Acemoglu wins Clark Medal

In golf, there is a tradition of the last winner of the Masters helping the latest victor slip into a green jacket. In economics, we don’t have the same tradition, but if we did, it would have been an honor for me to bestow a green pocket protector on Daron Acemoglu last week when he won the John Bates Clark medal.

I’ve known Daron since I was a first year graduate student. We both remember our first conversation, which happened to place in a mens room at MIT. I’ve long been a great admirer of Daron’s work, and honestly, felt he would have been a more deserving winner of the Clark medal two years ago than I was.

You can read about Acemoglu’s research here or visit his homepage.

Acemoglu’s research even has a touch of Freakonomics to it. For instance, in a paper with Simon Johnson and James Robinson, they argue that the death rates of soldiers, bishops, and sailors in colonies hundreds of years ago had a big impact on whether settlers came to colonies, which in turn affected the types of institutions that were established, which in turn has an important impact on economic and social factors in these countries today. In a roundabout way, this has some parallels to the idea that legalized abortion in the 1970s helps explain why crime fell in the 1990s.

In another paper, Acemoglu and co-authors challenge the conventional wisdom that democracy causes strong economic performance. They argue that although democracy and income are positively correlated, it is actually that they are both caused by long ago implemented institutions that fostered both democracy and strong economies. If this result holds up, it is really a remarkable finding.

To honor Acemoglu’s great contributions to economics, we are thinking of sending him a Freakonomics t-shirt.

Paul

Hmm, whenever I finish writing something, I never want to see it again!

Anonymous

"Freakonomics establishes this unconventional premise: if morality represents how we would like the world to work, then economics represents how it actually does work."Kind of arrogant for a discipline that is still in the process of evolving from a faith-based social science (blind faith in empirical validity of von Neumman & Morgenstern axioms) to an empirical social science (integration of insights from behavioral economists such as Kahneman, Tversky, Thaler, Loewenstein), don't you think?

Steven D. Levitt

Anonymous...we're not speakingfor a discipline, we arespeaking for ourselves. Ourpoint is that often peopleare blind to the way thingsreally work because they sobadly want the world to workin some other way. If you readthe book and think we're notshedding light on the worldaround us, I'll send you acheck for the price of the book.Steve Levitt

Anonymous

SL: Our point is that often peopleare blind to the way thingsreally work because they sobadly want the world to workin some other way.I agree with this statement in general. I think economists, who desperately want to believe that people and markets are "rational" are not in a good position to describe the world how it really is, given how badly you want vN&M's expected utility theory, Becker's rational choice theory, etc. to be true.

Steven D. Levitt

Anonymous, you said:"I think economists, who desperately want to believe that people and markets are "rational" are not in a good position to describe the world how it really is, given how badly you want vN&M's expected utility theory, Becker's rational choice theory, etc. to be true."I'm not saying I agree that economists in general desperately want to believe particular things, but regardless, I reiterate that if you read this book and you think that Dubner and I fall prey to that trap, I'll gladly refund you the price of the book. This is a book about data and ideas, not dogma.Steve Levitt

Sarah

Dear Dr. Levitt and Dr. DubnerI think your book is amazing. I am an undergraduate economics major and I have always loved looking at the world through the lens of rational actor theory. I am sure I will re-read your book again very soon -- until I do, please keep posting, I am sure your worldview will be a great addition to the blogosphere. Sarah

Anonymous

When I was at my Harvard 25 th reunion the dogmatic approach to life of the young in the sixties bothered me because of the certainty in their rightousness. I proposed that we should invite all the professors we had 25 years before and ask them to discuss what went wrong with the conventional wisdom they taught usI think particularly of:(1) the $ gap would never be closed(2) ther was no other way to look at the economic world except thru Keynesian eyesYou have shown us in your book the fallacies of conventional wisdom and I hope made all os us more skeptical of what is presented to us as the "gospel truth"

Jim Voigt

I'm not quite as educamated as the rest of the people posting here, but I wanted to state for the record that I really do have the most beautiful baby in the world. Everyone else is wrong about their own kid.Oh, and the book is great. However, it fails to account for the fact that 78% of statistics are made up on the spot.

