Melissa Dell on the Significance of Persistence

Hi everyone, this is Jeff, producer of Conversations with Tyler. This episode, the one you're listening to right now, is the 100th episode of CWT. And when we were thinking about how to celebrate, we returned to our motto: listening produces knowledge. This show is about listening to learn, learning to listen. So we thought the best way to commemorate the occasion would be to hear from you about what you've learned across these 100 episodes. To get things started, me and a few others on the team shared some insights we've gleaned, and you can check those out at conversationswithtyler.com. But we really want to hear from you. So to share what you've learned, tweet us at #100CowenConvos, tag Tyler, tag @CowenConvos. We're eager to see what knowledge has been produced by the show. And now, on to the 100th episode of Conversations with Tyler featuring Melissa Dell.

Conversations with Tyler is produced by the Mercatus Center at George Mason University, bridging the gap between academic ideas and real-world problems. Learn more at mercatus.org. And for more conversations, including videos, transcripts, and upcoming dates, visit conversationswithtyler.com. I am chatting today with Melissa Dell, who is one of the world's leading economists. She is a professor of economics at Harvard and recently has won the John Bates Clark Medal, which in the eyes of many is actually harder to win than a Nobel Prize. Melissa, welcome.

Thank you.

Now, as you well know, a lot of your research concerns the idea of persistence. Of historical effects through time. If we look at the economic history of Vietnam, do we on net see persistence effects on the large variables? And in particular, I have in mind the relative performance of North and South Vietnam. So North Vietnam is initially more Chinese-influenced, yet today it has ended up poorer. What does that tell us about persistence?

Yeah, so I've done some work looking at the persistence of economic development in Vietnam. And so the work I did, like, actually was limited to what was South Vietnam, because there's also been huge events obviously that have happened in the past 100 years in North Vietnam with a war that destroyed much of the country, was fought over an extended period of time. But when you look in general at places in Vietnam that have a similar, you know, recent history, but going back in time, one of them was part of a much stronger, more centralized state, the other one was part of what is today Cambodia, a much weaker state, you know, was generally ruled by local lords instead of by a strong centralized state, you see the towns that were part of the stronger centralized state going back before colonialism, so several hundred years ago, more recently they have better functioning local governments, they're richer, they're better off, which shows that, you know, places that have a long history of governance seem better able to do that more recently. So places that going back a long time ago, they were part of the central state. They had to collect taxes locally to send up to the central state. They had to organize military conscripts. The central state mandated that they had certain laws. More recently, those places also have more functional local governments and are also better off economically, whereas the places that never had that structure that comes from a state, it was just essentially, you know, if you were living in that area, there'd be a warlord that you sent tribute to. But there was never any regular taxation, you know, never any organized local government under a central state. Those places, you know, much more recently when there were constitutional reforms in Vietnam that gave them a degree of self-government, they weren't able to do that very effectively. And so, you know, they weren't able to keep the positions on their local city council filled, they weren't able to provide as effectively local public goods like education or health services. And so really having this long history of governance makes places more able to do that today. And that's relevant because there's been a big push to have local governments provide an important role in providing public goods, et cetera. And if places don't have a history of doing that, perhaps not surprisingly, they tend to be, you know, to have a much harder time. And so when the World Bank says, oh, well, we wanna give local autonomy to let local governments decide how to provide schools in the way that works best for them, that's going to work in places that have a long history of providing education. In places that don't, they're more likely to have a hard time.

But if you select your cases on the basis of having similar histories, aren't you selecting for persistence? Because the locales that have reversals of fortune— so a big war in North Vietnam, communism coming to North Vietnam, That's a kind of mean reversion. It deliberately gives them a not-similar history, and do you then not overrate the degree of persistence in the dataset by just taking the sliver that is indeed continuous with its own history?

Yeah, so I think that, like, you could imagine writing papers about different things, and so, like, our motivation was we wanted to think about if the historical state could have a role at all, and in order to do that, you don't really want to compare South Korea to the Philippines, which is what most of the historical literature on this does, because they're different in so many ways. We know that South Korea looks really different from the Philippines, but there's so many ways that they can be different. And so by looking within South Vietnam, we wanted to say, okay, these are places that had a much more recent modern history. Can their past history still matter? But we're not saying that, that, you know, it begins to explain everything. There's other forces that happen more recently that we think, you know, are also important. So certainly that there can be mean reversions, like, and the argument is not that things are always persistent, and I think part of the literature is about, you know, understanding why sometimes things persist and sometimes they don't. So certainly more recent events can matter, and we're not claiming that there's an R-squared of 1, that a place's history is its destiny, but that there are these forces. And you might think— I mean, I think that there's ways in which looking beyond just household consumption today, I think you do very much see the legacy of the historical state in both places that were part of North and South Vietnam. And so if you look at coronavirus, Vietnam has been remarkably effective at dealing with it. They share a border with China, and yet they have almost no cases. They've been super successful at isolating their outbreaks. Life is much more normal there than it would be in the United States. And I think that that in large part goes back to the fact that much of Vietnam does have this history of having a strong centralized state that coordinates very well with local governments. And, you know, having local governments that have been effective at providing public goods like healthcare. And so, you know, that has come in really useful in this moment when you really need a strong centralized response. So I think that that's an example where, you know, I don't have a way to prove that econometrically, But if you look kind of throughout Vietnam, the parts that were part of North Vietnam as well as South Vietnam, they've been able to deal with this, this really effectively. And I don't think that's an accident.

