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3 Questions with Steven Durlauf

Publication Date
July 1, 2016

Related People
Steven Durlauf (/people/steven-durlauf)

Related Links
Capital Punishment and Deterrence: Understanding Disparate Results
(https://hceconomics.uchicago.edu/research/working-paper/capital-punishment-and-
deterrence-understanding-disparate-results)
Interdependences and Inequality
(https://hceconomics.uchicago.edu/video/interdependences-and-inequality)
Ethics and Inequality (https://hceconomics.uchicago.edu/video/ethics-and-inequality)
Understanding Inequality and What to Do About It
(https://hceconomics.uchicago.edu/video/understanding-inequality-and-what-do-about-
it)

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HCEO co-director Steven N. Durlauf is a leader of our Inequality: Measurement,
Interpretation, and Policy Network. He is William F. Vilas Research Professor and
Kenneth J. Arrow Professor of Economics at the University of WisconsinMadison.
His research focuses on theoretical and econometric issues involving inequality,
social determinants of behavior, economic growth, and policy evaluation.

Please describe your area of study and how it relates to current policy discussions
surrounding inequality.

Much of my work represents an attempt to integrate sociological ideas into economic


models, so the broad theme of my inequality research is a systematic effort to
understand the social determinants of income inequality and intergenerational mobility.
Almost by definition, it is relevant to policy issues because of the salience of inequality
in current debates. With respect to policy, I see the main policy relevance as deriving
from the role of segregation in persistent inequality. What I mean is one can think of
individuals over the life course as being influenced by different social memberships.
The simplest membership applies to children as members of families. Links to children
from parents are fundamental in early childhood and adolescence, so disparities in
family background have first order inequality consequences. Second, and more social,
neighborhoods matter for development. So, neighborhood stratification by income and
segregation by race, represent mechanisms by which children have different
experiences during their development. Schools are another dimension for which there
are forms of segregation that occur, first through high school and then in terms of the
quality of colleges people attend, and whether they go to college at all. And finally if we
think about the labor force itself, the matching of workers to firms is fundamental to the
process of wage determination. When economists talk about the role of skill biased
technological change in wages, one facet of the change is that it creates incentives for
highly-skilled workers to work with other highly-skilled workers. Metaphorically, the
world in which Microsoft is the paradigmatic company is very different from the world in
which Ford is the paradigmatic company because of the nature of the matching of
types of workers. My broad vision is to try to understand persistent inequality via the
role of segregation and hence to understand fluctuations in inequality as mirroring
fluctuations in the degrees of segregation.

What areas in the study of inequality are most in need of new research?

One area that needs more research is the decomposition of the sources of inequality
so that we have a better sense of their relative salience. There are certainly literatures
that do decompositions but what I think is needed is an integration of the new
economics -- which I will self-servingly link to HCEO. I think of the Heckman research
program as an example of psychological economics, in other words it broadens the
domain of economic analysis to account for the psychological richness that defines
individuals as participants in an economy, and thats where socioemotional skills come
into play along with conventional measures of worker productivity. While not as
important in current research, I think the mechanisms that underlie the recent social
economics matter as well. Understanding the respective roles of different mechanisms
in inequality and their relative contributions as well as understanding how they interact
is a first-order measurement issue. Second are a number of different mechanisms for
disadvantage which have yet to be systematically explored. To give an example, theres
emerging literature on the role of incarceration in socioeconomic outcomes but I dont
think were at the point where we can make counterfactual statements, i.e. dont have a
good vision right now of what happens under alternative rules for criminal justice. Yet
different mechanism, which may be controversial to raise, is that I dont think we have
good ways now for thinking about the role of genes. Theres a long sequence of efforts
trying to attribute different aspects of inequality to genotypic differences across
individuals or groups. This has been discredited because it was not good social
science. Simply put, the work failed to distinguish genes from social and cultural
influences, that is to say, the environment. However, with the emergence of genomic
data, which is being coupled with social science data sets, I think there will be new
horizons for understanding the role of genes as they interact with the environment, as
they interact with development, which will allow an understanding of genes in
individuals-not group-outcomes. So genotypes may become part of the richer
explanation. As I said, early work on genes and environment was often bad social
science and was used to make ugly (and illogical) claims about group level differences,
I actually dont think the topic is interesting. I do think it matters on an individual level
that heterogeneity is important in a number of domains. Thats really uncharted
territory.

What advice do you have for emerging scholars in your field?

My advice for economists is always the same, and that is: read outside economics.
Being a good economist means being a good social scientist and therefore knowing
what psychologists do, what sociologists do, what political scientists are doing.
Understanding the ideas in the literatures and understanding the templates, the modes
of thought that define those analyses matters because so much of successful
economics represents integration of ideas outside of economics proper and because a
good economist needs to understand what is left out of our approaches. The second
piece of advice is to avoid being doctrinaire on empirical methodology. Theres a lot of
controversy about the role of economic theory, structural models in empirical work as
opposed to natural experiments. I think this fighting is unhealthy. As economists, were
trying to get answers and to understand specific questions such as the counterfactual
effects of a new policy and whatever tools are available that are going to help elucidate
the answer, should be employed. Doctrinaire claims on the value of structural versus
nonstructural empirics are theology, not science.

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