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Abstract: We are now in the midst of what will likely be the most serious economic and financial crisis since the Great Depression. This essay considers how we got into this mess, what responsibility government bears in allowing this to happen, and what the history of the Great Depression tells us about how we should go forward.
Financial Crisis, Economic Crisis, Great Depression, New Deal
Abstract: Review of Alan Greenspan, The Age of Turbulence: Adventures in a New World (2007).
Macroeconomics, Monetary Policy
Abstract: This chapter critically analyses contributions to evolutionary game theory by such writers as Robert Trivers, John Maynard-Smith, and Robert Axelrod. It develops four key arguments. First, that the behavioral propensities that manifest themselves in altruistic behavior are empirically relevant, extend to behavior to non-kin, and should be understood to include the passive altruism reflected in failure to harm. Second, that an evolutionary approach emphasizing group or multilevel selection provides a coherent framework for understanding how such traits might have become established in populations, and that existing “explanations” for such behavior do not. Third, that economic models are not necessarily the same as evolutionary models in their implications. In particular, the justification by appeal to evolutionary theory for the standard economic behavioral assumptions is invalid. Finally, that attempts to account for the origin of altruistic behavioral propensities toward non-kin through evolutionary models restricted to individual level selection or, what turns out to be the equivalent, economic models where agents efficiently pursue their own individual self interest, represent journeys down similar intellectual cul-de-sacs.
Altruism, Game Theory, Behavioral Economics, Evolutionary Theory
Abstract: Thomas Schelling was recognized by the Nobel Prize committee as a pioneer in the development of noncooperative game theory and its application to problems of politics and international relations. One of his principal concerns was how a country could engage in successful deterrence. If the assumptions of rationality and common knowledge are taken seriously, however, nuclear adversaries are almost certain to engage in devastating conflict. The history of the last half century falsifies this prediction, and Schelling's Nobel lecture took as its subject the event that didn't occur. Where does this leave us? Schelling's advancement of formal theory has been limited, and his attempted application to nuclear strategy incoherent, requiring appeals to agent rationality and irrationality. Given the conflicting predispositions that govern human action, and the wedge sometimes created between theoretical predictions and behavior, we will be better served, normatively and predictively, by adopting a more empirically oriented behavioral approach.
Game Theory, Deterrence, Nuclear Strategy
Abstract: A variety of scholars with widely differing political and disciplinary orientations continue to be fascinated by the prospect of making endogenous variation or changes in institutional structures through the use of a general model. While sympathetic to the appeal of such a research program, I argue in this paper that this methodological objective is, in the following sense, not attainable. At a minimum, some subset of institutional structures or rules needs to be treated as parametric in a general equilibrium model, and granted the same explanatory status accorded tastes, technologies, and endowments in these models. This proposition is developed through a critical analysis of work representative of this research program: in particular Richard Posner's Economic Analysis of Law (Boston: Little Brown, 1973) and, more especially, Douglass North and Robert Paul Thomas' The Rise of the Western World (London/New York: Cambridge University Press, 1973).
Institutions, legal systems, economic development
Abstract: There is now an emerging consensus that over the course of U.S. economic history, multifactor productivity grew fastest over a broad plateau between 1905 and 1966, and within that period, in the two decades following 1929. This paper argues that the bulk of the achieved productivity levels in 1948 had already been attained before full scale war mobilization in 1942. It was not principally the war that laid the foundation for postwar prosperity. It was technological progress across a broad frontier of the American economy during the 1930s.
Technological Progress, Great Depression, Productivity, TFP
Abstract: This paper considers the productivity impact on the U.S. economy of the period of war mobilization and demobilization lasting from 1941 to 1948. Optimists have pointed to learning by doing in military production and spinoffs from military R and D as the basis for asserting a substantial positive effect of military conflict on potential output. Productivity data for the private nonfarm economy are not consistent with this view, since they show slower TFP growth between 1941 and 1948 than before or after. The paper argues for adopting a less rosy perspective on the supply side effects of the war.