Let's say we take your example of South Korea and the Philippines. If we go back to 1960, as you know, many people in development economics were somewhat optimistic about the Philippines. They have the English language. They had a burgeoning education sector. Ties with the United States, and not many people were optimistic about South Korea. It had per capita income, you know, roughly at a Central African level. If persistence is so important at the aggregate level, shouldn't development economics be more predictive successfully than it in fact is? Few people really predicted the relative fates of South Korea and Philippines, but we could have read off their entire past histories in 1960?

Yeah, so I think it comes down to the fact that the world is fundamentally a complex place. So if you were sitting there in 1960, what is it that you're emphasizing? And I think actually the people that were saying South Korea is a basket case were emphasizing the current circumstances, because this was the midst of the Korean War, which, by the way, was more about external influences in Korea than about Korea itself. And it was about the Cold War, and it was a really bad situation. Much of the country had been destroyed, the politics were a bit of a mess, but if you had looked back at the longer history of Korea, you would have seen that they have this long history of having, you know, functioning institutions that are able to provide conditions that promote economic development, and that's important. So in some sense, like, the 1950s and the '60s were an aberration in Korea's history, whereas if you go back you know, further in time in the Philippines, they were organized very differently. They did not have a history of a strong centralized state, and, you know, that matters potentially, you know, for what they were able to do going forward. And so I think, like, also the argument is not necessarily that a strong state is always good for economic development. So there's, you know, a huge literature looking at examples like Nazi Germany that shows in places where the Prussian state was stronger, the Nazis were better, you know, at exterminating Jews. And so depending on what the state wants to do, you know, having that state capacity can be a good thing or a bad thing. It doesn't necessarily promote economic development at all points in time. In some sense, it seems to be largely a prerequisite. If you can't have a state that's capable of monopolizing violence and promoting, you know, the conditions that we need for economic development, like providing public goods, then most of those places that have chronically had a weak state are very poor. If you have a strong state, it can be good or bad, kind of depending on exactly what that state is doing. So it's, again, it's not, you know, and it can change over time and there can be reversals. But it, you know, it provides potential opportunities if that state does pursue policies that are helpful instead of harmful for economic development for that to happen. Whereas in the Philippines, I mean, you know, there's some arguments that like Marcos actually aspired to be a developmental dictator and he just had no capacity to do that because nobody at the local level would really do what the central government ordered them to do. And instead, it was much easier just to steal things than to, you know, to try to direct the state towards development because the central state in the Philippines just didn't have that capacity.

But say predictively, how much weight do you give persistence in your own understanding of the world? So if we compare Pakistan and India, throughout much of history, what we now call Pakistan was somewhat richer than much of India. It may well have had more state capacity. That's harder to measure. Now, right now, Pakistan is considerably poorer and people are more pessimistic about it. I mean, do you look to the past and think we should upgrade our expectations about Pakistan because of persistence?

Yeah, I mean, so I'll give an example here from a little bit of a different context, but I was presenting some work that I'd done on Mexico to a group of historians. And I think that historians have a very kind of different approach than economists. They tend to focus in on a very narrow context. They might look at a specific village and they want to explain 100% of what was going on in that village in that time period. Whereas, you know, in this paper, I was looking at the impacts of the Mexican Revolution, which is a historical conflict on economic development. And this historian who'd studied it extensively and knows a ton was saying like, well, well, you know, I kind of see what you're saying, and that holds in this case, but what about this exception, and what about that exception? You know, my response was to say, like, my partial R-squared, which is the percent of the variation that this regression explains, is 0.1, which means it's explaining 10% of the variation in the data, and I think, you know, that's pretty good because the world's a complex place, so something that explains 10% of the variation is, you know, potentially a pretty big deal, but that means there's still 90% of the variation that's explained, you know, by other things, and obviously, if you go down to the individual individual level, there's even more variation there, you know, in the data to explain. So, I think that, you know, in these cases where we see like, you know, 10% of the variation being explained by a historical variable, that's actually really strong persistence. But I mean, there's a huge scope for so many things to matter. I'll, you know, say the same thing when I, you know, I teach an undergrad class about economic growth in history. And when we talk about the various explanations you can have, be it geography, different types of institution, cultural factors. Well, there's places in Sub-Saharan Africa that are like 40 times poorer than the US. And so when you have that kind of income differential, there's just a massive amount of variation to explain. So like Nathan Nunn's work on slavery and the role that that plays in explaining Africa's long-run underdevelopment, he gets pretty large coefficients. But they still leave a massive amount of difference to be explained by other things as well because they there's just such large income differences between poor places in the world and rich places. And so I think, you know, if persistence explains 10% of it, that's a case where we see really strong persistence. And of course, there's other cases where we don't see much. And so there's, you know, there's plenty of room for, you know, everybody's preferred theory of economic development to be important, just because the differences are so huge.

In Vietnamese history, do you think that the presence of ethnic Chinese or people who are partly ethnic Chinese is in fact the most important persistence for assessing how communities are doing in relative terms.

Yeah, so I think, you know, we didn't look at that aspect, you know, specifically, like more what we were able to focus on is the presence of institutions, and that holds true, like controlling for the percentage of the population that identifies as Chinese more recently. And so I think that Certainly the fact that you had ethnic Chinese there, you know, setting up communities and bringing those institutions was important to their persistence. But, you know, I'm not sure quantitatively, like, kind of how important you would think that is to economic development. And it's actually like something that we can't even really measure, right? So a very small percentage of the population identifies as Chinese today. Of course, there were far more Chinese that settled and, you know, intermingled with Vietnamese, and we don't really have a measure, you know, of that.

