Tag Archives: technology diffusion

Nancy Stokey’s Plenary at SED 2018 on technology diffusion


The spread of washing machines in China

The tractors are coming, the tractors are coming for all the horses

Many new technologies display long adoption lags, and this is often interpeted as evidence of frictions inconsistent with the standard neoclassical model. We study the diffusion of the tractor in American agriculture between 1910 and 1960 — a well known case of slow diffusion — and show that the speed of adoption was consistent with the predictions of a simple neoclassical growth model.

The reason for the slow rate of diffusion was that tractor quality kept improving over this period and, more importantly, that only when wages increased did it become relatively unprofitable to operate the alternative, labor-intensive, horse technology


Source: Frictionless Technology Diffusion: The Case of Tractors By RODOLFO E. MANUELLI AND ANANTH SESHADRI

Diffusion of consumer durables to poor American households since 1984

We do not have air-conditioning. Do not know many people who do but New Zealand does have a temperate climate. But if you are down and out in America you still have air-conditioning.


Sources: The Economic Condition of Poor Americans (and the rest of us) Continues to Improve – Coordination Problem and Well-Being – Extended Measures of Well-being: Living Conditions in the United States, 2011 – People and Households – U.S. Census Bureau.

In the 2000s, dishwashers, air conditioning and microwaves were still diffusing rapidly in poor households in addition to the usual digital goods.

To make it even worse, despite the ravages of the 1996 US federal welfare reforms and a top 1% who apparently kept for themselves 90% of all income gains since the 1970s, air-conditioning in poor houses increased by 50% or so between 1994 and 2004.

Imagine how many more poor households would have dishwashers, air-conditioning, microwaves and digital goods but for the top 1%. Not that many actually because most of them already have those consumer durables despite their income not increasing for several decades.

I always puzzle over these who claim that incomes of ordinary families have not increased since the 1970s because that implies you can only buy the same basket of goods and same quality of goods as in the 1970s. That is what no real income growth means. You cannot buy more than before.