Productivity, War, Economic Growth
Abstract: Over the 1919-1929 period, fluctuations in the value of stock trading on the New York Stock Exchange exercised statistically significant and economically important impacts on the demand to hold cash balances. The marked post-1925 rise in the volume and value of stock trading led to a measurable increase in the transactions demand to hold cash balances, an increase in demand not recognized or seriously discussed by individuals inside or outside of the system. Had it been recognized, it is unlikely that the Fed would have persisted in its antispeculative policies in 1928-1929, policies associated with rises in interest rates and the beginnings of a downturn in real activity in the second quarter of 1929.
Great Depression, Monetary Policy, Stock Trading
Abstract: Institutions affect economic outcomes, but variation in them cannot be directly linked to environmental factors such as geography, climate, or technological availabilities. Game theoretic approaches, based as they typically are on foraging only assumptions, don't provide an adequate foundation for understanding the intervening role of politics and ideology. Nor does the view that culture and institutions are entirely socially constructed. Understanding what institutions are and how they influence behavior requires an approach that is in part biological, focusing on cognitive and behavioral adaptations for social interaction favored in the past by group selection. These adaptations, along with their effects on canalizing social learning, help to explain uniformities in political and social order, and are the bedrock upon which we build cultural and institutional variability.
institutions, economics and biology, group selection, game theory and experimental economics, economics and psychology
Abstract: Prologue to Field, Alexander J. (2001) Altruistically Inclined: The Behavioral Sciences, Evolutionary Theory, and the Origins of Reciprocity. Ann Arbor: University of Michigan Press.
Abstract: A consideration of TFP growth in the United States during the golden age (1948-73) raises two related questions: on the one hand why was it so strong and on the other hand, why were TFP growth rates lower than they were during the Depression years (1929-41)? A continuing downward trend in TFP growth within manufacturing, and its declining share after World War II, help provide answers to the latter question. A persisting productivity windfall associated with the build out of the surface road infrastructure helps answer the former question. By adopting a longer historical perspective, we can move beyond understanding the golden age sui generis, and begin to see it instead as a period reflecting the persistence of trends and developments whose origins are to be found prior to the Second World War.
Productivity, TFP, U.S. Macroeconomic History, Manufacturing, Transportation
Abstract: Between 1890 and 2004, total factor productivity (TFP) growth in the United States has been strongly procyclical, while labor productivity growth has been mildly so. This chapter argues that these results are not simply a statistical artifact, as Mathew Shapiro and others have argued. Procyclicality results principally from demand shocks interacting with capital services which are relatively invariant over the cycle. This account contrasts with that offered by the real business cycle (RBC) program, which attributes economic cycles to technology shocks as measured by deviations in TFP from trend.
TFP, Productivity, Cycles
Abstract: from Field, Alexander J. (2001), Altruistically Inclined: The Behavioral Sciences, Evolutionary Theory, and the Origins of Reciprocity. Ann Arbor: University of Michigan Press.
Abstract: Between 1919 and 1946 bankruptcy rates in the U.S. traced out an inverted U-shaped curve, rising during the 1930s as income levels fell, and then plummeting during the Second World War in the face of both rising income and falling debt levels. This paper explores these relationships econometrically, both at the aggregate level and at the level of a number of individual states. It also discusses the historical evolution, motivation, and macroeconomic consequences of bankruptcy law, concluding that the value of analyses such as those of Joseph Schumpeter and Secretary of the State Andrew Mellon have been too quickly dismissed, at least in their entirety, by scholars such as Ben Bernanke.