Anonymous

Economics aye? fun is it? Um yeah so wat u up to tonight

Queenie

I think you should hand out free Donald Trump haircuts.Q

targetedoutrage

Gentlemen, I bought and read your book. I have a couple of comments.1. Regarding sumo, how insightful is your thesis that vested wrestlers throw matches to their 7-7 opponents in a quid pro quo? When I lived in Japan from 96-2001, I noticed that those conducting the tournaments tried to match 7-7 wrestlers on the final Sunday of matches, specifially to avoid the type of collusion you mentioned. Further, as I recall, "smart money" gamblers ALWAYS bet on the 7-7 wrestler if he did happen to be matched agaist one who already had his kachikoshi. Such a bet is the closest you can come to a "lead pipe cinch" without actually being privvy to the comspiracy. Japenese gamblers may not have the benefit of regression analysis, but they have a lifetime of empirical knowledge which results in the same conclusion.2. Why be reticient about advocating abortion and voluntary sterilization as a crime fighting tools or as a tools for ameliorating many of sociey's ills? I wonder because it seems that later in your book in the parenting section and in the naming section, you bolster the idea that social pathologies are genetically inherited. I think that the half of the American population that generally supports abortion would be gratified to know there is another reason to support its legalization, and it would undercut the idea that many on the pro-life side hold that abortion is an absolute evil. Properly presented, I think you and polititians who embrace your ideas would find a large, receptive audience for them.Just as Japanese gamblers lacked regression analysis but made the same conclusion you did about 7-7 wrestlers, I think that the American people have noticed that criminal pathologies come out of one socio-economic group, but have been conditioned NOT to give voice to those thoughts. Ironically, your book shows how this conditioning was done in the case of the Klu Klux Klan yet how we still harbor and act on our prejudices if we thing we can get away with them, as you noted in your discussion of the Weakest Link. If academics and writers like yourself are willing to point out statistically that society would be better off with a smaller population of the pathology-producing groups, it will provide society will the cover to talk comfortably about solutions that will actually work to reduce crime and illiteracy such as lifetime incarceration for career criminals, economic incentives for voluntary sterilization and free birth control and abortion.If you are looking for a unifying theme for this book, I would suggest that you look no further than "genetics is desiny."Thank you for a thoughtful and interesting book.Ken

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dearieme

"it is actually that they are both caused by long ago implemented institutions that fostered both democracy and strong economies": does one really get prizes in economics for rediscovering the bleedin' obvious?

Bill Petti

"it is actually that they are both caused by long ago implemented institutions that fostered both democracy and strong economies"Didn't Douglass North already win the Nobel Prize for this? Its called neo-institutionalism or path-dependency and political scientists and economists have already been talking about this for decades (even longer if you count Barrington Moore, Karl Polanyi, and Max Weber)...

Princess Leia

I would say to send a t-shirt to Pres. Larry Summers of Harvard, another past Bates medal winner. It seems he could really use a lift like that these days. P.S. If one doesn't win a Nobel Prize after the Bates, would that be a huge let-down??? I hope not...

Princess Leia

Whoops! I mean the CLARK medal, not the Bates medal. Silly me!

Aaron

There are Tshirts???An image is coming to mind. It's a black shirt with a b/w picture of Levitt on the front. Below his visage is the single block letter word "ROGUE".

Anonymous

"Didn't Douglass North already win the Nobel Prize for this? Its called neo-institutionalism or path-dependency and political scientists and economists have already been talking about this for decades (even longer if you count Barrington Moore, Karl Polanyi, and Max Weber)... It is one thing to talk about something (i.e. to do theory,and it helps if they could write up a model instead of that endless humdrum) and quite another to show that something is empirically true, using the data in ingenious but rigorous way. The work of Acemoglu is more useful than the thousands pages of drudgery, because he can actually make the point, istead of just trying to think aloud. Other people (except some high brow theory types) are likely to understand the usefulness of such work and appreciate this kind of skill.

Bill Petti

Other people (except some high brow theory types) are likely to understand the usefulness of such work and appreciate this kind of skill.I wasn't saying that the ability to test a theory wasn't useful, mearly asking if theoretically the paper was adding anything or if they were essentially testing previously formulated theories (which, again, is a useful contribution given the importance of North's work). You seem a might bit defensive about all this...

Anonymous

I wasn't saying that the ability to test a theory wasn't useful, mearly asking if theoretically the paper was adding anything or if they were essentially testing previously formulated theories Certainly, it adds quite a bit. Before you go testing a theory, you first have to make it testable, which the theory received by Acemoglu was not.To quote one of his papers:"Even though many scholars including John Locke, Adam Smith, John Stuart Mill,Douglass North and Robert Thomas have emphasized the importance of economic institutions,we are far from a useful framework for thinking about how economic institutions are determined and why they vary across countries." To find such a framework one has to make the theory more precise, thus adding to it. See for example a paper titled "Institutions as the Fundamental Cause of Long-Run Growth". As to me being defensive... Not at all, rather I am dissatisfied with the current state of applied research in economics. It seems that high quality applied work is a very small field indeed. To do it you need to know and appreciate (i)economic theory(ii) statistics and econometrics There are many people proficient in one of the fields, but it is not easy to find someone who is good in both and is able to ask nontrivial questions. It seems that people in charge of giving out Clark medals are of similar opinion.

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Bill Petti

Then we are in agreement. I certainly can relate to that position. Given my interest in path-dependent dynamics (albeit from an IR/political science persepctive) I am adding Acemoglu's work to my reading list.