Innovation and safety nets

Joseph Henrich in The WEIRDest People in the World:

Such broader and stronger safety nets would have sharpened the population’s cognitive and social skills on average. These psychological effects, along with the greater independence from families and churches that such insurance gives individuals, help explain why stronger safety nets promote more innovation, both in preindustrial England and in the modern world.

p. 464

He cites several papers but here’s part of one of them, where he’s co-author:

On the other end, reducing the costs of failure by creating a safety net can influence innovation via multiple channels, including by allowing individuals to invest in broader social ties (expanding the collective brain) over kin ties and by increasing entrepreneurship directly. This relationship is supported by analyses of England’s old poor law [100], more forgiving bankruptcy laws across 15 countries [101], unemployment insurance in France [102] and in the USA, the introduction of food stamps [103], health insurance for children [104] and access to health insurance unbundled from employment [105], all of which increased entrepreneurship. Of course, there is an optimal amount of social insurance vis-à-vis innovation, because increased funding of such programmes can increase tax burdens—some data suggest that higher corporate taxes can lead to lower entrepreneurship [106,107]. Overall, social safety nets energize innovation because they permit individuals to interconnect in broader, richer, networks.

A bunch of previous links to posts I’ve done on this here.

Leave a comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s