Bankruptcy, Debt, Great Depression
Abstract: Multifactor productivity growth in the U.S. economy between 1919 and 1929 was almost entirely attributable to advance within manufacturing. Distributing steam power mechanically over shafts and belts required multistory buildings for economical operation. The widespread diffusion of electric power permitted a shift to single story layouts in which goods flow could be optimized around work stations powered by small electric motors. Within this framework, as well as opportunities to produce a variety of new products, economies of scale and learning by doing permitted rapid and across the board gains in manufacturing productivity. The sector contributed 83 percent of the 2.02 percent per year overall advance in the private nonfarm economy in this ten year period. The Depression years witnessed manufacturing MFP growth that was not as uniformly distributed as it had been during the twenties, and only half as rapid: 2.60 as opposed to 5.12 percent per year. As a consequence, and in spite of a rise in the sector's share, manufacturing accounted for only 48 percent of PNE MFP growth between 1929 and 1941. Yet overall growth in MFP was by far the highest of any comparable period in the twentieth century - 2.31 percent per year. This resulted from combining a manufacturing contribution which by any standard of comparison other than that of the 1920s was world class, with spillovers from government financed infrastructural investment that enabled rapid advance in other parts of the economy, particularly transport and public utilities and wholesale and retail distribution.
MFP growth between 1989 and 2000 was more than twice what it had been during the years 1973-89, but less than a third that registered between 1929 and 1941. Within manufacturing, advance was narrowly concentrated within the old SIC 35 and 36, virtually all of this attributable to information technology (IT). IT was also responsible for some MFP growth in using industries, notably wholesale and retail distribution and securities trading. This paper questions the common practice of also crediting IT with the portion of capital deepening's effect on labor productivity associated with the accumulation of specific IT capital goods.
Productivity, Economic growth, Technological Change
Abstract: Aggregate economic activity was heavily influenced by the construction sector's expansion, collapse, and failure to revive during the interwar years. The 1920s building boom was the first to respond to the potential of the automobile and the last to be largely unplanned. Its uncoordinated character slowed the growth of full employment output toward the end of the 1920s. The physical and legal detritus of unregulated land development posed continuing obstacles to recovery during the second half of the 1930s.
Great Depression, Construction, Housing, Building Boom
Abstract: In the immediate postwar period, Moses Abramovitz and Robert Solow both examined data on output and input growth from the first half of the twentieth century and reached similar conclusions. In the twentieth century, in contrast with the nineteenth, a much smaller fraction of real output growth could be swept back to the growth of inputs conventionally measured. The rise of the residual, they suggested, was an important distinguishing feature of twentieth century growth. This paper identifies two difficulties with this claim. First, TFP growth virtually disappeared in the U.S. between 1973 and 1995. Second, TFP growth was in fact quite robust between the end of the Civil War and 1906, as was in fact acknowledged by Abramovitz in his 1993 EHA Presidential address. Developing a revised macroeconomic narrative is essential in reconciling our interpretation of these numbers with what we know about scientific, technological, and organizational change during the gilded age.
Productivity, Economic Growth, Technological Change
Abstract: This essay considers the status of the new economic history from the vantage point of the mid-1980s. It discusses the historical and demographic factors that contributed to the golden age of academics in the United States (1957-1969), and how this, along with various intellectual factors, influenced the growth of Cliometrics. It argues that by the 1980s the subdiscipline had moved substantially beyond its initial self-identified status as an insurgency. The essay includes data on the production of first degrees as well as economics and history Ph.D.s from 1964 through 1981.
Cliometrics, new economic history, methodology
Abstract: Much of economic theory has been guided by a methodology that, in its more enthusiastic moments, seems to glorify the irrelevance of empirical research on how people actually behave (see, e.g, Selten, 1998). In this light it is not surprising that with one or two important exceptions, economists' knowledge of or interest in experimental methods historically has been limited. In recent years, multidisciplinary participation in experiments using human subjects has begun to change this, and has been associated with an increased willingness to use these methods and consider the implications of what they show. As Selten's comments indicate, these results are now, in the area of strategic interaction, so broad and so consistent in their identification of deficiencies in the predictions of standard models that a number of theorists have found it desirable to rethink what explanatory or predictive claims are actually made for normative theory.
