect on per capita income today, because the colonists
set up varying political institutions, such as property rights rules, which were highly persistent and affected economic development. Their book Why Nations Fail draws on this paper and others to argue that good economic conditions and good “institutions” tend to
reinforce each other, and so do bad ones. (By “institutions”, they mean “the rules of the game”, such as democracy or property rights.)
A blog post with a good discussion: “Last weekend I attended a conference at Brown University on ‘Deep-Rooted Factors in Economic Development’. [....] Nearly all of the papers gave
evidence that economic shocks or initial differences in economic outcomes dissipate
very, very slowly, if at all.” The same blog has the series The Skeptic’s Guide to Institutions,
a readable overview of the institutions literature, although (in the author’s words) “unfair, deliberately.”
“The Long Term Effects of Africa’s Slave Trades”, Nunn 2008. He says “I find a robust negative relationship between the number of slaves exported from a country and current economic performance” and that relationship is causal. In a later paper, he explores trust as a mechanism, saying “most of the impact of the slave trade is through factors that are internal to the individual, such as cultural norms, beliefs, and values.”
“The Persistent Effects of Peru’s Mining Mita”, Dell (2010) shows that a forced labor system in Peru from 1573 to 1812 lowered present-day household consumption by 25% and increased childhood stunting by 6%. She also attributes the persistence to institutions.
It sounds promising for people working on economic development that past events can have huge effects on the long-term future, but there are some caveats...
Economic history projects do not typically have the randomized controlled trials, high-quality data, or huge data sets used in other branches of economics, making the “persistence” literature less credible. “Colonial Origins” has been controversial on empirical grounds
Even if these papers are right that really bad things in the past had persistent effects, that doesn’t imply that doing good things things today will have persistent effects. “Critical junctures” may be in the past, an idea that Acemoglu et. al. (2008) touch on.
We should not expect a lot of persistence if there is an an overall trend towards convergence, where poorer countries tend to grow faster.
At the country level, poverty just doesn’t seem to be very persistent. See “Do Poverty Traps Exist?”.
My personal view is that if we improve present-day global health and development, we probably won’t change the far future much, but there’s a decent chance we would. There is empirical proof-of-concept backing for “persistence” and theoretical justification in the form of models of multiple equilibria and self-reinforcing cycles. I’d love to see more development economists and economic historians studying the conditions needed for persistence.
What does PG stand for? I did intend this feedback to be very positive. :)
I am claiming that causing economic improvements today could affect the future in 200+ years. The economic history literature provides many examples of events a few hundred years ago that cause surprisingly long-term, large, and diffuse effects today. That includes effects on governance, culture, and other aspects of “institutions”; improving these could plausibly reduce existential risk. I see this historical research as a proof of concept that very long-term effects might be possible, and I would love to see more economic historians and development economists trying to figure out whether modern changes have such long-term effects, and how.
Here’s some reading suggestions; if you want to look into this yourself, good keywords are “economics” plus one of “persistence,” “institutions,” or “path dependence”. Full disclosure, I have not looked into this stuff since 2013.
Papers in the vein of “long-ago economic events had a big effect on the present”:
“The Colonial Origins of Economic Development”, Acemoglu, Johnson, and Robinson (2001), has been cited 14k . The authors argue that the way countries were colonized in the early 1800′s had a large effect on per capita income today, because the colonists set up varying political institutions, such as property rights rules, which were highly persistent and affected economic development. Their book Why Nations Fail draws on this paper and others to argue that good economic conditions and good “institutions” tend to reinforce each other, and so do bad ones. (By “institutions”, they mean “the rules of the game”, such as democracy or property rights.)
A blog post with a good discussion: “Last weekend I attended a conference at Brown University on ‘Deep-Rooted Factors in Economic Development’. [....] Nearly all of the papers gave evidence that economic shocks or initial differences in economic outcomes dissipate very, very slowly, if at all.” The same blog has the series The Skeptic’s Guide to Institutions, a readable overview of the institutions literature, although (in the author’s words) “unfair, deliberately.”
“The Long Term Effects of Africa’s Slave Trades”, Nunn 2008. He says “I find a robust negative relationship between the number of slaves exported from a country and current economic performance” and that relationship is causal. In a later paper, he explores trust as a mechanism, saying “most of the impact of the slave trade is through factors that are internal to the individual, such as cultural norms, beliefs, and values.”
“The Persistent Effects of Peru’s Mining Mita”, Dell (2010) shows that a forced labor system in Peru from 1573 to 1812 lowered present-day household consumption by 25% and increased childhood stunting by 6%. She also attributes the persistence to institutions.
It sounds promising for people working on economic development that past events can have huge effects on the long-term future, but there are some caveats...
Economic history projects do not typically have the randomized controlled trials, high-quality data, or huge data sets used in other branches of economics, making the “persistence” literature less credible. “Colonial Origins” has been controversial on empirical grounds
Even if these papers are right that really bad things in the past had persistent effects, that doesn’t imply that doing good things things today will have persistent effects. “Critical junctures” may be in the past, an idea that Acemoglu et. al. (2008) touch on.
We should not expect a lot of persistence if there is an an overall trend towards convergence, where poorer countries tend to grow faster.
At the country level, poverty just doesn’t seem to be very persistent. See “Do Poverty Traps Exist?”.
My personal view is that if we improve present-day global health and development, we probably won’t change the far future much, but there’s a decent chance we would. There is empirical proof-of-concept backing for “persistence” and theoretical justification in the form of models of multiple equilibria and self-reinforcing cycles. I’d love to see more development economists and economic historians studying the conditions needed for persistence.
Thanks so much, I’ll check these links out!
(I had abbreviated “Probably Good” to PG)