State of the art

Kevin Lewis

August 15, 2013

Arts and Crafts: Critical to Economic Innovation

Rex LaMore et al.
Economic Development Quarterly, August 2013, Pages 221-229

Governments, schools, and other nonprofit organizations are engaged in critical budget decisions that may affect our economic development success. The assumption is that arts and crafts are dispensable extras. Research suggests, however, that disposing of arts and crafts may have negative consequences for the country's ability to produce innovative scientists and engineers who invent patentable products and found new companies. A study of Michigan State University Honors College science and technology graduates (1990-1995) yielded four striking results: (a) graduates majoring in science, technology, engineering, and mathematics (STEM) subjects are far more likely to have extensive arts and crafts skills than the average American; (b) arts and crafts experiences are significantly correlated with producing patentable inventions and founding new companies; (c) the majority believe that their innovative ability is stimulated by their arts and crafts knowledge; and (d) lifelong participation and exposure in the arts and crafts yields the most significant impacts for innovators and entrepreneurs.


Innovation and firm value: An investigation of the changing role of patents, 1985-2007

Sharon Belenzon & Andrea Patacconi
Research Policy, forthcoming

This paper examines how the relationship between firm value and patent-based indicators of inventive activity has changed over time. We use data from more than 33,000 mergers and acquisitions deals between 1985 and 2007, and distinguish between American (USPTO) and European (EPO) patents. Our results indicate that over time EPO patents have become the dominant indicator of innovative activity, while USPTO patents have no effect on firm value near the end of the sample period. The results are robust to controlling for citations and are especially strong for small firms, for firms operating in the drug and chemical industries, and when target and acquiring firms operate in different industries or countries.


One Swallow Doesn't Make a Summer: New Evidence on Anchoring Effects

Zacharias Maniadis, Fabio Tufano & John List
American Economic Review, forthcoming

The experimental method is taking on increasing import within the economic science. We present a theoretical framework that provides insights into the optimal usage of the experimental method and the appropriate interpretation of experimental results. A key insight is that the rate of false positives depends not only on the observed significance level, but also on statistical power of the test and research priors. Through the lens of our model, we argue that most 'surprising' results published in the top scientific journals are likely false. As an example, we present evidence that a celebrated study with far-reaching economic implications reports results that are not replicable. The bad news is that this study is just one of hundreds that will not replicate. The good news is that a little replication goes a long way: a few independent replications dramatically increase the chances that the original finding is true.


How Copyright Makes Books and Music Disappear (and How Secondary Liability Rules Help Resurrect Old Songs)

Paul Heald
University of Illinois Working Paper, July 2013

A random sample of new books for sale on shows more books for sale from the 1880's than the 1980's. Why? This paper presents new data on how copyright seems to make works disappear. First, a random sample of 2300 new books for sale on is analyzed along with a random sample of 2000 songs available on new DVD's. Copyright status correlates highly with absence from the Amazon shelf. Together with publishing business models, copyright law seems to stifle distribution and access. Second, the availability on YouTube of songs that reached number one on the U.S., French, and Brazilian pop charts from 1930-60 is analyzed in terms of the identity of the uploader, type of upload, number of views, date of upload, and monetization status. An analysis of the data demonstrates that the DMCA safe harbor system as applied to YouTube helps maintain some level of access to old songs by allowing those possessing copies (primarily infringers) to communicate relatively costlessly with copyright owners to satisfy the market of potential listeners.


Piracy and Copyright Enforcement Mechanisms

Brett Danaher, Michael Smith & Rahul Telang
NBER Working Paper, June 2013

Much debate exists around the impact that illegal file sharing may have on the creative industries. Similarly, opinions differ regarding whether the producers of artistic works should be forced to accept any weakening of intellectual property rights resulting from illegal file sharing, or if governments should intervene to protect these rights. This chapter seeks to inform these questions by outlining what we do and do not know from existing academic research. We first discuss whether filesharing displaces sales of media goods and then discuss whether such displacement will lead to reduced incentives to produce new creative works. We continue by summarizing recent findings on what businesses can do to compete with piracy and the effectiveness of anti-piracy interventions on encouraging consumers to migrate from illegal to legal consumption channels. We conclude by demonstrating that without additional empirical evidence, it will be difficult to determine the socially optimal set of strategies and government copyright policies in the digital era.


