When Ideas Meet the Real World with Mushfiq Mobarak

New York is the birthplace of gridlock—of the word “gridlock,” that is, which emerged in the Big Apple in the 1970s. Now, one solution to gridlock is charging vehicles to enter the city center, especially during business hours. Fewer cars, less noise, faster deliveries, less pollution. You may know the solution by the name “congestion pricing.” It’s rooted in economic theory, and there are real-world examples of it working. London, Singapore, and Stockholm all have congestion pricing. New York City got federal funding to start working on congestion pricing back in 2007, but plans to reduce physical gridlock kept running into political gridlock—years of delays and objections and revised plans and more delays and objections.‌

Finally, in 2024, there was enough agreement at all levels of government for congestion pricing to begin. They spent half a billion dollars on cameras and sensors and other infrastructure and then Governor Kathy Hochul, who had been for congestion pricing, hit the brakes.‌

A few months later, she changed her mind again. So congestion pricing finally started in January 2025, and early signs are that it’s working just like the policymakers said it would. Fewer cars, faster deliveries. Except…‌

I’m Jessica Moore with breaking news. We have just learned the Trump administration is pulling the approval for congestion pricing.

When we published this, congestion pricing was still in effect, but by the time you hear it, who knows.‌

Today’s lesson is about all the forces that leaders need to consider when they try to introduce a new idea. I wanted to talk to someone who knows all about what can come between having a good idea and making it happen in the real world. Needless to say, I took the train up to New Haven.‌

My name is Mushfiq Mobarak, and I’m a professor of economics at Yale University.

Mobarak is a development economist.‌

It generally means that we worry about why some countries are poor and what we can do about that.

Other than maybe as a driver, Mobarak hasn’t been involved in New York’s congestion pricing saga. His projects do involve infrastructure, but also public health and poverty and the environment, and he doesn’t just sip through data and write papers; he follows these projects out into the field in Asia and Africa and South America. Usually these projects involve solutions that he has a sense might work.‌

It turns out that for many important classes of development challenges, there are solutions that are available already that are technically effective. And by technically effective, I mean that the engineers or the medics, whoever came up with the solution, they believe in it; it tests well in their lab.

But a lab test can’t tell you what happens when something technically effective meets the complexities of human behavior.‌

Ultimately, whether it’s going to actually affect people’s lives depends on whether individuals or households might take up that solution and actually use it and adopt it.

Mobarak teaches a course called State and Society. It’s a requirement for all MBA students because whether you’re managing a business or some other kind of institution…‌

You really also need to understand business-government interactions. You need to understand how society is designed.

Mobarak teaches the course with a political scientist. This way students get perspectives from business and from government.‌

As an example, I might teach about the theory of regulation, like the economic theory of the proper scope of regulation. But then Professor Ian Shapiro will complement that by talking about, in a political equilibrium, what types of regulations we actually see in practice. When political parties and voters are all trying to negotiate their interests, what is the regulation that emerges?

He talks to the class about his own experiments with regulation.‌

One case we discuss is my work with the government of Chile, where we were trying to help them design and implement a particular regulation which is about getting fishermen to cut back on the amount of fishing and extraction of a particular fish called merluza. Which is an important source of protein for low-income Chileans, but it’s been massively overfished.

The absolute worst time to fish for merluza, which you might know as hake, is when they’re making baby merluzas in September. So Chile made it illegal to catch or sell these fish in September. Anyone caught doing so would have to pay a fine.‌

Then we go to markets with Chilean National Marine Resource Authority inspectors and fine people. But it turns out that when we start fining people, they sell hidden fish—keep it in the back.

Mobarak and his colleagues anticipated that some people would be hiding fish. But with the help of some women who were pretending to shop for dinner, they found out that the fish sellers had come up with more creative ways around regulations.‌

For example, keeping the fish on ice and claiming it was caught in August back when it was legal to do so.

Chilean fishermen aren’t the only ones who try to find a way around the rules. Drivers who commute into New York City have been trading tips on Reddit about how to avoid tolls for congestion pricing—cover your license plate or even shine a laser pointer at the sensor.‌

That’s what I mean by complexities. When you’re moving from theory to implementation, in this case implementation of regulation, there are going to be unintended reactions that you might not have planned for.

