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NBER Papers on Economic Fluctuations and Growth

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Russ Roberts: But a reason it go to a regional scale is there's no water-cooler--it's not obvious there's a water cooler to mingle and interact with. I mean, is it the bar? Is it the local nightclub? Is it--the claim, now, I'm willing to admit, there a--all I'm really objecting to, here, is that the people who make these claims never seem to specify the mechanism. They observe an empirical reality--excuse me--an empirical regularity. And they don't really have a for how this takes place. There such possible mechanisms. It could be, for example, that the venture capitalists in Silicon Valley are driving a lot of the inter-firm movement and efficiencies of human capital being allocated better, there, perhaps. Or the fact that people get stimulated by working at one company and can quickly move to another--which they might not be able to do if they were in Poughkeepsie [NY] or somewhere else far away. By the way: There is a certain irony about all of this, which is that the technology digital revolution is what let me work from my bedroom, which I'm doing right now--I'm working in my office downstairs. I'm not sitting at the Hoover Institution. I'm not mingling with you here in the D.C. area even though I used to be at George Mason. And somehow we are having this conversation across distance. And we're stimulating[?] our ideas against each other. And yet, these arguments are that you have to be physically near people. Now, physical matters. Obviously there are costs of moving. There's costs of adapting. There's cultural differences across areas that are difficult to change. So, all those things are possible. I just think this, so-called complementarity theory or nonlinearity theory or whatever you want to call it, hasn't really gotten to the bottom of it, of what's going on.

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Roberts on Smith, Ricardo, and Trade | EconTalk | …

Russ Roberts: So, listeners who have heard me talk about these issues before will remember that I have a healthy skepticism about this. Healthy, in the sense that I don't have an axe to grind here. I don't have a horse in the race. I don't--I just don't--I literally the argument that says that if you'd moved Apple to other places, it couldn't have been Apple. Now, I understand that there's some sort--I'll say it differently. There's a water-cooler effect within Apple. I understand . If you have a firm, it's great to have your employees interacting and thinking of new things. The claim of Hidalgo, and Moretti, and Tyler Cowen, the recent conversation that we had, and assume Martin Weitzman although I haven't read his papers, is that there is a water-cooler effect in the whole area. That, the mingling of ideas and interaction between workers and firms somehow has this complementarity. And I'm open to the possibility. It's just not obvious to me that it's true. I know--it to be true, because we look at these prosperous areas. That there's an alternative explanation I think has to be taken seriously. Which is: All of this stuff about--it just--all these critiques of the standard model of production you are talking about, capital--they falter--and many people have pointed this out for a long time. They falter because one of the types of capital that's the most important is embodied in human beings. We call it human capital. We call it education. We have terrible proxies for it, like years of education. It's silly. It's really about know-how, and as you point out, recipes. It's about understanding how things work and how to make things work better. How to improve the recipe, how to make the people more productive than they were before, besides just adding a machine. It's the way the machines interact with the people; it's the way that people come to the machines with knowledge that they already have. Etc., etc. So, I just--I'm not saying it's wrong. I'm saying it's just not obvious to me the mechanism other than the fact that it appears to be an empirical reality that there's certain areas that seem to do well. I don't know that it's obvious--let me say it a different way. It's that cities are more prosperous than rural populations. But that can be just because the people who are in the cities are not the same as the people who live in the rural areas. It's because they more knowledge, and because you--not just you but the people who are making these claims--are overstating the benefits of city when in fact it's just the fact that the people who live their have the highest skills.

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Fredrickson, B. L. (2000). Cultivating positive emotions to optimize health and well–being. , (1). doi:10.1037//1522–3736.3.1.31a. This article develops the hypothesis that intervention strategies that cultivate positive emotions are particularly suited for preventing and treating problems rooted in negative emotions, such as anxiety, depression, aggression, and stress related health problems. Fredrickson's (1998) broaden–and–build model of positive emotions provides the foundation for this application. According to this model, the form and function of positive and negative emotions are distinct and complementary. Negative emotions (e.g., fear, anger, and sadness) narrow an individual's momentary thought–action repertoire toward specific actions that served the ancestral function of promoting survival. By contrast, positive emotions (e.g., joy, interest, and contentment) broaden an individual's momentary thought–action repertoire, which in turn can build that individual's enduring personal resources, resources that also served the ancestral function of promoting survival. One implication of the broaden–and–build model is that positive emotions have an undoing effect on negative emotions. By broadening the momentary thought–action repertoire, positive emotions loosen the hold that negative emotions gain on an individual's mind and body by undoing the narrowed psychological and physiological preparation for specific action. Indeed, empirical studies have shown that contentment and joy speed recovery from the cardiovascular aftereffects of negative emotions (Fredrickson & Levenson, 1998). Stepping off from these ideas and findings, a range of intervention and coping strategies are reviewed, including relaxation therapies, behavioral therapies aimed at increasing rates of pleasant activities, cognitive therapies aimed at teaching optimism, and coping strategies marked by finding positive meaning. These strategies optimize health and well–being to the extent that they cultivate positive emotions. Cultivated positive emotions not only counteract negative emotions, but also broaden individuals' habitual modes of thinking and build their personal resources for coping.

A comprehensive review of positive psychology ..