Paul Romer

Paul Romer
Born	Paul Michael Romer 7 11, 1955
Birthplace	Denver, Colorado, U.S.
Nationality	American
Occupation	Economist, academic, policy entrepreneur
Title	Seidner University Professor in Finance
Employer	Boston College
Known for	Endogenous growth theory, charter cities concept, "mathiness" critique
Education	University of Chicago (B.S., Ph.D.) Queen's University Massachusetts Institute of Technology
Awards	Nobel Memorial Prize in Economic Sciences (2018)
Website	[[paulromer.net paulromer.net] Official site]

Paul Michael Romer (born November 7, 1955) is an American economist and policy entrepreneur who holds the position of Seidner University Professor in Finance at Boston College. He is best known for his foundational contributions to endogenous growth theory, which transformed economists' understanding of how technological innovation and the accumulation of ideas drive long-run economic growth. For this work, Romer was awarded the 2018 Nobel Memorial Prize in Economic Sciences, shared with climate economist William Nordhaus, "for integrating technological innovations into long-run macroeconomic analysis." Romer's career has spanned appointments at several leading universities, including Stanford University, the University of Chicago, the University of California, Berkeley, the University of Rochester, and New York University, as well as a stint as Chief Economist of the World Bank from October 2016 to January 2018. Beyond academic economics, Romer has engaged in entrepreneurship and public advocacy, proposing the concept of "charter cities" as a mechanism for institutional reform in the developing world and coining the term "mathiness" to critique what he viewed as the misuse of mathematics in economic research. His oft-quoted aphorism—"Growth springs from better recipes, not just from more cooking"—encapsulates a career devoted to understanding how new ideas generate prosperity.

Early Life

Paul Michael Romer was born on November 7, 1955, in Denver, Colorado. He grew up in a political family; his father, Roy Romer, served as the 39th Governor of Colorado from 1987 to 1999 and later became superintendent of the Los Angeles Unified School District. This early exposure to public policy and governance would shape Paul Romer's later interest in the intersection of economics and institutional design.

Romer attended Phillips Exeter Academy, one of the oldest and most selective preparatory schools in the United States, before pursuing higher education. His intellectual trajectory led him through several institutions during his formative academic years.

Education

Romer began his undergraduate studies at the University of Chicago, where he earned a Bachelor of Science degree in mathematics. He subsequently spent time at Queen's University in Canada and the Massachusetts Institute of Technology before returning to the University of Chicago for his doctoral studies in economics. At Chicago, Romer worked under the supervision of José Scheinkman and Robert Lucas Jr., the latter of whom was himself a Nobel laureate known for his contributions to macroeconomic theory, including the Lucas critique and rational expectations theory. Romer also received academic mentorship from Russell Davidson and Ivar Ekeland.

Romer completed his Ph.D. in economics at the University of Chicago in 1983 with a dissertation titled Dynamic Competitive Equilibria with Externalities, Increasing Returns and Unbounded Growth, which laid the groundwork for the endogenous growth theory that would define his career. The dissertation addressed a fundamental challenge in economic theory: how to model economies in which growth was driven not by exogenous factors but by the internal dynamics of knowledge creation and technological change.

Career

Early Academic Career and Endogenous Growth Theory

Following his doctoral work, Romer joined the faculty of the University of Rochester before moving to the University of Chicago and then to the University of California, Berkeley. It was during this period that he produced the two seminal papers that would eventually earn him the Nobel Prize.

In 1986, Romer published "Increasing Returns and Long-Run Growth" in the Journal of Political Economy, a paper that introduced a model of economic growth in which the accumulation of knowledge by forward-looking, profit-maximizing agents served as the primary engine of long-run growth. The paper challenged the prevailing neoclassical growth framework associated with Robert Solow, which treated technological change as an exogenous variable—something that happened to an economy from outside the model rather than arising from within it.

In 1990, Romer published a second landmark paper, "Endogenous Technological Change," in the Journal of Political Economy. This paper formalized a model in which technological progress resulted from intentional research and development activities undertaken by firms seeking to earn monopoly rents from their innovations. The model incorporated three key features: the non-rival nature of ideas (one person's use of an idea does not diminish another's ability to use it), the partially excludable character of technological knowledge (through patents and intellectual property), and the role of human capital in the production of new ideas. These features meant that the economy exhibited increasing returns to scale, a departure from the constant-returns assumption of standard competitive models.

