Knowledge that Transforms

Paul Samuelson's Foundations of Economic Analysis played a major role in defining how economic theory was undertaken for many years after the Second World War. This paper fills out Samuelson's account of the book's origins and corrects some details, making clear his debt to E. B. Wilson and establishes that turning the thesis into a book was a long process. The contents of the book and its reception are then reviewed.

Important progress has been made in economists' understanding of the Beveridge curve, from its measurement to its expression in canonical labor market models. Yet enduring puzzles remain. Chief among these are the empirical role of vacancies in the recruitment process; the amplitude, comovement, and persistence of cyclical unemployment–vacancy dynamics; and the sources of lateral shifts in the Beveridge curve. The synthesis of these themes identifies several priorities for ongoing research, including the role of entry costs into vacancy creation in shaping Beveridge dynamics; the cyclicality of search intensity, both off and on the job, and its relation to participation and job-to-job transitions; the theory and measurement of mismatch; and the sources of hysteresis in unemployment flows.

I discuss the health transition in the United States, bringing new data to bear on health indicators, and investigating the changing relationship between health, income, and the environment. I argue that scientific advances played an outsize role and that health improvements were largest among the poor. Health improvements were not a precondition for modern economic growth. The gains to health are largest when the economy has moved from "brawn" to "brains" because this is when the wage returns to education are high, leading the healthy to obtain more education. More education may improve use of health knowledge, producing a virtuous cycle.

A growing body of empirical work measuring different types of cultural traits has shown that culture matters for a variety of economic outcomes. This paper focuses on one specific aspect of the relevance of culture: its relationship to institutions. We review work with a theoretical, empirical, and historical bent to assess the presence of a two-way causal effect between culture and institutions.