But that may be driving the institutions because ethnic Chinese throughout Southeast Asia, as you know, it predicts household wealth pretty well, but there's been to varying degrees discrimination, so people may not wish to identify too explicitly as ethnic Chinese, or especially in Vietnam, often they're only part Chinese. Yep. And they want their children to have more or less, you know, normal lives, not be the target of discrimination. What do we think is actually driving the persistence effect across the different classes of villages in South Vietnam that you studied? Because the institutions are endogenous, right?

Yeah, yeah. So I mean, I think like that an important part of it, just to step back and provide a little bit more history. And so the part of Vietnam that was a colony of China back 1,000 years ago, it's kind of almost entirely in the north of Vietnam. And then across time, that state moves down and conquers more and more of the South, right? Because it was a much more capable kind of centralized state than the Cambodian state. So naturally it started eating into its territory across time. And when it did that, it was very good at bringing new territories into the Vietnamese state. And so if you look across other borders that were in effect for like, you know, a couple of hundred years, you don't see, you know, any differences in income more recently. But finally, you know, you get to the mid-19th century, and the French show up to colonize Vietnam. If the French hadn't shown up, the Vietnamese state would have probably kept going and conquered all of what is today Cambodia, because they were just a much more effective state militarily at that point in time. But that doesn't happen. The French show up. Effectively, the very kind of southernmost part of what is today Vietnam had just been brought into the Vietnamese state. And the French essentially, you know, stopped that process of integrating them. And according to the historical literature, what, you know, the local institutions, the local customs essentially persist under the French, because the French actually don't have a lot of power to change things on the ground. And so, you know, the local norms at the time that the French show up essentially persist. And then we get forward to the period of independence, and that's when we start observing, you know, all these differences in local governance. And so I think essentially, like, What happened is that the French don't really have the capacity to actually change things at a village level on the ground. They can show up and take over the top level of the government, but they don't have the capacity to go into a village and say, change how you govern yourselves. And so essentially, that means that the way that things were kind of in 1850, that becomes like pretty persistent over the next 100 years while the French are there, because there's just not really like a force to change the village government because the French say, you know, do what you want at the village level, pay taxes to us, but they essentially don't have the same capacity that the Vietnamese state had to conquer places, or they don't have the desire to do it and bring them into a central state. And so I think the persistence is largely about that, because then when you move into the independence period, you know, South Vietnamese state is also at the national level is a chronically weak state. And so again, the South Vietnamese state doesn't have the capacity to go into to the 18,000 hamlets that were in South Vietnam and say, change how you govern yourself. And so I think the persistence is really just about there's not a force to make a change. And maybe things drift a little bit over time. But going further back in time, when the strong Vietnamese state comes in and really says, OK, you're going to implement our institutions at the local level because this is the most effective way that we think we have to tax you and to make you contribute to the state, then that's, you know, a rupture and the institutions change. When there's not the pressure to do that, then I think essentially like the structure that they have for governing themselves just reproduces over time. And so places that had been, you know, part of this strong state historically, the village is the center of government. There's a village government, they organize to tax, they organize to enforce laws, et cetera. And that continues, whereas in places that had not been part of the Vietnamese state, that were part of this— they were on the periphery of this very weak Cambodian state, there was no form of village organization to speak of. You might live near other people, but there wasn't a village government that had been elected the way that it had in Vietnam. Instead, the way that that social organization worked is that there is a local lord who owns the land. It's almost like a feudal-like system. And when the French come in, they don't have an interest or they don't have the capacity to essentially change that, and kind of that just power tends to reproduce itself until there's a strong force to change, right? And so, in the areas that had been part of this strong state, there weren't strong landlords to speak of. There were these village governments, and the people who had the power in the village governments, the families, that tends to reproduce itself over time because people don't want to let go of that power. And where things were organized differently, where it was more about these lords who had power and you pay tribute to them and then they pass that up again, they're not going to willingly let their power go. They want to reproduce that power. And that, I think, essentially is central to leading to persistence. So of course, there can also be cultural attitudes and all those things, other things that underlie that. But I think that part of the dynamic of persistence is that when you have power, you want to do everything in your capacity to maintain that power. When you have economic resources, you want to do everything that's in your capacity to maintain those resources. And sometimes we get these radical raptures that change things substantially. Other times, maybe there's just a gradual wearing away because the world economy has changed or things like that. But there's going to be this sort of this push towards persistence because people that benefit from the way things are want to keep it that way.

But again, how much does that matter in the aggregate? So at least according to the CIA, in 1950, North and South Vietnam have the same per capita income, more or less, maybe poorly measured, but very different histories, right? Different ethnic groups, different methods of governance, and yet it seems to wash out. I mean, isn't that a puzzle for any of you?

I wouldn't take the World Bank GDP data, too seriously for kind of anywhere in the colonial/postcolonial world after World War II, just because it's a very unusual time, right? So there's been these huge disruptions from being colonized by the Japanese. Like, they caused a massive famine in Vietnam that killed kind of millions of people. And then you have the independence war with the French. And like, how on earth any of this is measured, like, sort of, I don't even know. But I think if you go back and you look, for example, at maps that were made in the 1930s by the French, like showing different types of infrastructure, which we think is likely to be correlated with economic development, you see more infrastructure in the north than in the south. I think that we don't have a great way to measure what economic output looked like historically, but I think it's consistent. You know, with what we see more recently, I don't think that there's been a reversal in that case, despite what, you know, some GDP data may say, we have to be pretty suspicious of that data in that period.

But there can be a lot of mechanisms that pretty simply undo a lot of the persistence. So say the villages in the south are poorer, so more people migrate to Saigon, the returns to urbanization we know are very high in development, Saigon's the center of the ethnic Chinese community, just anecdotally described as by far the richest place in Vietnam before the war really geared up. And maybe the South, because it was backward, precisely undid that through migration and caught up and became more urbanized, or not.