Romer's endogenous growth theory had profound implications for economic policy. If ideas and knowledge were the primary drivers of growth, then government policies affecting education, intellectual property rights, research and development subsidies, and openness to trade in ideas could have permanent effects on economic growth rates—not merely on the level of output, as the Solow model suggested. As the Centre for Economic Policy Research noted upon Romer's Nobel award, his work demonstrated how "economic forces govern the willingness of firms to produce new ideas and innovations," thereby "integrating technological innovations into long-run macroeconomic analysis."

Romer also contributed other notable work during this period, publishing in leading journals. His research appeared in outlets including the American Economic Review, the Brookings Papers on Economic Activity, and the Quarterly Journal of Economics.

In 1997, Time magazine recognized Romer as one of America's 25 most influential people, reflecting the broad impact of his ideas on both academic economics and public discourse about economic growth and innovation policy.

Stanford and "Mathiness"

Romer held a faculty position at Stanford University's Graduate School of Business, where he continued to develop his ideas on growth and innovation. During his time at Stanford, he was affiliated with several research centers, including the Stanford Center for International Development, the Stanford Institute for Economic Policy Research, and the Hoover Institution. He was also a researcher at the National Bureau of Economic Research.

In 2015, Romer introduced the term "mathiness" in a paper published in the American Economic Review. The concept described what Romer saw as a troubling tendency among some economists to use mathematical formalism not to clarify economic arguments but to obscure them—deploying impressive-looking equations that lacked clear empirical content or made assumptions disconnected from the verbal claims accompanying them. Romer argued that mathiness had become a tool for advancing ideological positions under the guise of scientific rigor, and he singled out specific prominent economists whose work he believed exemplified the problem. The critique generated significant discussion within the economics profession regarding standards of theoretical argumentation and the relationship between mathematical models and economic insight.

Charter Cities

Beginning in the late 2000s, Romer became a prominent advocate for the concept of "charter cities"—a proposal for creating new urban zones in developing countries that would operate under a set of rules or a charter different from those governing the rest of the host country. The idea drew on Romer's growth theory insight that institutions and rules matter for economic development, and posited that creating new institutional environments from scratch might be easier than reforming existing ones.

Romer argued that charter cities could provide a voluntary path to better governance: residents would choose to move to a charter city, and the host country could adopt successful rules more broadly if the experiment proved fruitful. The concept drew both interest and criticism. Supporters saw it as a creative approach to the intractable problems of governance in the developing world, while critics raised concerns about sovereignty, the potential for exploitation, and the practicality of the proposal.

Romer engaged with the government of Honduras, which in 2011 passed legislation enabling the creation of special development regions. However, the project encountered significant political and legal obstacles, and Romer eventually withdrew from his advisory role in 2012, citing concerns about transparency and the rule of law in the implementation process.

World Bank Chief Economist

In October 2016, Romer was appointed Chief Economist and Senior Vice President of the World Bank, succeeding Kaushik Basu in the role. As Chief Economist, Romer oversaw the Bank's research department and its flagship publications, including the World Development Report and the Doing Business report.

Romer's tenure at the World Bank proved turbulent. He sought to reform the institution's research output, warning against the tendency of Bank staff to use reports as vehicles for advancing particular policy agendas rather than as neutral analytical products. His management style and reform efforts reportedly generated friction within the Bank's bureaucracy.

The most significant controversy arose in January 2018 when Romer suggested that the World Bank's Doing Business rankings—which measured the ease of doing business in countries around the world—may have been manipulated for political reasons, specifically with respect to Chile's rankings. Romer noted that Chile's ranking had declined significantly during the presidency of Michelle Bachelet, a center-left leader, and suggested the methodology changes that produced this decline may not have been entirely neutral.

The Chilean government demanded answers from the World Bank regarding the ranking changes. Romer resigned from his position on January 24, 2018, with Shanta Devarajan succeeding him as acting Chief Economist. The episode raised broader questions about the integrity and methodology of international institutional rankings.

