The WSJ has at least two fascinating pieces today. First, there is an interview with one of the main "gene editors". Second, there is a long piece on the positive role that precision medicine and real time monitoring will play in raising our overall health. What are the aggregate macro economic implications of these trends?
At a time when our macroeconomy is growing quite slowly, could these emerging trends unleash 4% growth in the medium term?
How? With edited genes, in our "Brave New World"; what will happen to average IQ at birth? I have a feeling that it will sharply rise. A smarter populace will be able to solve more problems and find more synergies and be more resilient in the face of shocks (whether terrorism, climate , etc). By facing less risk of later life cancers (due to edited genes) and thus enjoying a longer life expectancy, these smarter people will invest more in their early human capital because the expected present value of the benefits of such investment in skills will be higher. Intuitively, if you expect to be dead at age 25; you won't train to be a brain surgeon. If you expect to be productive until age 95, then you will be more likely to . Now with more people investing in more skill, won't the returns to skill decline? This thus highlights a first question. Are the optimists such as Paul Romer correct about all of the permutations and combinations of ideas that are out there if only we could discover them. In this case, there are increasing returns to skill. For a modern statement of these issues, see Erzo Luttmer's work on this topic.
Now the precision medicine and monitoring will also play a key role here. Suppose that you have a pre-existing condition such as asthma or diabetes. In the past, your doctor would infrequently (every 6 months or a year) sample some data about you and update your files and make a recommendation. In this new smartphone era, there are sensors now monitoring a person's blood sugar, pulse, and other observables in real time. The person can observe the trends and see if he needs to take action. These data can be emailed to the doctor for some expert feedback. The person can use Google and type in his readings to see if he is an "outlier" and take immediate actions to improve his health. These real time nudges should increase compliance with good health and significantly improve the health of millions of Americans. Will these gains be concentrated among the wealthy and educated? Will they thus increase inequality or will the less fortunate gain the most from this feedback? A healthier set of middle aged people (in an era where the Baby Boomers are large and aging), has implications for work force productivity and the demands on Medicare and Medicaid.
A labor force that is healthier, and wiser and has invested more in human capital should translate into a 4% a year economic growth. Will it? I continue to worry that the laundry list of reasons that John Cochrane lists in his 4% growth blog post and the weakness of U.S public schools together undermine the possibilities listed in this blog post. I hope that I'm wrong.