An Interview with Edmund Phelps, Ph.D.
McVickar Professor of Political Economy, Columbia University
In 2006, Edmund Phelps won the Nobel Prize in Economics. Phelps is the
principal investigator on a grant from the Ewing Marion Kauffman Foundation to
the Center on Capitalism and Society at Columbia University. Since 2004, Phelps,
along with other scholars such as Massimiliano Amarante, Hian Teck Hoon, and
Gylfi Zoega, have been working to develop empirical applications and economic
models that encompass the principal theme of the individual entrepreneur as the
bearer of new commercial ideas, borne of an entrepreneur's special experience
You've spent the last several years studying entrepreneurship. Why?
Entrepreneurship, and the economic institutions that facilitate it,
ultimately affect people's lives as well as societal concerns like national
productivity, wage levels, and unemployment. We need to understand all of these
areas better if we are to understand job satisfaction, comparative advantage,
and investment patterns.
How do economic institutions affect people's daily lives?
Without attention to the character of business life offered by a country's
economic system (particularly the extent to which it makes business life
entrepreneurial and therefore engaging and challenging), we will miss what may
be the main source of the satisfaction and personal development that most people
derive from their business careers in highly entrepreneurial economies, such as
that of the United States. And we miss, too, the source of the dissatisfaction
and underdevelopment one sees signs of in less enterprising economies, such as
many in continental Western Europe.
What about at the national level? Where do you see the study of
entrepreneurship being important?
Without understanding how nations' economic systems differ in the degree to
which they allow and encourage the entrepreneur, and in the degree to which they
provide for good selection and early adoption of entrepreneurial initiatives, we
cannot have a good understanding of how much of the disparities in economic
performance are a consequence of institutional differences and how much,
instead, are a result of other forces. Additionally, without some understanding
of the mechanisms by which entrepreneurial visions drive the investment
activities that largely govern hiring and firing, we may fail to recognize the
nature and source of big swings, such as the recent investment boom in the
This essay is an excerpt from the Kauffman Thoughtbook 2007
. To view a table of contents for the 2009 edition, or to order a printed copy of the publication, please visit our 2009 Thoughtbook page