Abstract: The attempt to explain rule variation using rational choice models faces serious problems. An important range of phenomena, such as cooperation, cartels, and more generally the rules which organize economic activity, may need to be approached on a case-by-case basis. This necessitates the redevelopment of historical, institutional, and legal sensitivities to complement the analytical and statistical techniques emphasized in economics instruction.
Abstract: The heuristics and bias program has generated a body of striking experimental results that all serious students of human behavior need to address. It has increased our receptivity to what can be learned from experimental methods. And it has introduced into our vocabulary the important concept of framing: the idea that people may reason about and respond differently to the same formal problem presented in different contexts. The research generated and language employed by this program are very much consonant with the postulate of cognitive modularity developed in chapter 5.
Abstract: The introduction and diffusion of what Alfred Chandler called modern business enterprise had a profound capital-saving impact on the American economy. Given the availability of the railroad and telegraph, purchasing more managerial labor services paid off principally via increased speed of production and inventory turnover, which spread costs of holding capital over a larger volume of output. This article challenges the consensus that nineteenth- and early twentieth-century technological change in the United States was overwhelmingly labor saving and interprets the factor-saving bias of modern business enterprise as representative rather than anomalous.
Communication, industrial organization, technological change, telegraphy
Abstract: In several articles published in the 1990s, de Long and Summers argued that investment in producer durables had a high propensity to generate externalities in using industries, resulting in a systematic and substantial divergence between its social and private return. They maintained, moreover, that this was not the case for structures investment. Together, these claims constitute the equipment hypothesis. This paper explores the degree to which the history of U.S. economic growth in the twentieth century supports it.
Economic history, Economic growth, Productivity, Equipment investment
Abstract: In this paper, I consider a body of observational evidence not commonly studied by economists, namely the behavior of men and women (mostly men) in the military. I focus here on three issues: first the behavioral foundations for creating an effective military unit; second, evidence that infantrymen have historically been reluctant to fire on the enemy and how this reluctance has been overcome in the last half century through changes in military training, and third, the modern practice and conventions surrounding the taking of prisoners of war. The evidence in all three of these areas reinforces the appeal of the idea of cognitive modularity, the view that thought and behavior are influenced by different “mental organs.” With respect to behavior, these usually align in the counsel they provide. But not always, and focusing on circumstances where guidance conflicts - Prisoners Dilemmas are examples - offers a route towards building a more coherent behavioral science.
Behavioral Economics, Military, War, Game Theory
Abstract: Chapter 4 from Field, Alexander J. 2001, Altruistically Inclined: The Behavioral Sciences, Evolutionary Theory, and the Origins of Reciprocity. Ann Arbor: The University of Michigan Press.
Abstract: In spite of its checkered intellectual history, and in spite of the myriad proposals of alternative models that claim both to account for the range of human behavior and to dispense with the need for selection above the organism level, a multilevel selection framework allowing for biological as well as cultural group selection remains the only coherent means of accounting for the persistence and spread of behavioral inclinations which, at least upon first appearance at low frequency, would have been biologically altruistic. This argument is advanced on three tracks: through a review of experimental and observational evidence inconsistent with a narrow version of rational choice theory, through a critique of models or explanations purporting to account for prosocial behavior through other means, and via elaboration of the mechanisms, plausibility, and intellectual history of biological group selection.
Group Selection, Evolutionary Theory, Behavioral Sciences
Abstract: Review Essay on Philip Mirowski, Machine Dreams: Economics Becomes a Cyborg Science (2002)
Economic Methodology, History of Thought
Abstract: Chapter 5 from Field, Alexander J. 2001, Altruistically Inclined: The Behavioral Sciences, Evolutionary Theory, and the Origins of Reciprocity. Ann Arbor: University of Michigan Press.
