Economist Daron Acemoglu named Institute Professor
Acemoglu: ‘My work has not been in any way a static thing’
Economics professor Daron Acemoglu was named Institute Professor July 10.
Acemoglu is the winner of the 2005 John Bates Clark Medal and co-author of the New York Times bestselling book Why Nations Fail.
The Tech sat down with Professor Acemoglu to discuss his research and experiences at MIT. This interview has been lightly edited for length and clarity.
The Tech: What does the title of Institute Professor mean to you?
Daron Acemoglu: It's a great honor. If you look at the list of people who have held the title in the past and are holding it now, it's an amazing list of scholars and thought leaders. The fact that I was put among them is a huge privilege and honor and a very humbling one.
TT: What research have you done so far that you are most proud of?
Acemoglu: Two areas have defined a lot of my work and both of them come from efforts to understand the causes of prosperity and poverty around the world.
The first is on political economy and institutions. In contrast to a lot of the economics literature, which did not deny that institutions and social organization matter, but did leave them aside, I was convinced that these were really central determinants of the growth process and the ability of societies to achieve prosperity. I put a lot of the focus on institutions and that focus is multifaceted. It meant understanding which dimensions of institutions matter, how institutions become self sustaining, and how they change. Why don’t institutions and organizations necessarily have a tendency to become more efficient or more growth promoting over time? In fact, under some circumstances when we most need institutions to function, they are more likely to fail.
A lot of the early work I did was theoretical, trying to understand the dynamics of institutions and what makes them tick. The work I did over 15 — and almost 20 — years ago then turned to the empirical aspects of trying to identify what dimensions of institutions matter and the ways in which they change and function both at the macro and the micro level.
The second area has been on technology. A lot of my early work on that has been on understanding how incentives and markets shape the direction of technological change, meaning whether people invest in one type of technology or another. Do you use a silicon chip more to turn it into scanners or laptops? How much do people push the different frontiers of technology? That is important for both overall prosperity and distribution [of prosperity].
Who benefits from technology? Many technologies replace certain types of workers and complement other types of workers so the direction of technological change is not just of academic interest but really critical for understanding how gains from creativity and knowledge in society are distributed.
More recently I have really been building on this last point and analyzing automation and robots, obviously critical topics for MIT. There are a lot of simplifications or misconceptions in the public debate about some of these technologies and how and why they may or may not create shared prosperity. For example, there are a lot of exaggerated doom and gloom stories about automation and robots, but on the other hand, there are many economists and public commentators that express a false sense of security by saying that in the past things have worked out, so they will work out [in the future]. Both of those ideas are simplistic, both conceptually and also compared to what our empirical work shows. In reality, automation does displace workers, reduces the labor share, and can reduce unemployment. At the same time, however, other types of technologies can help reinstate labor. It's the balance between those two types of technologies that matters, and that's the sort of thing that we've been studying both theoretically and empirically.
TT: What profound or unexpected results have you uncovered during your research?
Acemoglu: It is hard for one to say that one’s results are profound. My own thinking on most topics is always, “There are first order insights that we are missing.” I don't think about whether they’re profound or not, but a lot of the ideas that I find appealing are a little surprising in some sense.
For instance, one set of results that I thought was quite surprising is how an increase in the abundance of a factor tends to make technology endogenously more biased to that factor in a complementary way. In the context of automation, how automation actually impacts employment and wage structures turns out to be very different from what people thought, both in public discussions and in some academic discussions.
TT: What work did you envision yourself doing when you came to MIT? How has that vision grown and evolved over time?
Acemoglu: I was interested in long run economic growth, technological change, and institutional foundations of growth. I have continued to work on all of these things but I have shifted my style from time to time and changed my mind on certain things. My work has not been in any way a static thing, but the broad set of questions that motivated me to get into economics in the first place have persisted.
TT: What is your process for deciding what topics to study and what questions to try to answer next?
For one, I am most attracted to topics where people are converging towards a conventional wisdom that I don’t agree with, so I can probe issues that people are thinking about where they’re not seeing the big picture.
Second, the big questions are attractive. Some of the most major challenges facing us are climate change, institutional change, collapse of democracy, automation, and robots, and all of these appeal to me because they have meaningful impacts on the future of humanity. The research I do will not immediately have a such an impact, but at least, as an academic community, we can help that process or refine it.
TT: What motivates you in your work?
Acemoglu: I like what I do. MIT is a fantastic intellectual environment. I'm very grateful. What makes MIT great is that a lot of people really enjoy what they're doing. Beyond that, it’s really this sense that I'm working on something meaningful that's actually important for societal problems.
TT: How have you seen the field of economics and MIT as an institution evolve during your time here?
Acemoglu: Economics is a young discipline and has been changing. On the other hand, it also has some strong foundations, so it’s an interesting mix. MIT has always been the leading place in economics because it's very dynamic and adaptable. During my time here, economics at MIT has become more empirical and more engaged with a social context. You can't do most of the research today by completely abstracting from the institutions, settings, policies, societal pressures, or environment in which you are functioning. Economics is interacting more with history, political science, sociology, and psychology. Those are challenging interactions for economists but ultimately fruitful. But, on the other hand, economics has done that without giving up its serious mathematical foundation. I find that really impressive.
TT: What advice would you give to community members and those aspiring to work in economics?
Acemoglu: Having a playfully open mind to experiment with different things and reading and thinking a lot to understand the broader context. Don’t get locked into a particular set of ideas, but also celebrate the commitment to doing serious, excellent, and well crafted work, which is my hallmark.
People invest a lot in making everything rigorous, credible, and as good as it can be at the frontier. That hallmark is not just about research but an attitude towards knowledge that embodies the best values of MIT. For that reason, MIT economics, though small, is actually a leader that sets the trends in economics.
TT: Do you have any exciting work planned for the future?
Acemoglu: There are two areas that I’m working on a lot and I find very important. One is automation and how it is changing both the economy and society, as well as how it can be made better. The other is about climate change and climate adaptation. Given how [climate change] has become completely defining of our humanity and to some degree understudied and overlooked in terms of its importance and economics, it’s another area that I am devoting more of my time to.