Paul Romer is the World Bank’s new Chief Economist. Romer is noted for his work on economic growth and specifically endogenous growth theory—the idea that the factors shifting up a nation’s aggregate production function (yes, this concept is abstract fiction) can be identified and to some extent shaped by public policy.
Foremost among these policies are those affecting human capital, like education and health, which have been the mantra of the World Bank for a decade at least.
Romer and the Bank president Jim Kim have an interesting video that outlines the Bank’s thinking and approach going forward. Several points stick out. First, the WB is continuing its push for interdisciplinary approaches, asking economists to work with anthropologists and psychologists and others to understand the world we live in.
Culture—and particularly moral culture (the social norms that dictate what we value and how we behave in specific settings)—are hugely important according to Romer. This is something the members of the Association for Social Economics have been saying since 1941.
Glad that some mainstream folks are catching on, but Romer now considers himself an outsider and heterodox after his recent blasting attack on macroeconomics.
Economics is progressing, slowly and painfully, to a more respectable science.