Abstract: This paper delineates how the telegraph was used in the financial services sector in the United States, and considers the implications of this use for U.S. economic growth, New York Stock Exchange trading volume, and securities market regulation. The parallel implementation of two separate dedicated telegraphic networks facilitated the emergence of a technological/institutional trading regime that endured for the better part of a century, beginning in the 1870s, and breaking down decisively only in the second half of 1968. There is little evidence that communications innovation per se made volume or asset prices either more or less volatile. The telegraph did permit a reduction in per share transactions costs, which given the elasticity of demand for such services, resulted in an upward drift over time in the real resources consumed by the secondary exchanges, the brokerage industry, and individuals and institutions engaged in short term trading. It is unlikely that the benefits of enhanced trading in secondary markets, in relation to the costs needed to realize them, and in comparison with a posited world without the telegraph, created a social return that came close to that realized in the other major business application of the telegraph: logistical control.
Communication, Asset Markets, Stock Trading, Telegraph, Stock Exchange
Abstract: Chapter 2 from Field, Alexander J. (2001) Altruistically Inclined: The Behavioral Sciences, Evolutionary Theory, and the Origins of Reciprocity. Ann Arbor: University of Michigan Press.
Abstract: This paper addresses a general theoretical question - the appropriate specification of the transactions demand for money - as well as a particular historical question: what triggered the Great Depression? Theoretically, fluctuations in the volume and value of asset exchanges in secondary asset markets can influence the transactions demand for money independently of real output and interest rates, and ought to be integrated into the analysis of those forces perturbing the demand for money and shifting LM curves in the absence of monetary intervention. Empirically, I demonstrate that, over the years 1919-29, monthly fluctuations in the volume and value of trading on the New York Stock Exchange did influence the transactions demand for money independently of fluctuations in real output and interest rates. Moreover, in the context of relatively slow post-1925 growth rates of monetary aggregates, the unprecedented increase in the volume and value of such trading from the beginning of 1925 to October 1929 had the effect of shifting the LM curve persistently to the left. The failure of U.S. monetary authorities to accommodate thls surge in transactions demand, a failure unrecognized at the time, was associated with an antispeculative policy that drove real interest rates to very high levels in 1928-29, levels not approached again until the early 1980's. This deflationary impulse, larger than is apparent from a simple examination of monetary growth figures in relation to GNP growth, was the proximate cause of the downturn in real activity generally dated from August 1929.
Abstract: Norms established through the process of socialization, perhaps voluntarily accepted or affirmed, perhaps building on certain genetic predispositions, provide part of the framework within which individuals pursue their self interest. Intellectually defensible microeconomic analysis, in its competitive or game theoretic variant, can be undertaken only if this principle is recognized.
Institutions, norms, legal systems, game theory
Abstract: The argument of this paper reduces to two key propositions. First, legal rules differ where technologies and endowments are similar. Second, diversity matters, in the sense that it exercises an independent influence on economic structure and rates of economic growth, and in ways that have not fully been explored. Recent literature has tended to limit the effect of law on productive use (the sectoral distribution of inputs)to its efficacy in overcoming or not introducing bargain-impeding transactions costs. Insufficient attention has been given to the macro-economic consequences of variation in income and expenditure flows associated with different legal systems or assignments of legal rights, which have traditionally been considered principally with reference to issues of equity or fairness, as distinguished from their impact on economic structure.
Abstract: The communication sector of an economy comprises a range of technologies, physical media, and institutions/rules that facilitate the storage of information through means other than a society's oral tradition and its transmission over distances beyond the normal reach of human conversation. This chapter provides data on the historical evolution of a disparate range of industries and institutions contributing to the movement and storage of information in the United States over the past two centuries. These include the U.S. postal service, the newspaper industry, book publishing, the telegraph, wired and cellular telephone service, radio and television, and the Internet.