So if you look across like the border of like North and South Vietnam, that's not actually where the variation that we're talking about is. Like the variation in what was part of the strong historical state before the French showed up, that border is much further into the south of Vietnam. So if you look at data from household consumption surveys today, you still see a very strong effect. But that doesn't— again, that doesn't mean that it's permanent. And we were kind of interested in looking at how that effect changed across time. And if anything, it does seem to get smaller across time. But then the problem is just your standard errors, right? And so, you know, we don't have really enough data and the changes across time aren't large enough to really be able to establish like if there's some convergence. But this was something that we were actually kind of interested in in the context of this project. You know, are there forces, you know, that can make these effects grow smaller across time? And, you know, so one of the forces is in these places that have had this long history of village government that have very, very effective local governments, they have high high social capital, you see that they're actually less likely to have loans from commercial banks because they don't need that. Like, if you need to get a loan, you can go get it from your friends or family, whereas in the places that don't have that high social capital, they've actually seen further inroads of commercial banks. Or if you look when the Vietnamese state provides formal property titles, people are actually less likely to go and get a property title in the places that have a strong history of village governance, again, because you don't really need it if your local government, if you trust them to enforce your property right, you don't need to go get this thing from the provincial government, which people tend to trust less, and it's just not necessary, but that may matter as development continues. And so I think that there's certainly forces that could lead to reversal, and maybe in another 10 years, we'll have more data that we can look at that and try to understand that more carefully. But like, at least in the data that you see through the present, you still see pretty strong economic differences. And, you know, maybe they're getting weaker, but we just, you know, the differences across time that we're able to observe, we just don't have really the power to say whether those relatively modest differences are convergence or they're just noise in the data.

What do you think is the institutional capacity lacking in Vietnam? So you mentioned they had a great coronavirus response, and we all know they've done some good things with their education system, some very high math and other scores, yet their per capita income, it's about the same as Bolivia by some measures, right? Same general category, which doesn't seem so impressive institutionally. So what's lacking in Vietnam?

I mean, I think like they have been, you know, quite successful economically in recent years relative to where, you know, they were historically. And so essentially you have, right, first of all, like there's the Vietnam War, which, you know, if you look at the period between 1955 and 1975, like 3 million people die in a country of 18 million. So it's just an enormously disruptive period, you know, more bombs dropped by a wide margin per capita than in any other context in history. So the country was just completely devastated by this conflict, which probably wouldn't have happened without outside interference. And so they're completely devastated by the conflict. And then they have this communist government with an ideology that doesn't really work economically. And so they implement some really— they try to implement, but actually aren't weren't successful at implementing some really economically harmful, like, forced collectivization policies in the '80s. And then kind of in the, you know, following reform in China, like, they start, like, reforming as well. And since then, it's been, you know, relatively successful. And I think, like, the questions that we have about Vietnamese development going forward in some sense are similar to the questions about, you know, Chinese development. You know, to what extent is it important, you know, to have, you know, a democratic state to promote innovation? And these are questions that we don't really have. They're very controversial questions that we don't really have the answer to, right? You know, do we think that the policies of the Chinese government are actually, you know, bad for innovation because, you know, there's not democracy and people are restricted in some ways? Or, you know, are they able to tailor their policies enough that, you know, the lack of democratic institutions may be harmful in other ways, but for economic outcomes, it's not stifling innovation. And that's something that I think is a little bit hard to resolve at this level of development, because by and far, they're not kind of at the level of development where to keep growing, they have to innovate. They still have some returns that can be made just by catching up with the global frontier of innovation.

Here's another way to put the question. Say we go back to the 1950s before Vietnam made the list of mistakes you mentioned. Most of the Andean nations had higher or comparable per capita income than Vietnam would have before the war, before communism. What is it that Andean Latin America has had that Vietnam hasn't in terms of levels?

I wasn't sure I quite understood. You mean, so why has Latin America done poorly?

Why has Latin America actually in some ways done better than Vietnam? It has a history of persistence and resource confiscation and landed elites, oligarchy, right? Made a lot of mistakes, yet you get to 1950 or 1955 before the Vietnam War is so significant, and it seems that even poorer parts of Latin America in general are doing better than Vietnam, or for that matter, Cambodia, Laos. What's the way to think about what those parts of Latin America had that Vietnam didn't? And this gets at the what's lacking in Vietnam institutional capacity question.

