A highlight from Prof. Benjamin Moll, Professor of Economics at the London School of Economics
My guest today Benjamin moore who is professor of economics at the london. School of economics is concerned with understanding. Why some countries and people are so much better than others and hope. Mike locate the opportunity even backs macro-economy and macroeconomic policy bentham. Thanks for having me really great to be here. Thanks for doing so. You have a research agenda at llc. And i want to go through some of the easiest of your interest. You say I in the piece that you send me one of the key. Developments in macroeconomics lucid's over the last three decades has been the incorporation of explicit Janati into the marlins of the macro-economy as taking michael data seriously these theories Economic questions in terms of distributions of mike economic variables like income or wealth rather than test aggregate. Yeah this is This is quite interesting ben. So then you think about macro economics generally be thinking about systems and system blindly sex and dow bartlestein to look at things at that level And you're taking it in slightly different direction. You're seeing. The participants in large systems are divorce. And that should have an impact on outcomes right the the philosophy i guess is sort of to build everything up from the ground right to take really seriously what we know from People's behavior that we see micro data and what are the the micro. Economists have been studying for for many years. you know. They're at people's consumption behavior. The savings behavior out you know and labor markets and so on drive to put that in in the in the macro models and then when you do that and you look at the micro data one of the first things jump out at you is just how much heterogeneity there is. A people in virtually every data variable you look at at in particular and things like income and wealth. There are some people who are phenomenally wealthy writing and there's other people who either have no assets whatsoever or they even have a massive amount of debt. And i so essentially for income as well some people have a very high annual flow and some other people have live off government benefits eight and so we wanted to sort of take that seriously in the macro models at sort of used as as the main building block for thinking macroeconomic policy macroeconomic shocks and how the economy behaves. So in other words averages. Doing work for that. That's exactly right The right way to think about it. You can't just look at the aggregates you get mask. A lot of relevant heterogeneity amended key ideas that there's a lot of non linear already at the micro level in people's consumption savings decisions so for example. If you give a rich person an extra dollar he'll do something very different with that Eat a lot less of that than if you give a poor person in extra dollar and because of that Garrity you cannot aggregate up and so as you exactly as you say the average is. Don't tell you everything you need to know.