Economic Incentives and Economic Growth

NYT: High-Tech Japanese, Running Out of Engineers

It was engineering prowess that lifted this nation from postwar defeat to economic superpower. But according to educators, executives and young Japanese themselves, the young here are behaving more like Americans: choosing better-paying fields like finance and medicine, or more purely creative careers, like the arts, rather than following their salaryman fathers into the unglamorous world of manufacturing.

What I don’t understand is how following economic incentives can make a nation’s economy weaker. Are the economic signals wrong, or are the investors (the students) ignorant? Absent evidence so, the flight from science and engineering could be an efficient reallocation. Heck, I’m one of those who are leaving.

The only other possibility that comes to mind is that benefits from science education are a public good – benefits from having such an education exist, but are enjoyed by society overall and cannot be efficiently captured by the individual.

HT: Xinhong

One Response to “Economic Incentives and Economic Growth”

  1. […] article, like the one about Japanese engineers, where worrying is done about competing with well-paying finance and consulting jobs. Instead of […]