Mankiw on the B-School Economist

Michael Giberson

Mankiw speculates on the differences between Econ department economists and business school economists. Among his suggestions, self-selection by the faculty member, the kind of research rewarded in each place, and this remark about the focus of students:

Faculty who teach PhD students are used to being asked, “How did you derive that first-order condition? How can you prove that the equilibrium exists and is unique?” Faculty who teach MBA students are used to being asked, “Is that really how it works?”

I wonder how economists in law schools differ from economists in Econ departments and business schools?

A century of Benny Goodman

Lynne Kiesling

Last Saturday was the centenary of the birth of Benjamin J. Goodman, otherwise known as Benny, the King of Swing. His music, and his signature virtuoso clarinet work, changed music forever. To riff off of something my favorite musician said about Buddy Rich, I defy any sentient being not to be moved by hearing “Sing, Sing, Sing”! Especially the original 1938 Carnegie Hall concert recording, for which I have a great fondness, because it was also a breakout event for one of the other most transformative musicians ever, drummer Gene Krupa. Coincidentally, the centenary of Krupa’s birth was January 15, 2009. Any of you who appreciate the crisp backbone that the hi-hat adds to music should thank your lucky stars for Gene Krupa, the inventor of the hi-hat.

I was reminded of how fantastic Goodman and Krupa (and when they played with Teddy Wilson and Lionel Hampton as the Benny Goodman Quartet) remain to this day by this truly outstanding NPR story from last Wednesday on Goodman. I encourage you to click through and listen to the whole commentary if you missed it; it’s a wonderful tribute to Goodman and his century.

Innovations in solar inverter technologies, and their economic impact

Lynne Kiesling

Following up on Mike’s solar policy post from last week … one of the sub-areas in which development is occurring that I consider thoughtful, and unheralded, is in inverter technologies. When an array of photovoltaic panels generates electricity, it generates a direct current, but for use in conjunction with our alternating current distribution network, that DC flow has to be inverted into AC in a way that matches the “sinusoidal phase” of the network into which it is interconnecting. “Sinusoidal phase” just means that it has to match the shape of the sine wave of the AC flow, but it’s just such a silky and elegant phrase that I had to use it …

The inverter is probably the most important piece of electronics in a solar PV system. The standard inverter technology is, at least in my simple-minded way of analogizing this to something to which we can all relate, essentially a serial processor; you hook up the panels to “series strings”, and at least to me it looks kind of modular — the larger a PV array you want, the more inverter strings you include. Apparently, though, this parallel inverter technology is a bit of a weak link in the system; they fail more and sooner than the panels, and typically only have 5-to-10-year warranties, so will need to be replaced several times during the life of the rest of the array. Those replacement costs are part of what makes solar so expensive relative to other generation methods.

Eric Wesoff at Greentech Media is predicting a coming disruption in the solar inverter market, arising from some innovations in the architecture of the inverter. In addition to enumerating the downsides of the existing technology, he points toward different inverter architectures that may perform better, leading to longer asset lives, more electricity generation for a given size of array, and thus more attractive economics of solar power:

Two new and potentially disruptive “distributed inverter architectures” are being applied to solar deployments:

•    Microinverter or parallel architectures
•    Distributed MPPT or DC-DC bus architectures

They are very different approaches but both methods potentially offer substantial benefits including:
•    Anywhere from 5% to 25% improved energy harvest
•    Easier installation – reduced system engineering
•    Cheaper installation – less time spent on the roof and reduced wiring cost

One way of doing distributed inverter architecture essentially scales down the inverter so that each panel has one, instead of hooking several panels together serially. In a separate article, Wesoff provides some more insights into the economics of why solar inverters matter, and who are the innovators working on these potentially disruptive technologies:

First mover advantage belongs to Petaluma, Calif.-based Enphase and its miciroinverter.  The company has already shipped tens of thousands of units for hundreds of PV installations. You can look at every PV installation in California under the California Solar Initiative here. It’s not the most elegant spreadsheet but the data is there and you can sort by inverter vendor.  It looks like Enphase has about 400 PV installations in California using their microinverter.

But SolarBridge, (formerly known as SmartSpark) is also going after the microinverter market and has a slightly different take on the distributed inverter endgame (see SolarBridge Seeks up to $15M).

Whereas Enphase’s current inverter design mounts on the panel racking equipment, SolarBridge envisions a fully integrated AC PV panel where the inverter is incorporated into the panel itself.  SolarBridge sees this as a superior solution and is partnering with module manufacturers to develop AC module solutions.

The rest of the article provides more details on these two firms and their products. Enphase also has a slick solar array monitoring tool using broadband connectivity. Most people who don’t work in solar don’t think much about the electronics in solar, the inverter, and how they can affect the economic competitiveness of solar. But these types of disruptive innovations in an unsung role in the product have the potential to change the relative costs and energy efficiency of solar arrays, and thus bear watching over the next few years.

Note also some potential for cross-pollination — the technologies are different, but plug-in electric vehicles are going to require inverters too, if PEV-enabled building owners are going to be able to sell power to others. So these inverter innovations may have implications for the future of PEVs too.

Economic experiments on growth policy

Lynne Kiesling

Tim Kane at the Kauffman Foundation is going to do some experimental economics research (with Dan Houser at George Mason) on some questions of growth and entrepreneurship:

The experiments are for the study of work and entrepreneurial behavior under different policy regimes, including taxation, welfare, and social insurance. I’ll share a link to the preliminary literature review / experimental design working paper in a future post. Questions on my mind are:

1. Will higher federal taxes reduce entrepreneurship and growth, or are those fears overblown?
2. What’s the best way to design an experiment for work under different policy regimes? Once we nail that down, what is the best way to design the choice of riskless versus risky (entrepreneurial) work?
3. Is there research already in existence informing this topic?

Tim’s post summarizes some of that literature and provides some insights into why he thinks an experimental approach will expand our understanding of these questions. I look forward to seeing this research.