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Talking to Mozart about how rapid economic growth is temporary

Update 8/6/2010 3:30pm Response to RT @auerswald People r (Not) Statistical Noise http://bit.ly/bAwtpQ:

on objection that small bursts of creativity can have very large effects. Um, yes, it’s called non rivalry of ideas (and music scores). Many people can simultaneously use the same idea/score. And everyone wants to use the best ones. So the scale effects can be Gigantic. I guess I had noticed I’m not the only one who likes Mozart.

This blog has often pointed out that bursts of rapid growth don’t last. I provoke readers with words like “luck” and “random” to describe the transitory component of growth.

The evidence says High Growth is likely to include a temporary component that will not recur. So High Growth countries in one period will likely experience a decrease in growth in the following period, moving them back DOWN towards the world mean.

The graph below shows a typical regression to the mean graph for a few data-points. The mean of the data is roughly 2 (where the mean reversion line crosses the horizontal axis). Years above 2 are usually followed by a decrease, while years below 2 are usually followed by an increase.

What’s slightly different about this graph is that the numbers here like “2” don’t refer to average annual economic growth, but to the number of masterpieces produced by Mozart every year from 1781 (after he moved to Vienna) until his death in 1791. Mozart produced 18 major classics over this period, or about 2 per year.

However, his economic growth number of masterpieces produced each year fluctuated a lot. For example, in 1788 Mozart produced three of the greatest symphonic breakthroughs of all time (Symphonies 39, 40, and 41), but in 1789 there were no new masterpieces at all.

I decided to discuss this with Mozart to see if we can get any more insight into what drives good and bad years.

Me: I love your symphonies 39, 40, and 41, congrats on having such a great year in 1788.

Mozart: who are you?

Me: Why did you have such a bad year in 1789?

Mozart: Let me get this straight, I revolutionized music with 18 masterpieces in a decade, and your main concern is that I didn’t spread them out more evenly across years?

Me: I just thought we could discover your secret to success by comparing the good years with the bad years.

Mozart: (Whispers to his servant: “Check with Viennese insane asylum whether they are missing a patient…”) I was learning and experimenting all my life, which all contributed to my miraculous final decade. When the masterworks happened to come out during that decade is arbitrary and of no importance whatsoever.

I learned from Herr Mozart that musical creativity, like economic growth, proceeds in fits and starts, and we should not be so obsessed with short term fluctuations.

Also I would not dare apply the words “random” or “lucky” to The Marriage of Figaro. Bursts of creativity, like bursts of rapid growth due to, say, entrepreneurial breakthroughs, may be temporary but they are not “random” in any mechanical sense. They reflect the best of humanity’s purposeful activity, and they stay with us forever even if the original creative moment is fleeting.

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9 Comments

  1. Must be musical something in the air this week – see latest Aid on the Edge post ‘From the Neoclassical Logic Piano to All that Jazz': ‘http://aidontheedge.info/2010/08/03/from-the-neoclassical-logic-piano-to-all-that-jazz/

    Posted August 5, 2010 at 1:21 am | Permalink
  2. fundamentalist wrote:

    Whether or not growth reverts to the mean depends on what caused it. The most common method used to achieve rapid growth spurts is massive credit expansion. That is always unsustainable and causes the reversion. However, rapid growth can come from real productivity growth that results from increased savings and investment and the adoption of Western technology. That is sustainable and explains most of China’s rapid growth.

    Posted August 5, 2010 at 9:56 am | Permalink
  3. ewaffle wrote:

    1785 was quite a year for him–published the six “Haydn” quartets. Unless you count them as just one masterpiece.

    Posted August 5, 2010 at 10:20 am | Permalink
  4. Alan Beattie wrote:

    I don’t disagree with the fits-and-starts thesis, but not sure about the Mozart comparison. IIRC it is believed he may have been bipolar, which would suggest that he was intrinsically capable of different levels of creativity from one year to another. Not sure this translates into economic growth. Economies don’t suddenly lose or gain large amounts of productive capacity in a few months – unless you want to draw an analogy between, say, a good monsoon and an up phase in the bipolar cycle, which IMHO would in any case be confusing exogenous and endogenous growth influences.

    Posted August 5, 2010 at 10:38 am | Permalink
  5. Dan Kyba wrote:

    Oh do dare. Luck and randomness play their roles. Record 500 coin flips and you will get a 50/50 split plus or minus a few percentage points; then look at the sequence – there will be streaks of heads and tails – gamblers’ hot hands. With human beings the odds for success can be shifted with education, training and genius but the good or bad streaks will continue nevertheless. In the entrepreneurial world, ability, research, timing and luck play their roles – and so does persistence. Mozart did not quit in 1789.

    Posted August 5, 2010 at 11:25 am | Permalink
  6. William Easterly wrote:

    Alan, you have a good point that I omitted mentioning. The temporariness of growth could be explained by the temporariness of one of it’s principal determinants. However, nobody has convincingly found any such explanatory temporary determinant. Bill

    Posted August 5, 2010 at 2:02 pm | Permalink
  7. William Easterly wrote:

    Dan, More generally, temporariness could be luck, randomness, or non-replicable bursts of skill. I love to provoke with randomness, but I have to concede that it can go too far,and some of the visceral resistance to randomness in the mechanical sense may be (a little bit) justified. Bill

    Posted August 5, 2010 at 2:06 pm | Permalink
  8. Dan Kyba wrote:

    @Bill
    Another way of looking at your post is to treat Mozart’s masterpieces as outliers and his so-called bad year as a regression to the (his) mean. In business this regression occurs all the time as products and processes are standardised to reduce risk since an outlier can be either a very profitable success or a very costly failure.
    Question to the Mozart experts: did he produce any clunkers?

    Posted August 5, 2010 at 3:29 pm | Permalink
  9. D. Watson wrote:

    By strange coincidence (just discovered today), I totally randomly thought about the production of masterworks yesterday as well. I would not dare to presume to suggest that “great minds think alike,” but on occasion, even a Volkswagon and a Mercedes’ turn signals will blink at the same time.

    Posted August 6, 2010 at 4:14 pm | Permalink

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