Progress

We are supposed to start by identifying the top-ten unsolved problems in our field.  Satisfactorily measuring and using entrpreneurship surely belongs in the top-ten.

William Baumol (among others) has long worked to upgrade the idea of entreneurship in economic analysis.  The fact that entrepreneurs are key players is self-evident.  But we have trouble defining and measuring their essential nature and work.  So most economic models move on, omitting what could be the heart of economic thinking.  In all of the hand-wringing over how most economists did not see the Great Recession coming, overreliance on incomplete models is a good place to start.

I saw Sonia Sousa present her work (published here) on measuring entrepreneurship (and using her derived variable in a regional economics model) at last year's meetings of the Western Regional Science Association.  It takes some cleverness to use the data we have to solve the problem of a key missing variable.  I think that Sousa has moved us forward.  Read the whole thing.