Thoughts on economics and liberty

A tiny sliver of humanity contributes more than 50 per cent to our progress and wealth. #3

The human capital literature in economics does not have refined studies that distinguish top talent from ordinary talent. The paper I cited here was the first I had come across but it was not an empirical analysis.

Now, the Economist has written about a paper that proves this hypothesis empirically, that top talent matters most.

http://www.economist.com/blogs/freeexchange/2014/07/education-and-industrialisation?

"It is the skills held by top engineers and entrepreneurs that enables a society to innovate and foster the type of rapid technological progress that characterised the industrial revolution".

(Word version of the Economist article and PDF of the paper). 

All the more reason for India to focus on “upper-tail knowledge” – or ultra-talent.

BRAIN DRAIN MATTERS – BUT ONLY AT THE VERY TOP END.

Sanjeev Sabhlok

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2 thoughts on “A tiny sliver of humanity contributes more than 50 per cent to our progress and wealth. #3
  1. Alex C.

    Was Einstein considered a “top talent” before his theories achieved spectacular confirmation? By the standards of the day, he was a poor student and slow learner, while he himself lambasted the high importance attached to brainless rote-learning. He even failed to get into engineering college, despite excellent grades in Physics and Math’s. How do you know if the so-called “top-talent” of tomorrow is in today’s IIT and not some clerk in a backwater post? Can any “top-talent” even make it through the soul-crushing IIT rigmarole?

    This thesis of “top” talent is preposterous. Identification of 1% people as the top contributors is well and good, but those “1%” are identified ex post facto, thus this thesis has zero predictive value—hence zero use. For all we know, we may have been exporting out the world’s best computer coolies while saving up the next-gen computing pioneers (who will most probably not be today’s fêted “engineers”).

     
  2. Sanjeev Sabhlok

    Not at all. This hypothesis has spectacular predictive value. A combination of scholastic talent, IQ and passion for a particular subject (e.g. physics) can readily predict. The study I cite (the first such study I’m aware of) used subscription to an encyclopedia to predict growth rates. Passion is most important. In economics or statistics you don’t predict whether a particular individual will do well. You can predict comfortably, though, that India’s top talent (even measured by scholastic talent such as JEE) is likely to contribute far more to society than the rest. You can look around not only in India (Infosys etc) but in USA and elsewhere, where IITians have gone. The marginal product of some IITians is spectularly higher than those of an ordinary engineer. 

    The policy implication is clear: the West has been lapping up the top talent of developing countries (and will contiue to do so). The developing countries, by merely counting the number of people who have left, and ignoring their quality, are being hollowed out.

    s