Much Innovation Has “Nothing to Do with Science–It’s Just Creative Mankind Chipping Away at Things”

(p. 122) VANE and MULHEARN: The prize rewards specific discoveries, achievements, or breakthroughs in economic science. Your pioneering contributions have opened up a rich seam of research for others to mine. Does academic knowledge largely progress through the lead taken by a small number of creative innovators?
PHELPS: That’s such a good question. It resonates with a subject in the area of innovation theory. The old guys like Arthur Spiethoff thought that progress was due to the great discoveries of the scientists and navigators. Schumpeter (1934) (p. 123) didn’t depart altogether from that, he simply said, well, that’s right but you’ve got to have some entrepreneur to actually implement it. But don’t think there’s much creativity there–everybody knows what’s in the air. And it’s very rare that anything new really gets created in the course of this development work. But now we don’t think about innovation in that way so much. We recognize that once in a while there is a big leap which creates the ground for a surge of innovations to follow. Nowadays we realize that an awful lot of innovation just comes from business people operating at the grass roots having ideas on the basis of what they see around them. Nothing to do with science–it’s just creative mankind chipping away at things. I know that the Sens and the Mundells and the Lucases are towering figures, but they couldn’t have become so if they hadn’t read a lot of papers by, well, pretty average people who are just doing a good job of exploring a question and giving inspiration. I guess the towering figures are people with just a little more drive, a little more imagination, just a little cleverer in putting some things together. In other words, I don’t know the answer to the question [laughter].

For the full interview, from which the above is quoted, see:
Vane, Howard R., and Chris Mulhearn, interviewers. “Interview with Edmund S. Phelps.” Journal of Economic Perspectives 23, no. 3 (Summer 2009): 109-24.

Openness to Creative Destruction Will Speed Health Care Progress


Source of book image:

Eric Topol has bucked the medical establishment before. In entries on August 20, 2006 and on December 26, 2006 on this blog, he was quoted as arguing that stents were being overused. Now he argues that the medical establishment is slowing progress that could reduce disability and extend life. He advocates the sequencing of each of our genomes and a medical revolution that will fine-tune treatment to our genomic differences.
Many agree with Topol’s view of the future of medicine, but many medical schools are neglecting teaching future doctors about the therapeutic implications of individual genomics.
Topol calls for the creative destruction of medical education and other medical institutions.
The early part of the book is weak because it discusses subjects on which Topol is not an expert—such as the history and applications of information technology. In these sections, he too often tediously explains the obvious and widely known. Sometimes in this section of the book, he is just wrong, as when (p. 14) he claims that Werner Sombart originated “creative destruction.”
After the early chapters the book comes into its own when Topol discusses medical advances and challenges. While his early prose may be aimed too low, his later prose may be aimed too high—but it is better to be talked up to than down to, and the best of the later chapters contain some fascinating descriptions of what is happening on the frontiers of medicine, and what could be happening if we change policies and institutions to make medicine more open to creative destruction.
In the following few weeks, I will be quoting several of the more important or thought-provoking passages.

Book discussed:
Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

Capitalism Is Justified Because It Is an “Engine for Generating Creative Workplaces”

(p. 121) Phelps: . . . Since 2002, I’ve been trying to develop a new justification for capitalism, at least I think it’s new, in which I say that if we’re going to have any possibility of intellectual development we’re going to have to have jobs offering stimulating and challenging opportunities for problem solving, discovery, exploration, and so on. And capitalism, like it or not, has so far been an extraordinary engine for generating creative workplaces in which that sort of personal growth and personal development is possible; perhaps not for everybody but for an appreciable number of people, so if you think that it’s a human right to have that kind of a life, then you have on the face of it a justification for capitalism. There has to be something pretty powerful to overturn or override that.

For the full interview, from which the above is quoted, see:
Vane, Howard R., and Chris Mulhearn, interviewers. “Interview with Edmund S. Phelps.” Journal of Economic Perspectives 23, no. 3 (Summer 2009): 109-24.
(Note: ellipsis added.)

The Entrepreneurial Resilience of a Business School Dean


“Mark Zupan is the dean of the Simon School of Business at the University of Rochester. Baggage carts once were his salvation.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B4) Once I landed in Boston without my wallet or any money, I was able to put into practice what I learned from watching the wonderful movie “The Terminal” featuring Tom Hanks.

Like the character he portrayed, Viktor Navorski, I wandered through the airport and rounded up and returned six baggage carts. I was refunded enough change to be able to afford the subway fare to get to my first meeting. Then, I was able to borrow enough cash from the amused alum I was meeting with to get through the rest of the day and back home to Rochester that night after my assistant faxed a copy of my driver’s license and passport to me.
I have to admit I felt a little idiotic rounding up the carts, but it was one of my finest entrepreneurial ventures.

