In this conversation, Alex Tabarrok, a professor of economics at George Mason University and co-author of the Marginal Revolution blog, dives into the innovative Grand Innovation Prize concept aimed at speeding up vaccine development. He explores the Baumol effect, which sheds light on rising prices in stagnant sectors like education. Tabarrok discusses the transformative potential of online learning and emphasizes the need for effective governance through dominant assurance contracts and even prediction markets to enhance democratic decision-making.
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insights INSIGHT
Grand Innovation Prize Explained
The Grand Innovation Prize incentivizes rapid vaccine development by offering a large reward.
This addresses the issue of companies being hesitant to invest heavily until a vaccine's success is certain.
insights INSIGHT
Prizes vs. Grants
Governments struggle to pick winners, favoring prizes for diverse solutions.
Funding upfront can help smaller firms lacking capital but requires careful tradeoffs.
question_answer ANECDOTE
AstraZeneca Vaccine Trial
Alex Tabarrok advocates for aggressive investment in vaccine development despite potential waste.
He cites AstraZeneca's trial pause as an example of the inherent risks in vaccine development.
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How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better
Tyler Cowen
In 'The Great Stagnation,' Tyler Cowen posits that the American economy has enjoyed 'low-hanging fruit' since the seventeenth century, including free land, immigrant labor, and powerful new technologies. However, over the last forty years, these easy resources have disappeared, and the economy has failed to recognize this shift. Cowen argues that this has led to a technological plateau, resulting in stagnant median wages and distorted political discourse. He also discusses the impact of the internet and other computing technologies, which, despite their benefits, have not significantly raised material standards of living. The book offers a critical look at the causes of the 2008 financial crisis and suggests potential solutions, including a greater respect for scientific innovations that benefit humanity as a whole.
Inadequate Equilibria
Eliezer Yudkowsky
Eliezer Yudkowsky's "Inadequate Equilibria" explores the concept of how systems, particularly social and economic ones, can become stuck in suboptimal states due to flawed incentives and cognitive biases. The book argues that identifying and challenging these 'inadequate equilibria' is crucial for progress and improvement. Yudkowsky uses examples from various fields to illustrate his points, emphasizing the importance of rationality and critical thinking in navigating complex systems. He highlights the role of individual action in disrupting these equilibria and creating positive change. The book's insights are relevant to a wide range of fields, including economics, technology, and social dynamics.
Alex Tabarrok is a professor of economics at George Mason University and with Tyler Cowen a founder of the online education platform http://MRU.org.
I ask Alex Tabarrok about the Grand Innovation Prize, the Baumol effect, and Dominant Assurance Contracts.
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