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ng i ll get into more detail below but the book explores the importance of cognitive skills as measured by iq for economic development there are several reasons to like it first the book has absolutely no fat on it this is a model of concise explanatory writing most books that try to bring recent research to the public end up bloated not this one five stars for clarity here onto the content there are really two parts to the book first jones establishes that cognitive skills are in fact highly correlated with economic development and a subsidiary part of this is establishing that iq is just one of many ways of measuring cognitive skills i m not going to go into a lot of detail here like i said the book is very lean and you can easily read jones own words on this let me summarize by listing his own five main channels for how iq is related to economic development in italics next to the channel are a few comments of my own on them high iq s are related to higher savings rates but we have evidence that savings rates don t actually vary a whole lot across countries and that what variation there is explains little high iq s are related to more cooperation for my money the most important channel economic development looks a lot like people choosing the cooperate equilibrium in a repeated game high iq may be a marker for people willing to play this move and to play it first and often even though the other players could take advantage of them high iq s are related to market oriented policies perhaps it is that high iq people believe in their own ability to succeed high iq s are related to using team based technologies i think i would lump this in with cooperation people like to conform this isn t about iq itself but if you have lots of high iq people with those other traits then even those without high iq s will try to conform a critical mass of high iq people may be sufficient to reach the good equilibrium let s be clear here about the role of high iq s they are a marker not necessarily a cause of these behaviors and traits jones is clear on this and is not making some strong causal claim rather think of all these traits including high iq scores as a package of traits that tend to come together call these traits cognitive skills as they typically involve some kind of ability to do abstract thinking an interesting note here is that lots of what the labor literature calls non cognitive skills are what i think jones would lump under cognitive skills for example patience is something that some refer to as a non cognitive skill but for jones it is part of the package of abilities that come along with relatively high iq levels the wrong conclusion to draw from jones book is that there is some kind of fixed genetic difference in intelligence across countries that explains why some are rich and some are poor these traits are malleable as evidenced by the flynn effect of rising iq scores over time cognitive skills certainly are related to economic development but they are better seen as a more refined measure of human capital than years of schooling you can invest in cognitive skills the same way that you can invest in years of schooling one possibility might be more extensive pre schooling that teaches those non cognitive skills that are associated with iq by the way feyrer politi and weil have a paper coming out on how iodizing water helped raise iq scores in the us there may be direct public health measures that could materially impact cognitive skills and iq in developing countries the second part of the book delves more specifically into jones research on the returns to iq or cognitive skills namely why is there such a small premium on iq within countries but such a large premium to iq across countries again i m not going to lay into a lot of detail here he does a nice job in the book explaining the theory here let me try to give you the basic intuition high iq places are able to take on fragile production processes where even one mistake ruins the output e g a semiconductor or a hit movie economists often call these o ring processes after the challenger disaster having lots of high iq people means you have lots of high productivity fragile production processes and this creates demand for other non fragile production processes e g retail the high demand for the non fragile process means that wages are relatively high for the low iq people who can work that sector hence there is little difference in wages between the high iq people and the low iq people but the average wage is incredibly high because the economy engages in these productive fragile production processes so high iq countries are very rich compared to low iq countries let me add that this disconnect of the within country return to a trait iq years of education etc and the cross country return to the same trait is littered all over the growth literature sometimes we think about these positive spillovers externalities but for the most part we do not one nice thing about jones book and prior research is that he does think about these things seriously even if you don t buy the first part of the book it is worth reading the second part substitute high skill or high education in everywhere you see high iq and you ll be fine i ll be assigning parts of this to my undergrads this semester it should be a fun day of class share this share on x opens in new window x share on facebook opens in new window facebook share on reddit opens in new window reddit email a link to a friend opens in new window email like loading posted in uncategorized 26 replies beating a dead robotic horse posted on december 31 2015 by dvollrath 17 note the growth economics blog has moved sites click here to find this post at the new site one of the recurring themes on this blog has been the consequences of robots ai or rapid technological change on labor demand will humans be put out of work by robots and will this mean paradise or destitution i ve generally argued that we should be optimistic about robots and ai and the like but others have made coherent arguments for pessimism i spent a chunk of this week reading over posts both new and old and thinking more about these positions if there is one distinct difference between the robo pessimist and robo optimist view it is almost exclusively down to timing the pessimists are worried that the rapid decline of human labor is occurring now and in many cases has been occurring for a while already the optimists believe that we have time in front of us to sort things out before human labor is replaced en masse brynjolfsson and mcafee s latest is a good example of this robo optimist view they concede that human labor is in danger of being replaced but will there be enough demand especially over the long term for those two types of human labor that which must be done by people and that which can t yet be done by machines there is a real possibility that the answer is no that human labor will in aggregate decline in relevance because of technological progress just as horse labor did earlier if that happens it will raise the specter that the world may not be able to maintain the industrial era s remarkable trajectory of steadily rising employment prospects and wages for a growing population but at the same time they do not think this is imminent but are our interpersonal abilities the only ones that will allow us to stave off economic irrelevance over at least the next decade the answer is almost certainly no