Political Economy, NBER Meetings, Gender Norms: How Alberto Alesina’s Research Changed Economics

Since the beginning of his career, Alberto Alesina has been a tireless proponent of the cross-contamination between economics and political science, psychology, and cultural study. His innovative approach proved extremely effective.

I can imagine many happy occasions calling for a presentation of Alberto’s contributions to Economics, as a discipline and as an academic community. I can also imagine other happy occasions where it would be Alberto’s accomplishments as a public intellectual I would enthusiastically highlight.

I can see Alberto laughing, lamenting ironically that I haven’t been congratulatory enough. I could have never imagined doing this in the present tragic situation.

Many have already observed that Alberto was one of the founders of the modern field of political economy (with Torsten Persson, Guido Tabellini, and few others) in the late 1980s and early 1990s.

This is no small feat.

Political economy is one of just a handful of successful revolutions that economics has gone through since the ’70s, along with, notably, rational expectations and behavioral economics.

Political economy has fundamentally changed the way economists think about the normative and positive implications of their analyses. It has provided new perspectives on the role of monetary and fiscal policy institutions, profoundly changing the way these institutions now operate in the real world. It has developed an intellectual space in which economists, political scientists, and sociologists interact productively.

Alberto has been instrumental on all these aspects. He has very original very early contributions to political business cycle theory, to central bank independence, to partisan politics and interest groups, to deficit government spending, to political redistribution and stabilization policies, and so much more.

He has been a tireless proponent of the integration of economics and political sciences, showing the way with great success at Harvard, at Bocconi, at the NBER, anywhere he had influence. He has enthusiastically promoted the work of countless students and younger colleagues in the field, in this case also with unparalleled success.

A couple of examples will make clear how Alberto has become such a central figure in the discipline. Firstly, his first important paper in the Quarterly Journal of Economics (1987) on political business cycles, from his PhD dissertation at Harvard, contains most of the themes formal political economy has concentrated for decades on, in a clear, coherent form. It is worth citing snippets of it directly, to highlight this:

“The results presented in this paper do not rely on irrational expectations formation or irrational voting behavior.”

“The equilibrium with cycles in this model has been shown to be suboptimal. If the parties agree to follow an identical policy, the cycle is avoided. There would be no fluctuations in output, and inflation and both constituencies would be better off.” 

“This policy has been characterized formally as the result of a bargaining process between the two parties, in which the more popular party can impose an agreement closer to its point of view.”

“A commitment to the cooperative rule is beneficial because it binds the two parties to a policy that improves welfare for both of them in the long run.”

“Even if binding commitments are not available, reputational forces due to the repeated interaction of the two parties and the public can improve upon the discretionary equilibrium by reducing the magnitude of the fluctuations of inflation and output.”

Rational voting behavior, strategic (game-theoretic) interactions leading to inefficient policy formation in equilibrium, bargaining, time-inconsistency and the role of commitment, reputation. All of it in 1987.

Secondly, to push a revolution, as I argue that political economy was in the late ’80s, it takes brains but also courage and guts. Alberto took the risk of working with a political scientist (Howard Rosenthal) and publishing in a political science journal (the American Political Science Review) early on in his career (1989), when tenure must have been at stake (rational choice was far from accepted in political science departments—it still isn’t in some of them—and economics departments tended to favor (back then more than now) publications in the five top economics journals.

Thirdly, a certain taste for quirky themes has also helped Alberto. His work on the size of nations (with Enrico Spolaore) is remarkable for this (besides its novelty and the clarity of the formulation). One of those issues people would talk and discuss about, informally, but never considered game for real academic discourse. Nonetheless, this work has been an instant success and has changed political economy as an academic discipline.

Its enormous academic impact should not cloud its impact in the political discourse, especially in Europe. The Quarterly Journal of Economics paper, and the book afterward, have taught economists and political scientists how to think, both positively and normatively, about the number and size of national units (countries).

A beautiful example of the power and elegance of the economic method, this research exploits the rich implication of a simple and fundamental trade-off, between the beneficial economies of scale of large and the costly heterogeneity of diverse populations. It characterizes the determinants of secessions and the effects of economic integration. It identifies conditions under which the number of countries in equilibrium is inefficiently large.

But this is all too dry. He was a great economist, no doubt. But, as many remarked, it was not just that. A couple of personal anecdotes will hopefully make for a more vivid image of Alberto’s role in the development of political economy. 

Still a PhD student in Chicago, I was asked to write my first referee report for the Journal of Political Economy (Chicago’s journal, one of the top 5 in the profession). To help me in this task the editor, Gary Becker, shared with me a “very well done” report written by Alberto. The paper he is reporting on is by a (then) young scholar (reports are anonymous and so should this one remain).

