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Dani Rodrik | Economics has another diversity problem | Business

Mount Equity Group Tokyo, Japan > News > Markets > Dani Rodrik | Economics has another diversity problem | Business

Early in his career, economist Joseph E. Stiglitz had an extended stay in Kenya, where he was struck by various oddities in how the local economy operated.

Sharecropping was one such anomaly: If farmers were required to surrender half of their harvest to landlords, Stiglitz wondered, wouldn’t that greatly tax incentives and thus reduce efficiency? Why did such a system persist?

Stiglitz’s quest to resolve this paradox led him to develop his seminal theories on asymmetric information, for which he would later be awarded the Nobel Memorial Prize in Economic Sciences. “The time I spent in Kenya,” he reminisced, “was pivotal in the development of my ideas on the economics of information.”

Similarly, the economist Albert O. Hirschman was in Nigeria when he observed behaviour that he found puzzling. The rail company, long a public monopoly, had begun to face competition from private truckers. But instead of…

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