This is a linkpost for a paper I wrote recently, “Endogenous Growth and Excess Variety”, along with a summary.
Two schools in growth theory
Roughly speaking:
In Romer’s (1990) growth model, output per person is interpreted as an economy’s level of “technology”, and the economic growth rate—the growth rate of “real GDP” per person—is proportional to the amount of R&D being done. As Jones (1995) pointed out, populations have grown greatly over the last century, and the proportion of people doing research (and the proportion of GDP spent on research) has grown even more quickly, yet the economic growth rate has not risen. Growth theorists have mainly taken two approaches to reconciling [research] population growth with constant economic growth.
“Semi-endogenous” growth models (introduced by Jones (1995)) posit that, as the technological frontier advances, further advances get more difficult. Growth in the number of researchers, and ultimately (if research is not automated) population growth, is therefore necessary to sustain economic growth.
“Second-wave endogenous” (I’ll write “SWE”) growth models posit instead that technology grows exponentially with a constant or with a growing population. The idea is that process efficiency—the quantity of a given good producible with given labor and/or capital inputs—grows exponentially with constant research effort, as in a first-wave endogenous model; but when population grows, we develop more goods, leaving research effort per good fixed. (We do this, in the model, because each innovator needs a monopoly on his or her invention in order to compensate for the costs of developing it.) Improvements in process efficiency are called “vertical innovations” and increases in good variety are called “horizontal innovations”. Variety is desirable, so the one-off increase in variety produced by an increase to the population size increases real GDP, but it does not increase the growth rate. Likewise exponential population growth raise
Consequentialism and Cluelessness by Richard Y Chappell (27 karma)
Why it's good: Raises and defends an important point that I think would release a lot of people from cluelessness-induced paralysis if more widely shared, namely that Option A can still have higher expected value than Option B despite us having no clue what many of the consequences will be, because these invisible consequences speak neither for or against either option. (Another important point that I wish was better known is that Person-affecting intuitions can often be money pumped, although this post was essentially a repeat of a post from 2020.)