It’s one of the first structural estimation papers in political economy, something Alberto would never write. The report is very informative, very careful, enthusiastic. While doubtful about the method, Alberto argues for its novelty and usefulness. The report is inspiring—very convincing, almost impossible to reject the paper after reading it.

This is what Alberto has done so masterfully in his career, supporting and inspiring new scholars and new ideas; pushing his own views of course, but with restraint, maintaining an open mind. We, in this business, know full well how hard this is. 

As a theorist (and a Chicago economist), in my early years I have not been much acquainted to the NBER—a place for salt-water applied work in my stereotypical vision. Until Alberto invited me to the political economy program (this is Alberto’s child; he founded it in 2006 and led it with a benevolent paternalistic attitude until last year).

I discovered an intellectual environment like few others: very bold, rich, inspiring, and at the same time respectful (no screaming, no insults), proper. Alberto was the undiscussed intellectual center of it—and he was working hard year after year to keep this position—after so many years, after every meeting he would still ask me (and doubtless many others) about the papers he had selected, whether he had “made mistakes.”  I cannot name any important paper in political economy which was not presented there.

The NBER Political Economy Program has been the physical space where political economy happened (and thrived), where economists and political scientists first met.

More recently, Alberto has taken political economy into really unchartered territories, away from macroeconomics and the study of fiscal and monetary policy, away from the theory of voting and legislative bargaining, away from theory tout court. This is part of a change of direction of the whole discipline, moving economics more towards empirical work, microdata, identification, and causal inference. I think it is fair to say, however, that in this change of direction of the whole discipline, political economy is leading the way and that Alberto (along with Daron Acemoglu, Oded Galor, Andrei Shleifer, and a few others)  has been leading political economy.

Once again, in this new turn as well, Alberto was among the first and the most clear-minded.

Since Alberto’s work along these lines is more recent, it is perhaps less well-known outside of academia. It is therefore perhaps worth discussing an example in more detail (it also helps that this is work I am intellectually closer to).

This is a paper that Alberto wrote with Paola Giuliano and Nathan Nunn,  the famed “plow” paper. This one of the first (and still one of the best) papers to study empirically the issue of the long-run persistence of preferences and cultural traits, their historical or pre-historical formation (at least a hundred papers have been published in the last few years that do something like that in one form or another). 

The underlying idea, taken from the Danish economist Ester Boserup, is that the need for physical strength in the use of the plow in agriculture may have driven women out of the workplace and into household production.

This paper formally tests Borerup’s (informal) idea, leading in turn to an empirical analysis of gender norms and economic development, and of gender discrimination in traditional modes of agriculture. To do this, the paper needs to get pre-colonial plow-use data by ethnic group (from Murdock’s Ethnographic Atlas). New data is a staple of this literature, and here too this paper is ahead of many.

These data show that ethnic groups who used the plow in cultivation did employ fewer women in agriculture, inland clearance, soil preparation, planting, or harvesting. But the question is whether this has induced gender norms still at play today—including in societies for which agriculture (and the plow) are much less relevant.

To answer this question appropriately, however, the authors need to address the issue of causality: a correlation between gender norms and the use of the plow in pre-colonial times is not enough, the causal relationship could go from the plow to the norms (as Boserup’s idea suggested) or vice versa, from the norms to the plow (societies with norms not favoring women in the workplace might have adopted the plow to keep them working in the household). 

Well, this is where statistical analysis gets tricky, and where I let the reader go to the paper to check the instrumental variable approach the paper uses to argue in favor of Boserup’s causal relation, from the plow to gender norms. However, these issues—causality, identification, instrumental variables—are all the rage in political economy and in the whole of economics nowadays.

This line of work has taken Alberto to also study the role of family ties in development (this also with Paola Giuliano). This line of analysis is related to the one adopted in the plow paper, methodologically (think of the preference for strong family ties across ethnic groups as formed in the past, and ask whether these preferences have had a causal effect on growth (development, economic success) across ethnic groups.

In some sense, this is a large scale evaluation of Banfield’s classic hypothesis of amoral familism (1958): ethnic groups in which individuals only trust their family (and in turn expect only to trusted by their family) have low growth. Not surprising that Alberto (and Paola) got interested.  

I’ll stop here. It is impossible, however, after having attempted to give a sense of the rare quality of Alberto’s contributions to economics, not to wonder what he would have done in the next ten years. They won’t be the same for those who lost a friend and a mentor (like me and many others), but especially not for the discipline.