Lengthen your horizon, and invest ...

Yes, no typo here: I wrote lengthen your horizon, rather than broaden your horizon. It seems to me that, more and more, this is one of the important challenges that we face: how can lengthen the horizon of consumers, firms, and investors? I'm sure there's a paternalistic answer to this: regulate (read: let the rules set the horizon, for example in pension decisions). But I'm equally sure that another solution is to be preferred: what if we can create incentives for people, firms and investors to lengthen their horizon?

Dec 31, 2011

Why I am writing this now? Well, here's the inspiration. A piece by Adam Davidson in the NY times that describes the dangers the US faces in losing its competitive edge as a result of sharply dropping investments in R&D.