Communications, information systems, technological change
Abstract: Review essay on Geoffrey Hodgson, How Economics Forgot History: The Problem of Historical Specificity in Social Science, 2001.
Economic Methodology, History of Economic Thought
Abstract: The contribution to growth of telegraphic- as opposed to rail-speed transmission of financial asset and commodity price data remains unclear. With more certainty we can identify savings in the holdings of real capital-savings made possible by the use of the telegraph at the firm level to implement tight systems of logistical control.
Communications, information systems, technological change, telegraphy
Abstract: In the last decade one of the most successful memes in economic history has been the concept of a general purpose technology. The rapid multiplication of technologies accorded this designation has raised questions about whether the concept has gotten out of hand. My intent in this essay is to ask whether the concept has indeed gotten out of hand, and, more fundamentally, whether, when the concept of a GPT and the ways it has been used are critically examined, we may conclude that the discipline of economic history could do as well without it. I note that the GPT criteria are not always consistently applied, the technologies under discussion are often not clearly identified, and that the criteria ultimately do a haphazard job of separating the consequential from the inconsequential.
GPTs, Technological Change, TFP, Social Savings
Abstract: Economists and economic historians tend to use the terms capital and machinery interchangeably, even though machinery rarely constitutes one fifth and sometimes is as little as one tenth of a nation's reproducible tangible assets. This habit can distort the way economists think and talk about important issues. In economic history, disproportionate attention to machinery helps explain why the "Habbakuk" debate, which is now several decades old, has been premised on the need to rationalize empirical regularities the opposite of those in need of explanation. In manufacturing, and, indeed, in the economy in the aggregate, the United States was less, not more capital intensive than Britain in 1860.
Capital, Machinery, Fixed Assets, Technical Choice
Abstract: Review article on "Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small Scale Societies." Oxford: Oxford University Press, 2004.
Experimental Economics, Behavioral Economics, Evolutionary Theory
Abstract: Economists often counsel against considering sunk costs in making decisions. But this advice is applicable in only a limited range of cases. Where the assets acquired through past investment are illiquid or specialized to a particular use, the advice to ignore prior commitments can be normatively incorrect. On the one hand we need to beware an escalating psychology of commitment that prevents us from pulling the plug when we should. On the other hand, terminating a half completed project simply because we fear falling prey to the sunk cost fallacy can be a mistake, even if from today's vantage point the project should never have been begun.
Sunk Costs, Economic Psychology, Commitment
Abstract: Using quantitative data on sectoral productivity and labor force shares, this paper assesses distribution's contribution to growth in aggregate output per worker between 1869 and 1992, speculates about performance during the prior two decades, and explores the implications and determinants of these trends within a broader technological, organizational, and legal framework.
Distribution, Producticity, Wholesale and Retail Trade
Abstract: Review Essay on The Cambridge Economic History of the United States, Volumes II and III, eds. Stanley Engerman and Robert Gallman
Economic History, United States
Abstract: A common procedure in productivity research is to use estimates of the stocks of physical capital as proxies for service flows. A number of authors propose cyclical adjustments for capital input which, if large enough, will eliminate findings of procyclicality in the behavior of TFP. This paper argues that for the preponderance of assets in the fixed capital stock, fluctuations in utilization have little effect on user costs. In the aggregate, adjustments to capital input data for utilization should consequently be small, much smaller, for example, than those suggested by Solow (1957), Griliches and Jorgenson (1966), Tatom (1980), Shapiro (1993), or Basu and Fernald. (2000).