Yeah, so I think Latin America has a relatively high growth performance in the '40s and '50s, which I think is playing a role in why they're doing a little bit better at that time, whereas it's really It's a fiasco for Southeast Asia, in large part because of the war and Japanese colonization. I mean, if you go back to 1900, I think like Bolivia versus Vietnam are both going to be extremely poor because, you know, industrialization hadn't— essentially hadn't arrived yet. And, you know, part of that may be due to colonialism. Part of it is due to broader factors about, you know, why does it take time for industrialization to spread, you know, from England to the rest of the world. And so I think it's hard to like, to take any specific date and say, okay, this place is doing better than that place, because they all kind of, especially for like the middle-income type countries today, they all tend to have like patterns of up and downs. Most of them, they haven't been able to to sustain growth over a long enough period yet that they've converged to the global frontier. But if you look at Vietnam, it seemed to get on that path more recently, whereas Latin America has this strong growth performance that happens earlier, and then they stagnate. That goes back to this idea of a middle-income trap. And people have talked about this comparison between East Asia and Latin America. So the East Asia, their strong growth performance started later, is China— is Vietnam going to get stuck in the same sort of middle-income trap that Latin America has seemed to be largely stuck in, you know, since the mid-20th century? Or, you know, is Vietnam going to be more like Taiwan or South Korea, and that it can keep sustaining that, um, that growth across time? I think that we don't really have like from an empirical sense, a great understanding of why exactly Latin America got stuck. I think that there's some sense in the literature that it has a lot to do with political economy factors, that there were policies that were captured by elites. And so if you compare like import substitution industrialization, they had that in South Korea too, but it was actually like the policy was wielded to try to promote economic development and to help companies to develop technology with some protection, and then they were forced to go out and compete in global markets. Whereas when you look at how those policies were implemented in Latin America, they were directed towards enriching people connected to politicians. And I think there's some sense that things like that, that the capture of policies plays a role in getting stuck in this middle-income trap. But I think it's not clear at this point what will happen. Will happen in China. And institutions are a high-dimensional thing. And as I said, like, having a state that's capable does not necessarily mean it's going to be good or bad for economic development. It depends what that state does. But if you don't have, like, a capable state at all, like, those places, you know, tend to be disproportionately in sub-Saharan Africa and parts of Southeast Asia that are extremely poor. And that really does seem to be a a barrier to development because you need property rights or stability, public goods, those things to make it a worthwhile investment, to invest in the things that promote economic growth, whether it's investing in a business, investing in education, et cetera.

Let's say we take Mexican villages that were the beneficiaries of land reform during the time of the Mexican Revolution. What does that predict about their current status today?

Yeah, so if you look at places that benefited from land reform, which importantly is a very type-specific type of land reform that gave, you know, it didn't give individual alienable property rights, it gave a community right to a certain amount of land and then the community decided amongst itself how it was going to divide that, and so if you look at those villages that benefited more, you know, 100 years ago, they are poorer today, and they're more agricultural today, and a lot of that seems again to go back to this particular form of property rights, where community is given land, it can't be converted from agricultural to non-agricultural uses, households aren't able to buy or sell the land, it belongs to the community, the community decides how it's divided, that creates all kinds of political problems because, you know, the people with power in the community can, you know, kind of sustain that power by holding control of land, and that has been bad for economic development, which I think again, you know, goes back to a point that when we make these sort of statements about how history matters, it's very important to be sort of precise. And so I think if you were to make a statement like land reform is bad for economic development, that wouldn't really be consistent with the evidence because, you know, there's been land reforms in, you know, in East Asia, you know, following World War II, that, you know, gave people individual property rights, you know, much of the land was land that had been confiscated from the colonizers in the case of Taiwan, and those seem to have been much more successful, whereas when you have this, you know, kind of odd form of community property rights in Mexico that's subject to these political problems, it seems to be pretty bad, or, you know, to use another example, like I've done some work showing that extractive institutions in Peru, so forced labor in mines, was bad for long-run development and traced out sort of the reasons why that was the case. And then have another paper looking at, you know, forced labor in Java in Indonesia historically, and the conclusion there is that the places that were more affected by it are actually better off today. So why would that be the case? I think we can all agree that You know, forced labor was horrible for the people that were subjected to it and were mistreated, but it has very different long-run effects depending on exactly how it was set up. And so, in Peru, this is forced labor in mines. You know, they're taking out silver. Once the silver disappears, that economic activity is gone. You don't build much infrastructure because it's just one mine. All you have to do is get that silver. You know, down to the coast where you can put it on a boat and send it to Spain. So there's not much infrastructure built along with that. And then, sort of, in order to make it easier for the government to force people to work in the mines, you don't let other economic activity come into those regions because you don't want competition for labor. And part of that, you know, was not giving people secure property rights because they didn't want landowners to come in and be competition with the state for this labor. And that has important effects, whereas In Indonesia, it wasn't about mines. It was about sugar. And it was very large-scale. It was actually a larger-scale system than what you saw in Latin America. It was a huge share of Dutch revenue. But sugar has a very different production process. And so once you cut the raw sugar, you can't put that on a boat and send it to Spain. It would spoil quickly. It's very heavy to transport. You can't even take it more than, you know, like a few miles. It needs to be processed. And that processing needs to happen in what, for the time, was a sufficient sophisticated food processing factory. And so what happens is you end up building a lot of infrastructure for factories, for transport, because you have, you know, many of these factories scattered all out across Java. It's not like a single mine in one place. And for each of those factories, you need a road or a railroad to get that back to the port to send it then to the Netherlands, which was the colonizing power. And then you have these, you know, factories with sophisticated technology that's set up. And the sugar, you know, that wasn't good enough to be sent back to the Netherlands could be sold, you know, on local markets. And you need to put that sugar in other food, right? Sugar has really dense linkages to a lot of other industries because you put sugar into everything. So you set up other food processing factories nearby, and that's like a source of agglomeration. And so they're both forced labor. Like, the objectives of both of those institutions were to make as much money as possible for the colonial powers. In both cases, they didn't they didn't care much at all for the colonial population as long as they stayed alive and kept contributing to the forced labor. That was objectives of the colonizers. But because there's two very different sort of technologies and associated sets of infrastructure that come along with mining versus sugar production, the long-run effects are totally different. And so I think the persistence is important in both cases. But the effects it has is very different. So we have to be specific.

