Download
HTML Embed
HTML EMBED
Click to Copy

Latest Episodes

Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Make Me Smart with Kai and Molly
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy

How Nobel Prize winner Paul Romer redefined economics

Oct 8, 2018
Share Now on:
HTML EMBED:
COPY
“I’ve been really disappointed that we just haven’t had the kind of political environment where we can think about speeding up technological progress,” Paul Romer said Monday.
ERIC PIERMONT/AFP/Getty Images

Paul Romer of New York University’s Stern School of Business won the Nobel Prize for economics Monday for his work connecting technological innovation to economic growth. He shared the prize with William Nordhaus of Yale, who researches the economic impact of climate change.

Romer’s big breakthrough was this: He took models of economic growth and added a missing, magic ingredient.

“Paul Romer put the production of ideas at the center stage of economic growth,” said MIT’s Scott Stern. Stern said ideas are different from a lot of other goods because they don’t get used up. “Either I eat an apple of you eat the apple, but we can all use calculus,” he said.

Sharing ideas, like the technology behind the internet, creates growth. Ideas need to be protected, at least a little, to reward people for coming up with them. So you have things like patents on new drugs, for example. Romer put all this together in a concrete economic model with a major implication, said Chad Jones, a former colleague of Romer’s and a professor at Stanford University. Jones summarizes: “Economic growth is the result of these innovative efforts by entrepreneurs and scientists and researchers, and so anything that influences their effort can therefore affect our living standards in the long run,” he said.

Governments have the power to promote or discourage innovation through policy. 

“He’s been very influential on governments,” said Joshua Gans, a professor at the University of Toronto. “Paul Romer’s work helped make the case for promoting science and innovation in ways that had not been previously possible.”

And yet, that message hasn’t sunk in as much as Romer himself would like. The U.S. government’s share of all basic research funding in the United States is the lowest it’s been since World War II.

“I’ve been really disappointed that we just haven’t had the kind of political environment where we can think about speeding up technological progress,” Romer said at a news conference Monday.

Click the audio player above to hear the full story. 

If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air.  But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.

Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.

When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.