Abstract: German. industrial expansion in the period 1880¿1913 was significantly more rapid than that of the United Kingdom, and substantially less volatile than that of the United States. A partial explanation for the relatively stable growth path of the German economy during these years may be found in the greater relative importance and volatility of the railroad construction component of net investment in the United States. By 1880 only a little over one-third of the U.S. final rail net was in place, compared with over half in the case of Germany. Compared to Germany, railroad investment in the United States between 1880 and World War I was, on average, much larger absolutely. It was also much larger in comparison to total population, total industrial output, and in comparison to expenditures on residential construction. In addition it was more. volatile. The lesser importance. of this component of autonomous expenditure in the German case partially accounts for the relative nonvolatility of the German industrial output series
Business Cycles, Volatility, German economic history, US Economic History
Abstract: The impact of industrialization on an economy's overall demands for skill cannot be deduced on purely a priori grounds, but depends, rather, on such variables as the character of the agricultural sector at the onset of industrialization,the particular industries in which manufacturing employment is concentrated,and the distribution of tertiary-sector employment between professional,technical, and scientific occupations, and such relatively low-skill occupations as domestic service. An examination of the evolution of the Massachusetts economy between 1820 and 1880 concludes that there was no major increase in the overall demands for skilled and educated labor during this period, at least before 1870.
Human Capital, Industrialization
Abstract: The key to the development of manufacturing in antebellum Massachusetts is to be found not in newly available technological or organizational blueprints in the manufacturing sector, not in changes in tariff policies, and not in demand shifts (although all of these many have contributed to some extent to the growth of manufacturing), but rather in the history of New England agriculture, a history which led to drastic changes in the nature of supply schedules for manufacturing labor in the region. Technological change in the transport sector depressed relative earnings in New England agriculture. Although some were able to move west in response to the more favorable agricultural opportunities available, not all were able to do so, for a number of reasons. It was this less than perfect factor mobility that permitted the growth of a sizable manufacturing sector in antebellum Massachusetts and New England.
Manufacturng, Agriculture, Industrialization, Transportation
Abstract: Virtually all sectors of the nineteenth-century American economy were less capital-intensive than their British counterparts. This resulted from persistently higher American interest/profit rates, due in turn to American land abundance. The paper adduces the evidence in support of these propositions, and explores their interrelationships through the use of a linear model inspired by the writings of David Ricardo.
Factor prices, Technical Choice, Capital Intensity
Abstract: French optical telegraph represented a highly refined blend of software and hardware generating performance levels in long distance communication which were, given the limitations of the hardware, quite remarkable. Had the electromagnetic telegraph not become available, French optical telegraphy, or a variant, would have served increasingly as an imperfect substitute, particularly in the transmission of price data on commodity, stock, and bond exchanges. This affirmation of the commercial viability of optical telegraphy does not, however, significantly reduce our estimate of the contribution of electromagnetic telegraphy to economic growth. The more substantial economic payoff to the electromagnetic device came from its use by firms to reduce inventory holdings and raise fixed capital utilization rates in sectors with large minimum efficient scales. Here optical telegraphy's vulnerability to disruption by the weather, limited channel capacity, and restriction to daylight use would have made it a very imperfect substitute in an age of rail speed communication.
Abstract: More than half the variance in length of school session in a cross section of 329 localities in Massachusetts in 1855 can be explained by the share of Irish in the town's population, the family per dwelling ratio, and a proxy for the share of male merchants over 15 in the population, all of which enter regression equations with strong positive coefficients. This paper considers what these results may tell us about a number of hypotheses that link industrialization and educational revitalization in antebellum Massachusetts, discusses independent confirmation of these basic relationships, and concludes with a more general discussion of the implications of thisMassachusetts evidence.
Education, Human Capital, Industrialization
Abstract: Economists and educational historians have put forward two major kinds of explanations for the coincidence between the industrial revolution and the development of mass public schooling in the United States. Industrial change, some maintain, created a demand for technicians, managers, skilled workers, and highly trained professionals; the rise of public education, then, involved a relatively automatic and decentralized response to a changing market for labor. Others argue that social disorganization wrought by the manufacturing system led members of elite groups to establish and support public education as a means to ensure the stability of the social arrangements from which they profited. This article uses a wide range of data from nineteenth century Massachusetts to assess the relative merits of the two schools of thought. While both explanations are accurate in some degree, in Massachusetts at least, the actions of economic elites in the political arena did more to establish mass public education than did the demands of individuals in the educational marketplace.