Take the Mexican results. Why should we trust the per capita income numbers from Mexican villages? So I did fieldwork in a Mexican village 20 years ago, and I went around and I asked everyone if they knew what a census taker was. They didn't even know what I was talking about. They didn't think any census taker had ever visited. They're supposed to be sent teachers, you know, from down in the city, the teachers never come. They say basically no one ever comes up to see the village. So if we look at per capita income numbers from 1920, 1930, even 1980, 1990, why do we trust them much? Aren't they just numbers that Mexican workers made up so they didn't have to go visit the village?

Yeah. So I mean, historically we wouldn't have like per capita income numbers at all. And so I think like there's sort of, there's different proxies we can use. And so, for example, like, rather than looking at, you know, a household survey, you could look instead at, like, electrification or, you know, access to water. And people have even done that using, like, satellite data, right, which is kind of crude, but we don't think that that is subject to manipulation, right? And these proxies tend to be pretty highly correlated. So I think you're exactly right to say that we should be suspicious of the data and to try to find, you know, multiple indicators and make sure that they are going in the same direction. You know, like, that, that's going to be enormously important. And like, the sampling is going to be enormously important. You know, if you only get, you know, the, the poorest households or the richest households, that's going to look very different. So I think that all these issues are like absolutely critical.

Why is Enid, Oklahoma the grain storage capital of America and indeed number 3 city in the world?

Number 3 city in the world?

That's impressive, isn't it?

In terms of grain storage?

Correct, according to Wikipedia.

I just learned that today, and so I assume you're asking that because that's where I grew up, but I actually don't know the answer to that. Maybe I should, maybe I should write more papers about the persistence of development in Oklahoma.

Why is James Michener an interesting author?

I think it's very intriguing to kind of think about the, the long-run history of places and how that matters.

And you think he does that, say, about the Chesapeake?

Yeah, I mean, I think I haven't, you know, I love to read his books growing up. I haven't read them in a long time from the standpoint of, you know, like evaluating him as a professional historian, but I think he, his work has really made people, you know, intrigued by history and the the role that it plays in people's lives.

How much do you think there's persistence in you, in the sense that did growing up in Enid, Oklahoma shape your later ideas and research, or is that just orthogonal?

No, I think it's definitely not orthogonal, you know, and if we were anthropologists, you'd spend like half your paper or half your book talking about your own perspective and your own history and how that influences like, you know, the way that you see things, and we don't really do that as economists. We like to think of ourselves as being, you know, 100% objective and all of that. But obviously, like, the questions that we're interested in, our priors, the way we approach them depends on our backgrounds. And I think that's part of the reason why having, like, diversity is super important, because if you have more people with different backgrounds, they'll ask different questions, which are all, like, sort of quite important. So I think, like, you know, sort of in my case, like a lot of the questions that I'm interested in, probably the reason I find them interesting probably does go back to things that like happened in my childhood, right? You know, so I have, you know, written about issues related to security. So a paper on the Vietnam War and the effects of bombing versus other strategies and whether or not those were effective for achieving U.S. objectives. Or I've done stuff on the drug trade in Mexico and effects of trying to crack down on the drug trade. I think part of my interest in security goes back to the fact that my parents both worked at an Air Force base when I was growing up, and I was kind of surrounded by people in that world. And I think that there's kind of lots of examples, you know, like that, that I could point to that in many ways, the things that we as researchers find interesting are a product of our experiences, and oftentimes experiences that happened, you know, as a kid or in college.

If we read the Old Testament, are those fundamentally stories of cultural persistence? After all, Judaism is still with us, right? That's quite remarkable. Wonderful that that's the case. But it seems to be a whole book about cultural persistence.

Yeah, I think that that is, um, like, that that is definitely true. And there's a, you know, a question of why certain aspects of culture are particularly persistent, whereas, you know, others disappear. And economists have looked at this a little bit, I mean, but there's obviously a huge, you know, literature beyond that with, um, you know, historians and people in other fields who've tried to understand what gives some things lasting power, whereas others seem to fade away.

If I'm taking the SATs and I don't know the answer to a question, should I just guess? Right? You've written an essay on how to take standardized tests. That's, that's the same illustration.

That's true. I mean, certainly you don't want to leave a blank.

It's a great essay.

If you leave a blank, it's wrong. Although, I mean, I've heard that they're basically, that the SAT is on its way out anyway.

So, you know, with COVID-19 coming, so many top schools have abandoned the requirement to standardized tests. Do you think we should make that permanent or do you think it's bad?

Yeah, I mean, I think that essentially the reason that they have it is when you look at an application, it's really hard to know what to make of grades or other things, um, and it's, you know, it's a metric on which everybody can be compared. But I think it's an, you know, it's a, it's a metric that ultimately holds, you know, a fairly limited amount of information. And part of what it does is just to proxy, um, for socioeconomic status because ultimately the SAT, um, is a test that can be prepared for very well.

And less so than extracurriculars, right? Isn't it at the margin somewhat egalitarian?

Um, the SAT?

Yeah, compared to the other standards that are used.

Yeah, so I think, you know, I think that, that, um, it depends on the way you use it, right? So let's say that you were to just have a cutoff where we're not going to look at anybody who doesn't have a 1600 on the SAT because that's already more applicants than there are spots, then you end up missing like a lot of people who are interesting in larger dimensions. But I think if you look at it within the context of the rest of the application, it kind of— it does have information. If you look at, you know, two students who are similar in other ways and one of them has a much stronger SAT score than the other, that probably tells you something. But I think that we have to appreciate that the SAT alone conflates a lot of different things and not just that student's potential to thrive. But like, I think again, it's one of those things, well, as you point out, what do we really have that's better? I mean, extracurriculars, maybe to an even greater extent, you know, students, some students have more opportunities than others.

Should we still call them Rhodes Scholars?

