Future Development Reads: A creative look at government failure, how location affects earnings, and defending behavioral and macroeconomics


For a creative look at overcoming bureaucracy and government failures, check out Water Get Enemy—a graphic novel in every sense of the word. It’s got everything—corruption, public-sector incentives, decentralization failures, political patronage, and the occasional World Bank failure. 

A rare, singly-authored paper in the American Economic Review looks at why programmers earn more in Houston than Hyderabad? Output tradability, technology, and human capital together explain less than half the difference. Location is important, for reasons we don’t fully understand.

And lastly, two economists make convincing arguments in defense of their respective fields, macroeconomics and behavioral economics.

Responding to recent criticisms, Ricardo Reis shows (by looking at, among other things, recent job market papers) that macroeconomic research, policymaking, and forecasting are alright; but macroeconomic teaching, especially at the graduate level, needs revision.

In “Much Ado about Nudging,” Richard Thaler responds to an apparent criticism of behavioral economics by Chater and Lowenstein by claiming that they’re attacking a straw man, that no one claims that behavioral economics can solve all problems. The debate does raise the question of when paternalism can be welfare-improving, something that has yet to be resolved.