Economics of Education, Human Capital, Socialization, Skills, Industrialization, Massachusetts
Abstract: The events associated with the financial crisis and recession of 2007-2009 continue to unfold. If the output loss from this recession ends up in the range of the 1982 downturn, it will be because Congress and the Federal Reserve moved more quickly and effectively with immediate remedies than was true in the 1930s. If an even more serious crisis occurs within the next decade it will be because the regulatory response ended up being less effective than what was summoned during the New Deal. NOTE: This is a draft version of chapter 12 from my book The Great Depression and U.S. Economic Growth, forthcoming from Yale University Press.
Finanacial Fragility, Great Depression, Recession
Abstract: Manufacturing was responsible for almost all - 83 percent - of the growth of total factor productivity in the U.S. private nonfarm economy between 1919 and 1929. During the Depression manufacturing TFP growth was not as uniformly distributed, and only half as rapid, accounting for only 48 percent of PNE TFP growth. Yet the overall growth of the residual between 1929 and 1941 was the highest of any comparable period in the twentieth century. This resulted from the combination of a still potent manufacturing contribution with advances in transportation, public utilities, and distribution, fueled in part by investments in public infrastructure.
Productivity, TFP, Technological Change
Abstract: This paper examines the relationships between occupational structure, dissent, and educational commitment in a sample of seventeen commercial and manufacturing localities in Lancashire in 1841. In this sample the structure of educational systems as measured by the mix of Sunday and day schooling varies systematically with differences in occupational structure, independently of differences in rates of population increase (which do not have a statistically significant effect on such structures) and measures of religious dissent (which do). This statistical evidence in conjunction with documentary evidence (also discussed) leads to the rejection of a class of hypotheses based on the proposition that Sunday schools were primarily an imperfect substitute for day schools, relied on in certain areas because of (1) high foregone earnings associated with day schooling, or (2) inelastic supply curves for day schools in the face of rapidly growing populations, or (3) relatively low income levels. Rather, it is argued that Sunday schools specialized in religious instruction and moral regeneration, day schools in writing and arithmetic as well as reading, and that different occupational clusters had different relative demands for these two types of outputs. The paper includes a discussion of how these results modify the conclusions of previous research in this area, as well as a brief comparative discussion of educational development in Lancashire and Massachusetts, in the light of a comparison of the occupational structure of the two regions.
Abstract: This paper considers the productivity impact on the US economy of the period of war mobilization and demobilization lasting from 1941 to 1948. Optimists have pointed to learning by doing in military production and spin-offs from military R & D as the basis for asserting a substantial positive effect of military conflict on potential output. Productivity data for the private non-farm economy are not consistent with this view, as they show slower total factor productivity (TFP) growth between 1941 and 1948 than before or after. The paper argues for adopting a less rosy perspective on the supply side effects of the war.
Abstract: Review of Mark Hauser, Moral Minds: How Nature Designed Our Universal Sense of Right and Wrong.
Altruism, Ethics, Economics and Psychology
Abstract: Review of Stephen Broadberry, Market Services and the Productivity Race 1850-2000: British Performance in International Perspective (2006)
Economic History, Productivity, Services,
Abstract: This comment on a 2002 article by Theodore Bergstrom in the Journal of Economic Perspectives argues that group or multilevel selection in haystack models does not require assortative mating. If the various subgroups into which the population periodically divides are sufficiently small, random variation will assure that some groups have more altruists than others, and these groups will have more surviving offspring than others. Under conditions in which the subgroups are periodically repooled into a larger population, it is possible for altruists to increase over time in the general population even though they are declining (or not increasing) at all times in every subgroup.
group selection, multilevel selection, evolutionary theory, altruism
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