Fining fishmongers for overfishing: that’s the state. Freezing the fish you caught today and pretending you got them last month: that’s society. And understanding the dynamics that work between them, that’s the aim of Mobarak’s course and of his research. ‌

Mushfiq Mobarak has been thinking about development economics since before he knew there was such a thing. He grew up in Bangladesh.‌

One particular summer we had a heat wave with droughts, and that summer I was living in Chittagong, which is a port city, and it’s in the south of the country, adjacent to the only part of our country that’s not at sea level, with some hills. Therefore, that was the only part of the country that had hydropower.

But because of the drought, there was no water in the hills, so no hydroelectric power.‌

That summer, the temperature was the equivalent of over 100 degrees Fahrenheit, and in Bangladesh it’s extremely humid, maybe 80%, 90% humidity. So it was extremely unpleasant. And imagine—without electricity, you’re in 100-degree-plus weather; it feels like 115, you’re sweating. And I remember that the only way to manage this—this was when I was in seventh or eighth grade—was I would just go under the shower every hour just to cool off. And so that made me curious about why is it that we don’t have electricity, particularly in this part of the country. And that made me learn about hydropower and this idea of intercepting water.

Another experience that had an outsized impact on his career trajectory happened in the capital of Bangladesh, Dhaka.‌

Growing up in a lower middle class neighborhood in Dhaka, we used to live in the same house as my grandmother, who was a widow. Didn’t have much to do, so she really liked telling stories, and I was the grandchild who would spend time with her just listening to the same story over and over. And it just so happened that our neighbor, his brother worked at the IMF, and I distinctly remember this because either once a year or once every two years, we’d have this car coming through the alley where we lived. And this is a clear memory because nobody in that alley ever owned a car. And it was also annoying because it was a narrow alley—then the cricket pitch, we’d have to dismantle it, or the badminton net, we’d have to dismantle it to let this car pass.

It’s a scene straight out of a gangster movie. Mr. Big Shot steps out of the car. He’s got spats on his shoes. Then the brave kid comes over to Mr. Big Shot; Mr. Big Shot gives the kid money to get him maybe a newspaper or a cigar. And when the kid grows up, he becomes the new Mr. Big Shot. But the Mr. Big Shot on that day in Dhaka was a different kind of big shot.‌

He works at the IMF, where he has a PhD in economics. I didn’t know what a PhD was; I didn’t know what economics was.

And it was Mobarak’s grandmother who spoke to Mr. Big Shot. She asked him, “How much money do you make?”—something you wouldn’t ask a crime kingpin.‌

This is socially acceptable in Bangladesh. After she asked you your name, her next question would be, “How much money do you make and how much is that in Bangladeshi taka?” You’d have to convert. So then she would tell me those stories. “He works at the IMF, has a PhD in economics. He makes this much money, and that’s how much that is in taka.”

Not only that, but the IMF paid for him to go back to Bangladesh once a year to visit his family.‌

And so for me, what got ingrained in my head, subconsciously without realizing it, is that that’s the definition of success. Success is you get something called a PhD in economics, you go work at the IMF, you get home leave.

Mobarak pursued a PhD in economics, and he did do a stint with the IMF and another at the World Bank.‌

It was really useful because I learned that actually that job is one that I wouldn’t want. It’s not a good fit. I was more interested in actually producing research.

A lot of that research is focused on solving public health challenges in developing nations—challenges with solutions that are technically effective but don’t necessarily catch on with the people they’re trying to help. Like cleaner cook stoves, which reduce respiratory infections, or toilets, which prevent transmission of other diseases.‌

We know from other work that malaria is a cause of low growth in sub-Saharan Africa and an insecticide-treated bed net would be an effective solution to that, but you have to buy one and sleep under it. But in all these cases, we have a problem where even though we understand the solution, we can take it to people, but even when people are given inducements to adopt that technology, that’s where we sometimes fail.