that s because recent technological progress while moving surprisingly fast is still not on track to allow robots and artificial intelligence to do everything better than humans can within the next few years so another reason that humans won t soon go the way of the horse is that humans can do many valuable things that will remain beyond the reach of technology on the robo pessimism side richard serlin has a mega post about the declining prospects for human labor and the possible consequences what is interesting about richard s post is that he essentially makes the case that the replacement of human labor by automation has been occurring for decades we are already living with it he cites a 2011 miliken institute report surely the most astonishing statistic to be gleaned from the trend data is the deterioration in the market outcomes for men with less than a high school education the median earnings of all men in this category have declined by 66 percent not a misprint from 1969 to 2009 at the same time this group has experienced a 23 percentage point decline in the probability of having any labor market earnings roughly 10 percentage points of the 23 percentage points is attributable to the fact that more men are reporting disabilities even though work in physically demanding jobs has been declining for many decades men with just a high school diploma did only marginally better their wages declined by 47 percent and their participation in the labor force fell by 18 percentage points richard s point is that demand for unskilled male labor has shrunk demonstrably over the last few decades and that this is only going to continue as robots or ai or automation come online even if you include the increase in female labor force participation we ve seen in the last 20 years that labor force participation has flatlined and started to decrease there isn t a lot of daylight between the robo pessimists and robo optimists both are wary of the replacement of human labor the big difference is whether you think this is a present or a future problem it is becoming hard to see what is optimistic about the robo optimist viewpoint i think it is helpful to get beyond the binary viewpoints let s divide things up as follows strong robo pessimism robots and ai will come no matter what we do they will reduce demand for labor so much that the majority of humans will have no work to do and we will be at the whim of the minority of robot ai owners the horse argument is a form of strong robo pessimism weak robo pessimism i d classify richard serlin here weak robo pessimism thinks that labor is already being replaced but there are things we can do to ameliorate this education redistribution weak robo optimism brynjolfsson and mcafee are a good example of this viewpoint possibility that labor will be replaced but this hasn t occurred yet we have time to adapt to the distributional issues strong robo optimism robots and ai will come no matter what we do they will create a scenario of material wealth such that humans will no longer need to work but if they want to they will always be able to invent something new to do one of the issues in discussing these topics is that we often are not arguing with the right group weak robo optimists use strong robo pessimists as their straw man weak robo pessimists use strong robo optimists as their straw man i am as guilty of this as anyone i think the argument that humans are doomed because look what happened to horses is stupid people are not horses they are apes and apes are intelligent creative and social the last one is very important because it means we have a built in demand for being around other people a demand that we routinely pay to have supplied we will always find ways to pay other people to interact with us the horse agument though is a form of strong robo pessimism when i go after it it makes it seem as if i have a real distinct difference from someone like richard a weak robo pessimist i don t i think i am a weak robo optimist and if you really get down to it the implications of the weak forms are not really different read through richard s post or the brynjolfsson and mcafee post or this article in the guardian or this one in the ft you get the same advice from weak robo pessimists and weak robo optimists training we need to equip people with skills that allow them to move into jobs that are harder to replace or at least to keep leapfrogging into jobs before robots replace them different people mean different things by training but it runs the gamut from pre school to vocational school redistribution whether this is simply taxes on wealthy robot owners state ownership of robots or some kind of robot share ownership plan the idea is the same spread the returns from owning robots around to everyone one interesting thing i see is that the robo pessimists tend to be more worried about training you have to keep providing people with skills to compete with robots but it is important that people work or can work or should work robo optimists tend to be more worried about redistribution how do we reallocate ownership or the proceeds of ownership so that everyone can maintain living standards the more i thought about it this week the more i think the important distinction between the optimists and pessimists is in their attitudes towards work the optimists ultimately see the decline in working hours for humans as a good thing yes there are issues with distribution but those details can be attended to how great will the world be when we all only have to work 5 hours a week the pessimists see the decline in work hours as a distinct problem this need not be because they have some puritanical need to see people act busy but rather because they don t see how we could solve the distributional issues necessary to ensure people can afford a basic living standard the best we can do is to ensure that people can continue to work full time in order to meet their needs how awful will the world be when we can all only work 5 hours a week as i said above i tend to be a weak robo optimist i like brynjolfsson and mcafee completely agree that robots ai will create a drag on the demand for human labor and in particular unskilled labor my robo optimism isn t a belief about technology it is a belief that we can figure out how to manage the glide path towards shorter work hours while maintaining living standards for everyone it s a good thing that we ll have to work less and there remains a little piece of strong robo optimism lurking inside of me i don t think work less is really well defined we will likely have to spend less time working for wages to afford the basic material goods in our lives but that doesn t mean we won t spend lots of our time working for each other doing other things whether that work is paid in wages or not is immaterial share this share on x opens in new window x share on facebook opens in new window facebook share on reddit opens in new window reddit email a link to a friend opens in new window email like loading posted in uncategorized 17 replies roman history reading posted on december 10 2015 by dvollrath 15 note the growth economics blog has moved sites click here to find this post at the new site this really has nothing to do with economic growth so feel free to dismiss it my most recent hobby reading has been on the fall of the roman republic and the emergence of the empire under augustus i ve got a nice little reading list if you ...
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