I think that the concerns that people bring up are sort of very reasonable. So obviously, like, from the standpoint of the Rhodes Trust, they say, well, this is the person that, you know, that made it. Other people, you know, say, well, like, look at all these horrible things that he did and his horrible views, which are true. I mean, I think the important thing is that we have conversations about this, and the conversations that we have are very useful. And so the more concerning thing is not You know, to me, so much the name, but, you know, in what sort of esteem is he held? And if they decided to change the name, like, I personally would be, you know, I would be, I would be fine with that. But I think it's also important that we have conversations about, you know, his legacy and his views and, you know, the role of colonialism more generally, rather than trying to pretend like it didn't happen.

What was your sport?

So I did cross-country.

Running?

Yes.

What is it that outsiders are least likely to understand about the joys of running, say, 100 miles?

I think that the reason that I really like running long distances are you can get out, explore nature, and in some ways it's like a very, almost a very meditative activity. I think that in modern life, we tend to be very focused on what we have to do next, on where we're going to. Whereas when you run long distances, you know, I think all of that in some sense kind of fades away and you're just focused on the activity of running, on where you are, and you stop worrying about what you're gonna do next, what happened previously, and that in some ways is a very liberating experience.

Growing up in Enid, Oklahoma, that's about 100 miles from Tulsa, how much were you taught about what's called Black Wall Street and the 1921 race massacre. Was that a big thing in the curriculum or just simply glossed over?

I'd never, honestly never heard of it, like until I went to college. Like I took Oklahoma history and it wasn't mentioned ever. You know, we'd talk a little bit about the Trail of Tears and a lot of it was spent on talking about the Land Run which is what happened after they had forced the Native Americans off the land. They had essentially a race where white settlers, they shot off the gun and whoever got the piece of land first became the owner. So we spent a lot of time talking about that. About African American history, totally nonexistent.

You have a famous paper on temperature and economic growth. And if I understand correctly, you have in there the result that an average temperature of 1 degree higher centigrade correlates with a growth rate of 1.3% lower, which is a significant effect, as you point out in the paper. What do you think is driving it that makes the effect so large? And it doesn't, as you point out, seem to just be agriculture, right? It's also manufacturing.

Yeah, Ben. So we find that effect in poorer countries, right? So countries that, you know, the way we define that is they're below the median GDP at the start of the sample in 1970. So I think that part of it, certainly part of it is agriculture, and agriculture is a very large share of those countries' economy. So even if you look at the US, hotter years are really bad for agriculture, even though we have things like irrigation and more resistant seeds and things like that. It's still, weather has a very big impact on agriculture, but agriculture is a tiny share of US of the world's GDP. And so it doesn't really matter for the overall picture that we see, whereas in poor countries, agriculture is a much bigger deal. But as you say, it's not just about agriculture. If you think about t-shirt factories in Bangladesh, like, people are working in pretty bad conditions. There's certainly not air conditioning. Oftentimes, there's not even a fan. And there's been numerous studies, both in the field and in labs, that when it's extremely hot, you're less productive at physical activities, and you're less productive at cognitive tasks. You know, if all of our air conditioning was to go out on a 100-degree day, we would be less productive. And so like that comes into play as well. And then finally, there's an impact on political stability. You know, if agriculture has much lower output, food prices will go up. Oftentimes there's food price riots, and that can spill over into more generalized political instability, and that matters for economic outcomes as well.

So should foreign aid subsidize air conditioning?

That becomes a tricky question. And so we think that there are potentially huge productivity effects of air conditioning. People have done some randomized control trials. But if you go and propose that, then the environmental people get very concerned, right? Because it's bad for the environment. I think even short of air conditioning, which is very expensive, even just things like fans or having access to electricity. Having more efficient building standards can make a big difference and is probably more realistic at the same time than getting air conditioning to everyone in sub-Saharan Africa now, which would be very, very costly.

In these poorer countries, do we see higher test scores in the cooler areas or the areas with more altitude? If we compare, say, Quito and Guayaquil, or, you know, Lima and Cusco, whatever. There are comparisons you could make, right?

I think there are. I mean, you know, there's a lot of things that would be, say, different between Lima and Cusco anyways. So I don't know if people have done that, but there are actually studies, but more in rich countries, looking at, you know, if you have the school standardized tests on a hot day, does that matter for scores? And does it matter if your school has air conditioning or not?, and people find a relationship there, you know, that if you're taking a standardized test in Massachusetts, where most of our schools don't actually have air conditioning, and it happens to be really hot, students don't do as well.

What did you learn from your grandmother?

I think I learned, you know, a lot in terms of, you know, what my interests are and what motivates me. So my grandmother, was a pilot during World War II and, you know, was just always very, very interested in learning. You know, back in that time, she didn't ever have an opportunity to go to college, but she just like read books her entire life and was so curious and would give me, you know, all kinds of books, especially related to history and related to, you know, cultures in different places and just really encouraged me to be curious and to pursue things and inspired me that, you know, that women can do that.

How do you now decide which history books you want to read? Obviously many will be project related, but you know a lot of history about many different areas. What's your selection algorithm?