An Empirical Guide to Hiring Assistant Professors in Economics

John Conley & Ali Sina Onder
Vanderbilt University Working Paper, May 2013

We study the research productivity of top Ph.D. programs in economics. We find that class rank is as important as departmental rank as predictors of future research productivity. For example, the best graduate from UIUC or Toronto in a given year will have roughly the same number of American Economic Review (AER) equivalent publications at year six after graduation as the number three graduate from Berkeley, U. Penn or Yale. We also find that research productivity of graduates drops off very quickly with class rank at all departments. For example, even at Harvard, the median graduate has only 0.04 AER paper at year six, an untenurable record at almost any department. These results provide guidance on how much weight to give to place of graduation relative to class standing when hiring new assistant professors. They also suggest that even the top departments are not doing a very good job of training students to be successful research economists for any not in the top of their class.


Big Science vs. Little Science: How Scientific Impact Scales with Funding

Jean-Michel Fortin & David Currie
PLoS ONE, June 2013

Agencies that fund scientific research must choose: is it more effective to give large grants to a few elite researchers, or small grants to many researchers? Large grants would be more effective only if scientific impact increases as an accelerating function of grant size. Here, we examine the scientific impact of individual university-based researchers in three disciplines funded by the Natural Sciences and Engineering Research Council of Canada (NSERC). We considered four indices of scientific impact: numbers of articles published, numbers of citations to those articles, the most cited article, and the number of highly cited articles, each measured over a four-year period. We related these to the amount of NSERC funding received. Impact is positively, but only weakly, related to funding. Researchers who received additional funds from a second federal granting council, the Canadian Institutes for Health Research, were not more productive than those who received only NSERC funding. Impact was generally a decelerating function of funding. Impact per dollar was therefore lower for large grant-holders. This is inconsistent with the hypothesis that larger grants lead to larger discoveries. Further, the impact of researchers who received increases in funding did not predictably increase. We conclude that scientific impact (as reflected by publications) is only weakly limited by funding. We suggest that funding strategies that target diversity, rather than "excellence", are likely to prove to be more productive.


U.S. and Them: The Geography of Academic Research

Jishnu Das et al.
Journal of Development Economics, forthcoming

Using a database of 76,046 empirical economics papers published between 1985 and 2005, we report two associations. First, research output on a given country increases with the country's population and wealth, yielding a strong correlation between per-capita research output and per-capita GDP. Regressions controlling for data quality, governance and the use of English give an estimated research-wealth elasticity of 0.32; surprisingly, the U.S. is not an outlier. Second, papers written about the U.S. are 2.5 percentage-points more likely to be published in the top five economics journals after accounting for authors' institutional affiliations and the field of study. This is a large effect because only 1.5 percent of all papers written about countries other than the U.S. are published in first-tier journals. No similar premium for research on the U.S. is detected in second-tier general interest journals, where papers from the UK and Europe command a substantial premium instead.


State Incentives for Innovation, Star Scientists and Jobs: Evidence from Biotech

Enrico Moretti & Daniel Wilson
NBER Working Paper, August 2013

We evaluate the effects of state-provided financial incentives for biotech companies, which are part of a growing trend of placed-based policies designed to spur innovation clusters. We estimate that the adoption of subsidies for biotech employers by a state raises the number of star biotech scientists in that state by about 15 percent over a three year period. A 10% decline in the user cost of capital induced by an increase in R&D tax incentives raises the number of stars by 22%. Most of the gains are due to the relocation of star scientist to adopting states, with limited effect on the productivity of incumbent scientists already in the state. The gains are concentrated among private sector inventors. We uncover little effect of subsidies on academic researchers, consistent with the fact that their incentives are unaffected. Our estimates indicate that the effect on overall employment in the biotech sector is of comparable magnitude to that on star scientists. Consistent with a model where workers are fairly mobile across states, we find limited effects on salaries in the industry. We uncover large effects on employment in the non-traded sector due to a sizable multiplier effect, with the largest impact on employment in construction and retail. Finally, we find mixed evidence of a displacement effect on states that are geographically close, or states that economically close as measured by migration flows.