So are you looking for ways to get around that or are you just looking to describe the situations when you do the research?‌

Actually, my research is much more action oriented in nature. So I am puzzled about why is it that somebody is not investing in toilets or buying a cook stove or migrating away from their very poor area to a place where they’ll have much better income-earning opportunities. When I’m puzzled about these things, the way I approach the problem is I actually try and set up the solution, market it to sometimes a few thousand households, sometimes tens of thousands of households, and we build some research around that to understand what works and what doesn’t work to get people to adopt a new technology or product or behavior, and that way we generate evidence on what the right policy strategies or marketing strategies should be.

So in Chile, for instance, Mobarak and his action-oriented team were able to demonstrate which methods for keeping merluza out of the market in September worked best, and also how cost-effective each of those methods were. The experiments proved that these changes really could improve people’s lives, and Chilean authorities followed the evidence. They scaled up their public service announcements to prevent overfishing because that was easier and cheaper than chasing fishmongers who circumvent inspectors.‌

In State and Society, Mobarak talks to his students about his research on fishery management or malaria nets, but one of his favorite units is about how government regulations on intellectual property rights affect innovation.‌

In this particular case, we want to understand whether providing incentives to innovators is useful or not. And the reason you need to understand this is that on the one hand, we might need to give pharmaceutical companies lots of incentives to make sure that they engage in a lot of R&D. And that incentive often takes the form of, “OK, you can have a patent; you can act like a monopolist, and sell your drugs at a higher cost as a monopolist because you don’t have any competition, because you need to recoup the R&D costs that you had already sunk in.”

Not just for that drug, but for the other thousand drugs you were trying to make at the same time and this one worked?‌

Exactly. And once we provide that incentive to create that monopoly power for that firm, of course we are hurting society in a different way, which is there’s going to be lots of patients who need access to the drug right away, but given that the price is now higher than it otherwise would be if there were generics available, that means many patients who need that drug immediately, we are charging too much from them. So in a situation like that, we are creating a trade-off. And so the question is, is it really necessary for us to give these types of protection, like patent protection or trademark protection, in order to make sure that they retain the incentives to innovate?

The stakes in the pharmaceutical business are so high that Mobarak probably would never find a company willing to experiment with this. So instead he turns to some research on 19th-century Italian opera. More specifically, it starts with the research of an economic historian named Petra Moser.‌

She identifies historical episodes which might shed light on some contemporary problem. It’s, of course, really difficult for us to get data on inventions that do not occur. And that’s why going all the way back to 18th and 19th-century operas was very useful. And that’s where Petra Moser’s work comes in. She shows that because of the timing of Napoleon’s military victories, after 1801, two states in Italy, Venezia and Lombardy, had a better intellectual property rights protection environment. They protected copyright and trademarks better than other states. And then you observe that exactly at that place and time, meaning after 1801 in those two states, you see greater production of operas relative to other states, not only in terms of quantity, but also in terms of quality. Those operas have been exceptionally durable and are still recognized as notable operas,

The Italian operas that people still listen to, the ones you can find recordings of more than 200 years later, they tend to come from Venezia and Lombardi.‌

So that helps us understand whether empirically it’s the case that intellectual property rights protection actually leads to more innovation.

Mobarak gets into 19th-century Italian opera to talk about the theory of innovation—what drives it, what slows it. But then he talks about the much messier business of innovation and practice and looks to a contemporary example that is much closer to home. In 1990, researchers at Yale University showed that an antiviral drug cocktail was effective in treating people with HIV. The university licensed it to the pharmaceutical company Bristol Myers Squibb to produce and distribute it. Meanwhile, HIV-AIDS was tearing through sub-Saharan Africa. The drug cocktail, however, cost several thousand dollars a year per patient, and nobody was offering a discount.‌

So immediately, Doctors Without Borders notified journalists that a rich university is essentially making decisions that are withholding drugs from poor populations who need it urgently in the middle of this global pandemic.

Students began protesting on campus, and that attracted the press.‌

And nobody at Yale ever wants to be on the cover of New York Times or Wall Street Journal or Financial Times or BBC with that type of coverage. So this caused a lot of internal strife.

