Saturday, June 11, 2016

Free creators lead to growth, coercive regulators do not

Possibly more fun than factual. From A brief history of human time by Olivier Gergaud, Morgane Laouénan, and Étienne Wasmer.
Historical accounts often assert that notable individuals matter for the growth of particular cities. This column uses a new database of 1.2 million people from 2,000 cities since 800CE to show that some types of ‘notable’ individuals have made a difference. Specifically, the presence of many entrepreneurs and artists is associated with faster long-term growth, but the association does not hold for notable military, political or religious figures.


We compile the largest possible database of “notable” people rather than focusing only on “very famous” individuals, because we are ultimately interested in detecting the statistically significant local economic impact of these individuals. It turns out that weighting individuals by measures of their impact does not make a big difference, which ex post justifies our collection of information on hundreds of thousands of lesser known artists, business people, and local rulers who are famous enough to have been listed and described somewhere on the internet or in various rankings, but are left out of the vast majority of internet sources.
A couple of findings from this exercise.
The fraction of notable people in governance occupations has decreased, while the fraction in occupations such as the arts, literature/media and sports has increased over the centuries. Sports caught up with the arts and literature for the cohorts born in 1870, then remained at the same level until the 1950s cohorts of the 1950s, and eventually came to dominate the database after 1950.


Last and not least, we find a positive correlation between the contemporaneous number of entrepreneurs and the urban growth of the city in which they are located the following decades. More strikingly, the same is also true for artists, with the contemporaneous number or share of artists positively affecting city growth over the next decades. In contrast, we find a zero or negative correlation between the contemporaneous share of “militaries, politicians and religious people” and urban growth in the following decades.
Interesting materials. I am not seeing anything at this level of synopsis about whether or how the researchers managed the direction of causal flow. In other words, did entrepreneurs/artists (creators) cause urban growth, or did urban growth generate the circumstances that permitted the flourishing of entrepreneurs and artists?


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