For the full story, see:
MARK ZUPAN. “FREQUENT FLIER; How to Cope at the Airport Without a Wallet.” The New York Times (Tues., September 4, 2012): B4.
(Note: the online version of the article is dated September 3, 2012.)

No Amount of Econometric Sophistication Will Substitute for Good Data

(p. 234) Using a powerful method due to Singh, we have established a relationship between God’s attitude toward man and the amount of prayer (p. 235) transmitted to God. The method presented here is applicable to a number of important problems. Provided conditional density (1) is assumed, we do not need to observe a variable to compute its conditional expectation with respect to another variable whose density can be estimated. For example, one can extend current empirical work in a variety of areas of economics to estimate the effect of income on happiness or the effect of income inequality on democracy. We conjecture that this powerful method can be extended to the more general case when X is not observed either.

For the full article, from which the above is quoted, see:
Heckman, James. “The Effect of Prayer on God’s Attitude toward Mankind.” Economic Inquiry 48, no. 1 (Jan. 2010): 234-35.

“The New Upper Class Must Start Preaching What It Practices”


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(p. C2) There remains a core of civic virtue and involvement in working-class America that could make headway against its problems if the people who are trying to do the right things get the reinforcement they need–not in the form of government assistance, but in validation of the values and standards they continue to uphold. The best thing that the new upper class can do to provide that reinforcement is to drop its condescending “nonjudgmentalism.” Married, educated people who work hard and conscientiously raise their kids shouldn’t hesitate to voice their disapproval of those who defy these norms. When it comes to marriage and the work ethic, the new upper class must start preaching what it practices.

For the full essay, see:
CHARLES MURRAY. “The New American Divide; The ideal of an ‘American way of life’ is fading as the working class falls further away from institutions like marriage and religion and the upper class becomes more isolated. Charles Murray on what’s cleaving America, and why.” The Wall Street Journal (Sat., January 21, 2012): C1-C2.

The essay quoted above is related to Murray’s book:
Murray, Charles. Coming Apart: The State of White America, 1960-2010. New York: Crown Forum, 2012.

Kahneman Says “Intuitive Thinking” Is “the Origin of Most of What We Do Right–Which Is Most of What We Do”

(p. 415) The investment of attention improves, performance in numerous activities–think of the risks of driving through a narrow space while your mind is wandering-and is essential to some tasks, including comparison, choice, and ordered reasoning. However, System 2 is not a paragon of rationality. Its abilities are limited and so is the knowledge to which it has access. We do not always think straight when we reason, and the errors are not always due to intrusive and incorrect intuitions. Often we make mistakes because we (our System 2) do not know any better.
I have spent more time describing System 1, and have devoted many (p. 416) pages to errors of intuitive judgment and choice that I attribute to it. However, the relative number of pages is a poor indicator of the balance between the marvels and the flaws of intuitive thinking. System 1 is indeed the origin of much that we do wrong, but it is also the origin of most of what we do right–which is most of what we do. Our thoughts and actions are routinely guided by System 1 and generally are on the mark. One of the marvels is the rich and detailed model of our world that is maintained in associative memory: it distinguishes surprising from normal events in a fraction of a second, immediately generates an idea of what was expected instead of a surprise, and automatically searches for some causal interpretation of surprises and of events as they take place.

Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

Romney Praises Dan Senor Book on Israeli Entrepreneurship

SenorDanRomneyAdviserBriefing2012-09-03.jpg “Dan Senor, left, a leading campaign adviser, at a briefing on Saturday for the Romney campaign on the plane en route to Israel.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A10) WASHINGTON — Moments after making remarks in Jerusalem about Middle East culture that enraged Palestinians and undermined the public relations value of his trip to Israel, Mitt Romney looked around the room for Dan Senor, one of his campaign’s top foreign policy advisers.

It was Mr. Senor’s book about entrepreneurs in Israel that informed his comments, Mr. Romney explained to the group of Jewish-American donors he had assembled at the King David hotel. The book, “Start-up Nation,” is among Mr. Senor’s writings that Mr. Romney frequently cites in public.

For the full story, see:
MICHAEL D. SHEAR. “Adviser Draws Attention to Romney Mideast Policy.” The New York Times (Thurs., August 2, 2012): A10.
(Note: the online version of the article is dated August 1, 2012.)

The Senor book is:
Senor, Dan, and Saul Singer. Start-up Nation: The Story of Israel’s Economic Miracle. hb ed. New York: Twelve, 2009.


“L. Paul Bremer III, left, in 2004 when he was the top United States envoy in Iraq, with Mr. Senor, who was his spokesman.” Source of caption and photo: online version of the NYT article quoted and cited above.