And there was no easy solution. For one thing, Yale held the patent, but Bristol Myers Squibb held the license to market the drug. So who gets to decide whether to release it in sub-Saharan Africa? It gets even more complicated when you consider the future. Releasing a drug for little to nothing could save more people in the short term. But what if it keeps companies from developing the next breakthrough drug? ‌

What did the newspapers get wrong? I mean, wasn’t Yale depriving people of important drugs, life-saving drugs?‌

The problem is that that’s a partial story. What doesn’t play well in a particular news story that has space limitations is why those decisions are made. Why would we have a licensing scheme in place to begin with? Why do we have intellectual property rights to begin with? Because at this particular moment in time, it may be the right decision for us to make the drug freely available. But once we make that decision, what happens is the next time that Yale researchers, or BMS especially thinks about licensing a drug and putting a lot of their own money into converting a Yale innovation into a marketable product, they will remember this episode and given that they’re beholden to their shareholders, they might think twice about how much money we should invest in making sure that this drug comes to market quickly.

And we will never see that innovation at all. And of course, there won’t be a New York Times article about, “Oh, we have a malaria problem. Why is there no malaria vaccine right now?” We can’t blame anybody for it. So that’s the issue. It’s a much more complex problem when you think about the dynamics and how it affects future innovations.

In the end, the university and Bristol Myers Squibb found that they were on the same page and they agreed to make the drug available as quickly as possible.‌

But with this case, it really helps to then visualize how these complicated debates play out in public, and that it’s not just about the theory of the trade-offs between monopoly pricing versus innovation incentive. It’s also about the politics. It’s also about media.

Politics. Media. How regulations influence innovation. As you can imagine, a course like State and Society is inevitably going to touch on topics that have generated heated debate for a long time, but Mobarak makes a point of rooting the discussion in evidence rather than ideology. For instance, when they talk about regulation:‌

Of course there are political alignments here. Different political parties view things differently, and some political parties view things in extreme ways. But the point I make to students— sometimes I give very simple examples from my own life, which is I travel around the world and I see that haircuts are extremely expensive in the U.S. Why is that? It’s partly because we have lots of licensing regulation. In Bangladesh, people can open up a barber shop just by learning barbering from their dad, and therefore they can offer that service for cheap. In the U.S., you have to go to school for 18 months or two years before you can get a license and, of course, then we have to reward them for that.

So does it make sense for us to have those regulations? And the answer there might be no. Maybe that particular sector is excessively regulated and the market could take care of the problem because if you get a bad haircut, I can look and say, “Oh, where did you get that interesting haircut?” and then avoid that barber.

And then I also ask them immediately after, “OK, what about regulation of doctors?” And you see that students, in aggregate, have a very different feeling about how much regulation we should have in the medical industry versus the haircut industry. But then again, we have discussions about, in some way, there might be some excessive regulation and where that comes from—which is the American Medical Association, who represents the current set of doctors. They have an incentive to put up entry barriers so there aren’t too many doctors. There are many UK-trained doctors who’d be very happy to move and practice in the US, even in areas that are more rural, where doctors are under supplied. But we make it very difficult for them to enter.

Or like nurse practitioners—

Exactly.

… a whole class of person. It’s almost like the non-tenure track faculty for something like that.‌

Yeah. And nurse practitioners can probably provide a lot of services that doctors wouldn’t want to see them providing because that acts as competition. So in all these cases, we might reasonably have different views about the extent of regulation in each of these sectors, depending on our needs. And so the idea is to help students not to tell them what to think, what amount of regulation to pursue, but to give them the tools to think about the costs and benefits so that if they’re ever in the position to either design or shape regulation, that they keep both the costs and benefits in mind. That we care about consumers, but we also care about safety.

Whenever you introduce a new product or service or policy, there are probably going to be wrinkles you didn’t anticipate, and there will be a lot of competing interests to balance, from business and politics and government and the public, including future generations. And any of these things can change and change quickly. So the next time you’re stuck in traffic—and I hope you’re not stuck right now—you might wonder if there’s a better way to do things. It took 18 years for congestion pricing to start in New York City, and it’s still not a done deal. Now, that’s not a reason not to try, but Mobarak hopes his students come away from his class, State and Society, knowing that no matter how good your idea is, it really helps to understand what you’re getting into.‌