numbers, entrepreneurship and Pittsburgh
I have mentioned this before: the classic article looking at the question of why entrepreneurship appears to be lower in Pittsburgh than elsewhere is by Ben Chinitz in this article:Contrasts in Agglomeration: New York and Pittsburgh. American Economic Review. Papers and Proceedings,Vol. 51, 1961, pp. 279-289. Granted its from the 1960's, but the answer he hypothesized was that the unique structure of the Pittsburgh economy, which was remarkably un-diversified, not just by industry but by ownership was the cause. The idea was that a few large corporations had fixed bureaucratic supply networks that were not conducive to new smaller suppliers that were trying to break into the business. Are there lessons for today from that? I bet there are.
But going back to the story in today's paper. You can read the full report online. In the realm of how some numbers are not all that they appear it's worth deconstructing a bit. I did get quoted on the age issue as it relates to these statistics... but something far more interesting. If you look at table 5 in that report you will see how entrepreneurship rates differ by educational attainment. What would you presume that pattern looks like? Higher educated groups have higher entrepreneurship rates? That turns out to be the exact opposite the findings in this report which showed entrepreneurship rates highest by far for those with less than a high school degree. Their numbers show that the percentage of population who are entrepreneurs is 0.36% for those with less than a high school degree compared to 0.30% for those with a bachelor's degree or higher.
What does that mean? I certainly don't have an answer, at least not one worth hypothesizing about here.. but when you consider that the local population is highly educated... especially when you correct for our unique age demographic... what does this report really mean for the region or state. We show up low in entrepreneurship.... because we are highly educated?? Again causality and correlation are not the same. But to the degree this report gets into it, you are left wondering. If you corrected for different patterns of education, how would we rank? At the very least it suggests the question and answer is a little more complicated than the issue of tax policy and business climate that is usually how this debate evolves.