School Competition Benefits Students

(p. 150) We study competition between two publicly funded school systems in Ontario, Canada: one that is open to all students, and one that is restricted to children of Catholic backgrounds. A simple model of competition between the competing systems predicts greater effort by school managers in areas with more Catholic families who are willing to switch systems. Consistent with this insight, we find significant effects of competitive pressure on test score gains between third and sixth grade. Our estimates imply that extending competition to all students would raise average test scores in sixth grade by 6 percent to 8 percent of a standard deviation.

For the full article, from which the above abstract is quoted, see:
Card, David, Martin D. Dooley, and A. Abigail Payne. “School Competition and Efficiency with Publicly Funded Catholic Schools.” American Economic Journal: Applied Economics 2, no. 4 (Oct. 2010): 150-76.

Garfield’s Doctors “Basically Tortured Him to Death”


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(p. 15) Had Garfield been left where he lay, he might well have survived; the bullet failed to hit his spine or penetrate any vital organs. Instead, he was given over to the care of doctors, who basically tortured him to death over the next 11 weeks. Two of them repeatedly probed his wound with their unsterilized fingers and instruments before having him carted back to the White House on a hay-and-horsehair mattress.

There, control of the president was seized by a quack with the incredible name of Dr. Doctor Willard Bliss. Dr. Doctor Bliss insisted on stuffing Garfield with heavy meals and alcohol, which brought on protracted waves of vomiting. He and his assistants went on probing the wound several times a day, causing infections that burrowed enormous tunnels of pus throughout the president’s body.
Garfield’s medical “care” is one of the most fascinating, if appalling, parts of Millard’s narrative. Joseph Lister had been demonstrating for years how his theories on the prevention of infection could save lives and limbs, but American doctors largely ignored his advice, not wanting to “go to all the trouble” of washing hands and instruments, Millard writes, enamored of the macho trappings of their profession, the pus and blood and what they referred to fondly as the “good old surgical stink” of the operating room.
Further undermining the president’s recovery was his sickroom in the White House — then a rotting, vermin-ridden structure with broken sewage pipes. Outside, Washington was a pestilential stink hole; besides the first lady, four White House servants and Guiteau himself had contracted malaria. Hoping to save Garfield from the same, Bliss fed him large doses of quinine, causing more intestinal cramping.
The people rallied around their president even as his doctors failed him. The great Western explorer and geologist John Wesley Powell helped design AmeriĀ­ca’s first air-conditioning system to relieve Garfield’s agony. Alexander Graham Bell worked tirelessly to invent a device that could locate the bullet. (It failed when Dr. Bliss insisted he search only the wrong side of Garfield’s torso.) Two thousand people worked overnight to lay 3,200 feet of railroad track, so the president might be taken to a cottage on the Jersey Shore. When the engine couldn’t make the grade, hundreds of men stepped forward to push his train up the final hill.
The president endured everything with amazing fortitude and patience, even remarking near the end, when he learned a fund was being taken up for his family: “How kind and thoughtful! What a generous people!”
“General Garfield died from malpractice,” Guiteau claimed, defending himself at his spectacle of a trial. This was true, but not enough to save Guiteau from the gallows.

For the full review, see:
KEVIN BAKER. “Death of a President.” The New York Times Book Review (Sun., October 2, 2011): 14-15.
(Note: the online version of the review has the date September 30, 2011, and has the title “The Doctors Who Killed a President.”)

The full reference for the book under review, is:
Millard, Candice. Destiny of the Republic: A Tale of Madness, Medicine and the Murder of a President. New York: Doubleday, 2011.

The Precautionary Principle Would Have Blocked Many Great Innovations

(p. 351) The intense aversion to trading increased risk for some other advantage plays out on a grand scale in the laws and regulations governing risk. This trend is especially strong in Europe where the precautionary principle, which prohibits any action that might cause harm, is a widely accepted doctrine. In the regulatory context, the precautionary principle imposes the entire burden of proving safety on anyone who undertakes actions that might harm people or the environment. Multiple international bodies have specified that the absence of scientific evidence of potential damage is not sufficient justification for taking risks. As the jurist Cass Sunstein points out, the precautionary principle is costly, and when interpreted strictly it can be paralyzing. He mentions an impressive list of innovations that would not have passed the test, including “airplanes, air conditioning, antibiotics, automobiles, chlorine, the measles vaccine, open-heart surgery, radio, refrigeration, smallpox vaccine, and X-rays.” The strong version of the precautionary principle is obviously untenable. But enhanced loss aversion is embedded in a strong and widely shared moral intuition; it originates in System 1. The dilemma between intensely loss-averse moral attitudes and efficient risk management does not have a simple and compelling solution.

Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.
(Note: italics in original.)