Paul Romer—the Seidner University Professor in the Seidner Department of Finance and founding director of the Center for the Economics of Ideas at the Carroll School of Management—is one of the most influential economists of the 21st century. In four decades as a professional economist, he has addressed a range of abstract and practical questions, typically by re-examining an existing concern from a novel perspective.
Romer’s Ph.D. thesis revisited questions that had been left unresolved by prior work on the determinants of long-run growth. The most important of these was a lack of attention to the difference between two types of economic goods: objects and ideas. Attention to objects leads inevitably to the diminishing returns that Thomas Malthus emphasized. Because ideas are intrinsically associated with increasing returns, they provide a coherent explanation for the persistent, accelerating pattern of human progress. The resulting analysis also reveals the centrality of scale economies in generating gains from trade and facilitating monopolies.
In 2018 he was awarded the Nobel Prize in Economics for this work. His Nobel lecture elaborates on the implications of ideas for "The Possibility of Progress."
Owing to his interest in not just the abstract process of innovation but also the practical details, in 2001, Romer started an educational technology company, Aplia, which showed how online exercises could reinforce classroom education. He sold the company to Cengage Learning in 2007.
In 1993, he co-authored (with George Akerlof) a paper that used the savings and loan crisis of the 1980s to highlight the harm that careless financial deregulation could cause. The paper met with considerable skepticism at the time, but since the financial crisis of 2007-2008, its message has become part of the “accepted wisdom." The paper is also seen as one of the founding contributions to the area known as Forensic Finance.
After 2007, Romer focused on successful urbanization as a key driver of rapid catch-up growth for poor countries. The importance of this process is particularly clear in China’s rapid growth during the 1990s. On the basis of the successful urban centers of Hong Kong and Shenzhen, he encouraged policy makers to consider the possibility of starting entirely new "Charter Cities." He became the founding director of New York University’s Marron Institute for Urban Management and subsequently chief economist at the World Bank. His approach to urban design and form is reflected in his exploration of Black Rock City, which comes into existence each year with a population of 70,000 at the Burning Man Festival in Nevada.
Recently, Romer has revisited the policy challenges created by the novel characteristics of ideas as economic goods. The issue that emerged in the 1990s was the tendency for markets in software and digital services to evolve toward monopoly control, a question he examined in part as a consultant for the US Department of Justice on its antitrust case against Microsoft. Romer has also emphasized the problems created by web business models based on targeted digital advertising, and the threat posed by digital messages of unknown provenance. The initial focus of the new Center for the Economics of Ideas that he is launching at Boston College will be to offer practical solutions that address the need for “Digital Authenticity.” With the tools that the Center will develop, authors and publishers will be able to certify to any reader the integrity of the files they distribute.
