Average TFP growth declined after 1970 due to constraints on idea processing capability, not idea supply, in particular by policies that affect financial market effectiveness

James, Kevin Roger and Kotak, Akshay and Tsomocos, Dimitrios P., Ideas, Idea Processing, and TFP Growth in the US: 1899 to 2019 (July 13, 2022). SSRN: http://dx.doi.org/10.2139/ssrn.4161964

Abstract: Innovativity - an economy's ability to produce the innovations that drive total factor productivity (TFP)  growth - requires both ideas and the ability to process those ideas into new products and/or techniques. We model innovativity as a function of endogenous idea processing capability subject to an exogenous idea supply constraint and derive an empirical measure of innovativity that is independent of the TFP data itself. Using exogenous shocks and theoretical restrictions, we establish that: i) innovativity predicts the evolution of average TFP growth; ii) idea processing capability is the binding constraint on innovativity; and iii) average TFP growth declined after 1970 due to a constraints on idea processing capability, not idea supply.

Keywords: Innovation, Financial Market Effectiveness, Endogenous Growth, Total Factor Productivity

JEL Classification: O44, O43, O47, O16, O51, O31

V Conclusion

An innovation requires both an exploitable idea and an entrepreneur who transforms that exploitable idea into a new product or process. Innovativity—the economy’s ability to create the innovations that drive TFP growth—is therefore determined by both idea supply and idea processing capability rather than by idea supply alone. Examining US innovativity over the last 120 years, we find that it is plausibly the case that idea processing capability is now and has been the binding constraint on US TFP growth. This finding therefore suggests that idea processing capability plays a central role in the growth process and merits further investigation.

Our innovativity framework creates a new perspective on the debate over the future of economic growth by calling the neo-Malthusian analysis of Gordan (2012, 2014) into question. Starting from the premise that ideas drive TFP growth and the observation that TFP growth has fallen since the Peak regime of 1946/1969, Gordon reaches the seemingly inescapable conclusion that TFP growth is declining because we are running out of ideas. And, if we are running out of ideas, it inevitably follows that “future economic growth may gradually sputter out”(Gordon 2012). Needless to say, the end of growth would have profound and terrible consequences for all aspects of economic, political, and social life.

Our analysis offers a way out of this dismal conclusion. We find that the poor TFP growth performance of the US economy since 1980 is not due a lack of ideas but to a lack of idea processing capability. Our analysis further suggests that the economy’s idea processing capability can be (and has been) influenced by policy, and in particular by policies that a↵ect financial market effectiveness. Consequently, the poor TFP growth performance of the US economy may be due to (cheaply) correctable policy failings rather than to a brute fact of nature that we must simply accept and deal with as best we can.

Our analysis here is exploratory. We focus upon endogenizing idea processing capability in a TFP growth model in which both idea processing capability and idea supply play a central role. To do that, we abstract away from important features of endogenous growth theory. We aim to more fully incorporate these features in future work. It may happen that doing so alters some of the conclusions we reach here. But, given the stakes in the future of growth debate, we should find out.

All over the world, gay men are met with more aversion than gay women; gay men are perceived as mentally unhealthy and more threatening (e.g., more likely to be child molesters)

Sexual Orientation as Gendered to the Everyday Perceiver. P. J. Henry & Russell L. Steiger. Sex Roles, Aug 10 2022. https://rd.springer.com/article/10.1007/s11199-022-01313-1

Abstract: We present an integrated interdisciplinary review of people’s tendency to perceive sexual orientation as a fundamentally gendered phenomenon. We draw from psychology and other disciplines to illustrate that, across cultures and over time, people view and evaluate lesbians, gay men, and bisexuals through how they conform or fail to conform to traditional gender expectations. We divide the review into two sections. The first draws upon historical, anthropological, legal, and qualitative approaches. The second draws upon psychological and sociological quantitative studies. A common thread across these disciplines is that gender and sexual orientation are inseparable constructs in the mind of the everyday social perceiver.

Temporal variations in individuals' religiosity did not predict variations in happiness

Temporal Associations between Religiosity and Subjective Well-Being in a Nationally Representative Australian Sample. Mohsen Joshanloo. The International Journal for the Psychology of Religion, Aug 10 2022. https://doi.org/10.1080/10508619.2022.2108257

Abstract: This study examined the between-person and within-person associations between 4 components of subjective well-being (i.e., general life satisfaction, satisfaction with life domains, positive affect, and negative affect) and 2 components of religiosity (i.e., religious salience and religious participation). Data were drawn from the Household, Income, and Labor Dynamics in Australia (HILDA) Survey, collected 5 times between 2004 and 2018. The Random-Intercept Cross-Lagged Panel Model was used to analyze the data. Results showed weak between-person associations between the components of religiosity and subjective well-being. At the within-person level, the cross-lagged associations between religiosity and subjective well-being variables were trivial and nonsignificant. This indicates a lack of robust temporal associations between religiosity and subjective well-being when measured at intervals of a few years.

Higher IQ in adolescence was related to higher openness, lower neuroticism, lower extraversion, lower agreeableness and lower conscientiousness 50 years later

IQ in adolescence and cognition over 50 years later: The mediating role of adult personality. Yannick Stephan et al. Intelligence, Volume 94, September–October 2022, 101682. https://doi.org/10.1016/j.intell.2022.101682

Highlights

• Higher IQ in adolescence was related to better cognition 50 years later.

• Higher IQ was related to higher openness to experience in adulthood.

• Higher openness mediated the link between adolescent IQ and late life cognition.

Abstract: There is substantial evidence for the association between higher early life IQ and better cognition in late life. To advance knowledge on potential pathways, the present study tested whether Five-Factor Model personality traits in adulthood mediate the association between adolescent IQ and later-life cognition. Participants were from the Graduate sample of the Wisconsin Longitudinal Study on Aging (WLS; N = 3585). IQ was assessed in 1957 (about age 17), personality was assessed in 2003–2005 (age = 64), and cognition was assessed in 2011 (age = 71). Controlling for demographic factors, higher IQ in adolescence was related to higher openness, lower neuroticism, lower extraversion, lower agreeableness and lower conscientiousness in adulthood. Higher openness partially mediated the association between higher IQ and better cognition. Additional analyses indicated that the pattern of associations between IQ, personality and cognition was similar when the polygenic score for cognition was included as an additional covariate. Although effect size were small, this study provides new evidence that openness in adulthood is on the pathway between early life IQ and later-life cognition.

Keywords: IQPersonality traitsCognitionMediationLongitudinal study