New York University and Later Career

Romer had taken leave from his position as professor of economics at New York University's Stern School of Business upon joining the World Bank, and he returned to NYU following his departure from the Bank. In October 2018, while at NYU, Romer was awarded the Nobel Memorial Prize in Economic Sciences, shared with William Nordhaus of Yale University.

Boston College

In May 2023, Boston College announced that Romer would join the university as the Seidner University Professor in the Carroll School of Management's Finance Department. The appointment, described by the university as bringing "one of the most influential economists of this century" to its faculty, reflected Romer's interest in new directions for his research and teaching.

In a 2024 profile by Boston College, Romer described his move to the institution as an opportunity to "remake" his intellectual agenda. The profile noted his continued interest in how ideas drive economic growth, while also highlighting his engagement with new questions about the role of finance, technology, and institutional design in the modern economy.

Public Policy Engagement

Beyond his academic work, Romer has been an active voice on policy matters. During the COVID-19 pandemic in 2020, he emerged as a prominent advocate for mass testing as a strategy for managing the virus. In an interview with The New Yorker, Romer argued that widespread, frequent testing—even with imperfect tests—could allow economic activity to resume safely by identifying and isolating infected individuals. He also discussed the challenges of digital contact tracing and the reasons Americans might resist such surveillance-oriented approaches.

In 2021, Romer proposed a Pigouvian tax on large technology companies as a mechanism for curbing market concentration in the digital economy. Writing and speaking on the subject, he argued that a tax that increased with a firm's size would create incentives for large technology platforms to limit their dominance and allow for greater competition. The proposal reflected Romer's broader concern with the concentration of market power and its implications for innovation and economic dynamism.

Personal Life

Paul Romer resides in the United States. He maintains a personal website where he publishes commentary on economics and policy. His father, Roy Romer, served as Governor of Colorado. Romer is a fellow of the American Academy of Arts and Sciences and has been affiliated with the Center for Global Development.

Recognition

Romer's most significant honor is the 2018 Nobel Memorial Prize in Economic Sciences, which he shared with William Nordhaus. The Royal Swedish Academy of Sciences cited Romer "for integrating technological innovations into long-run macroeconomic analysis." The prize recognized the endogenous growth theory that Romer had developed beginning with his 1986 and 1990 papers, which had by that time become a foundational framework in macroeconomics and development economics.

Prior to the Nobel Prize, Romer received substantial recognition for his contributions. In 1997, Time magazine named him one of America's 25 most influential people, citing his work on economic growth theory. He has been elected a fellow of the American Academy of Arts and Sciences and has held research positions at the National Bureau of Economic Research and the Center for Global Development.

Among his doctoral students are the economists Sérgio Rebelo, who became a professor at Northwestern University's Kellogg School of Management, and Maurice Kugler, reflecting Romer's influence as a mentor and teacher in addition to his role as a researcher.

Legacy

Paul Romer's contributions to economics have reshaped the field's understanding of long-run growth. Prior to his work, the dominant Solow growth model treated technological progress as exogenous—a force that improved productivity over time but whose origins lay outside the economic model. Romer's endogenous growth theory provided a framework in which the production of new ideas was itself an economic activity, driven by incentives, investment, and policy choices. This shift had far-reaching implications for how economists and policymakers think about education, research and development, intellectual property, and international trade.

The phrase "Growth springs from better recipes, not just from more cooking" became one of the most widely cited summaries of his framework, capturing the essential insight that economic growth depends not simply on accumulating more inputs—labor and capital—but on discovering new and better ways to combine them. Romer's work on the economics of ideas also contributed to broader discussions about the knowledge economy, the role of human capital, and the economics of innovation.

His concept of charter cities, while not implemented at the scale he originally envisioned, contributed to policy discussions about institutional reform, special economic zones, and the role of governance in development. His critique of "mathiness" sparked an ongoing debate within the economics profession about methodological standards and the relationship between theoretical formalism and empirical substance.

At the World Bank, despite his brief and contentious tenure, Romer drew attention to questions about the integrity of institutional rankings and the potential for political influence on ostensibly technical assessments—issues that continued to receive scrutiny after his departure.

As Romer's career has continued at Boston College, he has remained engaged with the central questions that have defined his work: how ideas are produced, how they spread, and how institutions and policies can be designed to foster innovation and broadly shared prosperity.