Look Again: Effects of Brain Images and Mind-Brain Dualism on Lay Evaluations of Research

Cayce Hook & Martha Farah
Journal of Cognitive Neuroscience, September 2013, Pages 1397-1405

Brain scans have frequently been credited with uniquely seductive and persuasive qualities, leading to claims that fMRI research receives a disproportionate share of public attention and funding. It has been suggested that functional brain images are fascinating because they contradict dualist beliefs regarding the relationship between the body and the mind. Although previous research has indicated that brain images can increase judgments of an article's scientific reasoning, the hypotheses that brain scans make research appear more interesting, surprising, or worthy of funding have not been tested. Neither has the relation between the allure of brain imaging and dualism. In the following three studies, laypersons rated both fictional research descriptions and real science news articles accompanied by brain scans, bar charts, or photographs. Across 988 participants, we found little evidence of neuroimaging's seductive allure or of its relation to self-professed dualistic beliefs. These results, taken together with other recent null findings, suggest that brain images are less powerful than has been argued.


Mind Matters

Slavisa Tasic
Kyklos, August 2013, Pages 403-416

This paper argues that two different worldviews may be identified in economics and hypothesizes about the origins of this differentiation. I argue that the differences in economic worldviews go beyond technical academic, methodological or ideological distinctions; instead, they may be related to both old conceptions of the two types of mind and some newer findings in cognitive neuroscience. In particular, I analyze the recent developments in economics from the brain lateralization point of view and argue that some salient trends in economic thought are largely compatible with the hypothesis of the increased left brain hemisphere dominance.


Why Selective Publication of Statistically Significant Results Can Be Effective

Joost de Winter & Riender Happee
PLoS ONE, June 2013

Concerns exist within the medical and psychological sciences that many published research findings are not replicable. Guidelines accordingly recommend that the file drawer effect should be eliminated and that statistical significance should not be a criterion in the decision to submit and publish scientific results. By means of a simulation study, we show that selectively publishing effects that differ significantly from the cumulative meta-analytic effect evokes the Proteus phenomenon of poorly replicable and alternating findings. However, the simulation also shows that the selective publication approach yields a scientific record that is content rich as compared to publishing everything, in the sense that fewer publications are needed for obtaining an accurate meta-analytic estimation of the true effect. We conclude that, under the assumption of self-correcting science, the file drawer effect can be beneficial for the scientific collective.


Necessity as the Mother of Invention: Innovative Responses to Natural Disasters

Qing Miao & David Popp
NBER Working Paper, July 2013

How do innovators respond to the shock of a natural disaster? Do natural disasters spur technical innovations that can reduce the risk of future hazards? This paper examines the impact of three types of natural disasters including earthquakes, droughts and flooding on the innovation of their respective mitigation technologies. Using patent and disaster data, our study is the first to relate natural disasters to technology innovation, and also presents the first attempt to empirically examine adaptation responses to climate change across multiple sectors at the country level. Overall, we show that natural disasters lead to more risk-mitigating innovations, while the degree of influence varies across different types of disasters and technologies.


The stereotyping of science: Superficial details influence perceptions of what is scientific

Douglas Krull & David Silvera
Journal of Applied Social Psychology, August 2013, Pages 1660-1667

Previous research indicates that superficial details can influence judgments about science. The current research investigated whether the content of research influences judgments about whether research is scientific. In Experiment 1, participants judged topics and equipment associated with natural science to be more scientific than topics and equipment associated with behavioral science. Experiment 2 found that natural science topics combined with natural science equipment were rated as more scientific than all other combinations. Experiment 3 replicated these findings and found that research using natural science topics and natural science equipment was also judged to be more important. Thus, although science is defined by its method, the topic being investigated and the equipment being used influence judgments about what is scientific.


Population heterogeneity and causal inference

Yu Xie
Proceedings of the National Academy of Sciences, 16 April 2013, Pages 6262-6268

Population heterogeneity is ubiquitous in social science. The very objective of social science research is not to discover abstract and universal laws but to understand population heterogeneity. Due to population heterogeneity, causal inference with observational data in social science is impossible without strong assumptions. Researchers have long been concerned with two potential sources of bias. The first is bias in unobserved pretreatment factors affecting the outcome even in the absence of treatment. The second is bias due to heterogeneity in treatment effects. In this article, I show how "composition bias" due to population heterogeneity evolves over time when treatment propensity is systematically associated with heterogeneous treatment effects. A form of selection bias, composition bias, arises dynamically at the aggregate level even when the classic assumption of ignorability holds true at the microlevel.


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