The State Dept View of Entrepreneurship

Jeff Cornwall has a funny post about an email he recieved from the U.S. Department of State, which reflects, in part, how government thinks about entrepreneurship policy. Jeff is too hard on Josh Lerner, who's done great work on innovation policy, but otherwise it's something to keep in the back of your mind as the President prepares to kick off his Summit on Entrepreneurship.

Say's Law

What is Say's Law? It doesn't matter, Say's Law is Dead. Or maybe it isn't? This should give you a sense for why microeconomists don't much care for macroeconomics.

Randomized Control Trials

Since Professor Duflo is known mostly for her innovative field experiments, perhaps a backgrounder is timely. Interested readers might like to check out, "In Pursuit of Balance: Randomization in Practice in Development Field Experiments," by Bruhn and McKenzie. The article was published in the AEA Journal in Applied Economics last October. The link will take you to an ungated version.

Here is an excellent contrarian take on RCTs.

The 2010 John Bates Clark Award

The winner this year is Esther Duflo, of MIT. Her award is based on her work on randomized control trials. From her bio:

Duflo has been a leader in using randomized field experiments to address important questions concerning public policy in developing countries. In one series of papers, she and various coauthors study the impact of female political leadership on local government spending and attitudes toward women by examining a policy that required one-third of India’s villages, selected at random in each election cycle, to choose a woman as council head. She finds, for example, that villages forced to choose female council heads shift local government spending away from education and towards drinking water and (in some areas) roads. Another series of papers measures the effects of various randomized educational interventions, such as the introduction of teacher aids (local women with some secondary education but no formal teacher training), a computer-assisted math program, reductions in pupil-teacher ratios, ability grouping, various forms of monitoring and incentives to reduce teacher absenteeism, and programs designed to encourage community participation. For example, in work with Abhijit Banerjee, Rukmini Banerji, Rachel Glennerster, and Stuti Khemani, she investigates the effects of three randomly assigned programs targeting community participation. The first informed villagers about opportunities to participate in school governance and monitoring committees, the second trained villagers to use a testing tool, and the third organized literate villagers to hold remedial reading classes for illiterate children. The study concludes that the interventions had no impact on community involvement in the schools, no impact on teacher effort, and no impact on students' achievement in school.

In work with Emmanuel Saez, Duflo has also used field experiments to study issues concerning U.S. pension policy. One article reports the results of a study in which a random sample of employees in some departments of a major university were provided with monetary incentives to attend a benefits fair. The incentives increased attendance of both the targeted employees and employees in the same departments who were not targeted, and significantly raised enrollment in tax deferred accounts for both groups. Thus, the effects of the intervention appear to have been ransmitted through social channels.

Her website is here and her papers are here.

Entrepreneurial Policy

Dane Stangler writes (Growthology):

Policymaking around entrepreneurship is evidently not clear-cut as there is still quite a bit we do not understand regarding startups. In the coming weeks we will try to explore these questions and illuminate the world of startups for policymakers. We’ll start with the lowest-hanging fruit of all, though one that may seem like poison to some in Washington: immigration.

The rest of the post is focused around brain circulation, which deserves more attention than simply talking about brain gain or brain drain. Stay tuned for the rest. Dane, Tim and the other bloggers do a great job with Growthology and it remains one of my favorite blogs.

Searching for Entrepreneurial Solutions

“The people who make all these decisions don’t live like the way I do,” Mr. Mann added, echoing other uninsured people in his income group. “They don’t live like the rest of us.”

From the NYT. This was in reference to the new health care bill, but it immediately reminded me of the Millenium Villages and a professor in New York. From Owen's blog:

O&G: What is it like being a Millennium Village?
Shopkeeper: Very good. We have lots of things.
O&G: Does everything work well?
Shopkeeper: No, not all of it. But we are much better off now.
O&G: Who decides what to change? Do you have a village council, or is there an Elder who decides?
Shopkeeper: It is all decided by a Professor in New York.
O&G: Really? Do you know his name?
Shopkeeper: No. But he is a very famous man

And obviously we can extend this line of reasoning into many different policy areas. It's good there are people out there making the case for entrepreneurs.

C.K. Prahalad

HBR is running a nice page of rememberance for Dr. Prahalad, author of The Fortune at the Bottom of the Pyramid, among other famous works. They provide links to obituaries and to some of his columns for the HBR, many of which are free. Dr. Prahalad passed away last Friday at the very young age of 68.

Wise Words

If solutions are known, need $$. If solutions are knowable, need evaluations. If solutions are evolving, need entrepreneurs.

That's the punchline to an excellent post about Jeff Sach's work, from @auerswald's blog, The Coming Prosperity. He's been promising some new posts on entrepreneurship in connection with the Skoll World Forum, so check over there in the next few days.

The Labor-Leisure Tradeoff

From the Times:

AN overseas holiday used to be thought of as a reward for a year’s hard work. Now Brussels has declared that tourism is a human right and pensioners, youths and those too poor to afford it should have their travel subsidised by the taxpayer.

See the rest of the story. Every day I respect Seymour Martin Lipset a little more that I did the day before.

Handbook of the Economics of Innovation

A handy reference for innovation/entrepreneurship scholars. It is the latest in Elsevier's Handbook Series. The newly released two volume set is packed with great articles, but at almost $250 on Amazon, it's really suited for specialists in the field (those with lots of grant money). But look for it at your nearest university library, if it's not your immediate field and you have an interest.

It is edited by Bronwyn H. Hall and Nathan Rosenberg, two leaders in the field. Check it out.