I think, as you say, a lot of it goes back to kind of, I have a whole list of questions that I'm interested in and that I would really like to work on, but I don't have I don't have, you know, the right, essentially the right perspective to answer them because I need more knowledge of the institutions, I need data to be available. And, you know, so a lot of it comes back to being project-driven or sometimes just related to like current events. And so, you know, something that I read recently was looking at the development of the polio vaccine, and there's really a lot of parallels to our current situation with the coronavirus. You know, so polio is a disease like that, you know, many people don't know, like if you get polio, about 80% of people are asymptomatic, but then it can be really serious. And so it's not as if you get polio, you're automatically paralyzed. It's probably just kind of a mild stomach virus in most people, but with some small chance it invades your central nervous system and you get paralyzed. But it was very difficult to control with things like contract tracing because so many people are asymptomatic, right? And And so I was reading about kind of the push for the polio vaccine in the 1950s, which is this super interesting case because over 100 million Americans donated to the drive by the National Foundation for Infantile Paralysis to develop a polio vaccine. It was developed almost entirely with this kind of private donation-based funding. And so they develop a successful vaccine, but then they're in a big rush to push it to market, and the federal government's— the committee that's supposed to license vaccines spends less than 2 hours reviewing who to license, which in comparative perspective, you know, they spend, you know, years and years today typically. And it ended up that like there was a company that wasn't really qualified to produce vaccine, and they produced 400,000 doses of polio vaccine that had live virus in it. And so I kind of got interested in reading about that history, you know, through just the current events, but then I realized, like, you look at where they sent this, you know, live vaccine to, and effectively it seems almost as if it's more or less random because some lots were good, some lots they didn't successfully kill off the poliovirus, which means they gave children who were injected with it polio. And, you know, where exactly that went, you know, seems to be something that that you could actually exploit. And so we're interested now in looking at, like, you know, how did that affect, you know, attitudes towards vaccination in the longer run? Did it affect it at all? Or, you know, did it, did it not?

Two last questions. First, say a student comes to you, an undergraduate, and they're thinking of trying to become a top economist. What is it you look for in that student that might make you think he or she is actually a good candidate? To become a top economist?

So I think, first of all, just having a curiosity for the world and a drive to discover facts is enormously, enormously important. To look at the world and say, like, I want to understand this. And I want to be able to use logic, whether it be with data or with theory, to make sense of what's going on, to try to look at things that are complicated and find a way to simplify them enough that we can understand what's going on. And having that curiosity is just, I think, enormously important. So, you know, a lot of emphasis gets placed on things like, you know, what's your math background? But I think that, you know, if you're kind of interested in the right questions, that there's a lot of capacity to make up you know, potential deficits and, you know, what sort of— what additional math classes do I need to take, or, you know, what additional technical skills do I need to learn. But I think almost part of it is just kind of having— just, just depends on, you know, how you, how you look at the world. Do you look at things and then try to think, okay, how can I simplify this, you know, along— how can I take something that's incredibly complex and narrow in on a specific dimension and really understand that in a way that can kind of shed light on the world. And then along with that, also being humble about the fact that, you know, that doesn't mean that you've understood everything. You've looked at one dimension, it sheds light on things, but you need to, you really need to know what you don't know.

And other than perhaps doing work on the history of the polio vaccine, what can you tell us about what you might be doing or working on next?

Yeah, so I have a couple of broad projects. Which are in some sense both about unlocking data on a massive scale to answer questions that we haven't been able to look at before. And so if you take historical data, whether it be tables or, you know, a compendia of biographies or newspapers, and you go and you put those into Amazon Textract or Google Cloud Vision, it will output complete garbage. It's just, you know, been very specifically geared towards specific things, which are like single-column books, and just does not do well with digitizing, you know, historical data on a large scale. And so we've been really investing in methods and computer vision, as well as in natural language processing to process the output so that we can take historical data on a large scale that would be— these datasets would be too large to ever digitize by hand, and we can get them into a format that can be used to analyze and answer lots of questions. And so one example is historical newspapers. And so we have about 25 million page scans of front pages and editorial pages from newspapers across thousands and thousands of US communities. And newspapers tend to have a complex structure. They might have like 7 columns and and then there's headlines and, you know, there's pictures and there's advertisements and captions, and if you just put those into Google Cloud Vision, again, it will read it like a single-column book and give you total garbage. And so that means that the entire, like, large literature using historical newspapers, unless it uses something like the New York Times or the Wall Street Journal that has been, you know, carefully digitized by a person sitting there manually drawing boxes around the content, all you have are keywords. You can see what words appear on the page, but you can't put those words together into sentences or into paragraphs, and that means we can't extract the sentiment. We don't understand how people are talking about things in these communities. We see what they're talking about, what words they use, but not how they're talking about it. And so by devising methods to automatically extract that data, it gives us a potential to do sentiment analysis to understand across across different communities in the US, how people are talking about very specific events, whether it be about the Vietnam War, whether it be about the rise of scientific medicine, conspiracy theories, you know, name anything you want, like how are people in local newspapers, you know, talking about this? Are they talking about it at all? We can process the images, you know, sort of what sort of iconic images are appearing, are they appearing? So I think it just can unlock a ton of information about news. We're also applying these techniques to lots of firm-level and individual-level data from Japan historically to understand more about their economic development. So we have annual data on like 40,000 Japanese firms and lots of their economic output. So this is tables, like very different than newspapers, but it's a similar, you know, problem of extracting structure from data, working on methods to get all of that out to look at a variety of questions about long-run development in Japan and how they were able to be so successful. And so, like, kind of more broadly, like, I'm really excited about unlocking data that not just us, but that lots of other people can use to understand lots of questions, not just about persistence, but maybe there's just some interesting variation in the past, and you want to use that to understand something that happened in the past. And you're not concerned about if it persisted, but that variation is interesting. And so hopefully, with these tools, It will unlock data, other researchers can use them to unlock their own data, and that will open the door to lots of interesting questions.

Melissa Dell, thank you very much. It's been a pleasure.

Yep, thank you so much.

And look forward to continuing to read your work.

Yep, thank you.

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