Jump-start the economy with public investments in science – Jonathan Gruber and Simon Johnson

MIT Sloan Professor Simon Johnson

MIT Sloan Professor of Economics Jonathan Gruber

From The Hill

The American engine of progress and prosperity is in serious trouble. Innovation has stalled. The number of good, middle-class jobs is dwindling. Wealth and opportunity are increasingly concentrated in a few coastal megacities. And cultural divides are widening. How do we turn this tide?

The answer lies in science — specifically, government-funded science. Investment in science is the ultimate pro-growth policy: It leads to more invention, higher productivity and broad-based economic development.

According to our research, if the U.S. government were to boost funding by $100 billion per year with strategic, geographically dispersed investments and initiatives, the result would be roughly 4 million new jobs.

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How do populists win? – Daron Acemoglu and James A. Robinson

Daron Acemoglu, Elizabeth and James Killian Professor of Economics, MIT Sloan School of Management

From Project Syndicate

In the Middle Ages, Italian city-states led the European “commercial revolution” with innovations in finance, trade, and technology. Then something strange happened. In 1264, to take one example, the people of Ferrara decreed that, “The magnificent and illustrious Lord Obizzo … is to be Governor and Ruler and General and permanent Lord of the City.” Suddenly, a democratic republic had voted itself out of existence.

In fact, this was not an uncommon occurrence in Northern Italy at the time. As Niccolo Machiavelli explains in The Prince, the people, seeing that they cannot resist the nobility, give their support to one man, in order to be defended by his authority. The lesson is that people will abandon democracy if they are worried that an elite has captured its institutions.

Medieval Italy’s democratic institutions succumbed to what we might now call populism: an anti-elitist, anti-pluralistic, and exclusionary strategy for building a coalition of the discontented. The method is exclusionary because it relies on a specific definition of “the people,” whose interests must be defended against not just elites, but all others. Hence, in the United Kingdom, the Brexit leader Nigel Farage promised that a vote for “Leave” in 2016 would be a victory for the “real people.” As Donald Trump told a campaign rally the same year, “the other people don’t mean anything.” Likewise, former Colombian President Álvaro Uribe often speaks of the “gente de bien” (the “good people”).

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Globalism is under siege. Here’s how to save it — and why. – JoAnne Yates and Craig N. Murphy

MIT Sloan Distinguished Professor of Management JoAnne Yates

MIT Sloan Distinguished Professor of Management JoAnne Yates

From The Washington Post

Over the past few years, world politics have been governed by a backlash against globalization. From the Brexit mess in Britain to restrictive immigration policies and tariffs in the United States and elsewhere, global economic integration is under assault.

But such integration offers many benefits: a greater variety of less expensive goods, greater opportunities for travel and cultural exchange, a more cosmopolitan world. In this climate, nongovernmental entities may be crucial to preserving them.

Thankfully, engineers have spent the past century building just such international bodies, because they believed that economic integration must remain above politics. These organizations have long set voluntary standards to ensure integration even when the political winds blow against them. This conception of global business standards will be crucial in the years to come as we struggle to preserve the benefits of cohesive systems for international trade, even as politicians battle over how interconnected they want to be.

It is ironic that the British should find themselves in the Brexit mess, because it was British engineers who created the first of the national standards bodies. Their project, a forerunner of today’s British Standards Institution (BSI), was a product of the expansive British Empire. It was founded in 1901 to ensure that industrial products and transportation networks within the United Kingdom and across its empire would be compatible with one another. Although some government representatives were included in its processes, the engineers leading the effort believed such standards should be voluntary, not government-mandated.

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Algorithmic bias or fairness: the importance of the economic context – Catherine Tucker

MIT Sloan Distinguished Professor of Management and Professor of Marketing Catherine Tucker

From the Shorenstein Center

As a society, we have shifted from a world where policy fears are focused on the ubiquity of digital data, to one where those concerns now center on the potential harm caused by the automated processing of this data. Given this, I find it useful as an economist to investigate what leads algorithms to reach apparently biased results—and whether there are causes grounded in economics.

Excellent work from the discipline of computer science has already documented apparent bias in the algorithmic delivery of internet advertising [1]. Recent research of mine built on this finding by running a field test on Facebook (and replicated on Google and Twitter), which revealed that an ad promoting careers in science, technology, engineering, and math (STEM) was shown to between 20 and 40 percent more men than women across different age groups [2]. This test accounted for users from 190 different countries, with the ad displayed to at least 5,000 eyeballs in each country. In every case, the ad was specified as gender-neutral in terms of who it should be shown to.

When my team and I investigated why it was shown to far more men than women, we found that it is not because men use these internet sites more than women. Nor is it because women fail to show interest or click on these types of ads—thereby prompting the algorithm to respond to a perceived lack of interest. (In fact, our results showed that if women do see a STEM career ad, they are more likely than men to click on it.) Nor does it seem to echo any cultural bias against women in the workplace. The extent of female equality in each of the countries as measured by the World Bank was found to be empirically irrelevant for predicting this bias.

Instead, we discovered that the reason this variety of ad is shown to more men than women is because other types of advertisers actually seem to value the opportunity to get their ads in front of female (rather than male) eyeballs—and they’ll spend more to do it. Some advertisers’ willingness to pay more to show ads to women means that an ad which doesn’t specify a gender target is shown to fewer women than men. In essence, the algorithm in this case was designed to minimize costs and maximize exposure, so it shows the ad in question to fewer expensive women than what amounts to a greater number of relatively cheaper men.

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Robots won’t steal our jobs if we put workers at center of AI revolution – Thomas Kochan

MIT Sloan Professor Thomas Kochan

MIT Sloan Professor Thomas Kochan

From The Conversation

The technologies driving artificial intelligence are expanding exponentially, leading many technology experts and futurists to predict machines will soon be doing many of the jobs that humans do today. Some even predict humans could lose control over their future.

While we agree about the seismic changes afoot, we don’t believe this is the right way to think about it. Approaching the challenge this way assumes society has to be passive about how tomorrow’s technologies are designed and implemented. The truth is there is no absolute law that determines the shape and consequences of innovation. We can all influence where it takes us.

Thus, the question society should be asking is: “How can we direct the development of future technologies so that robots complement rather than replace us?”

The Japanese have an apt phrase for this: “giving wisdom to the machines.” And the wisdom comes from workers and an integrated approach to technology design, as our research shows.

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