I agree with Kenworthy. It seems obvious that a stronger safety net would lead to more innovation. An acrobat isn't going to try a new trick if the safety net is unreliable. Not a perfect example, but I think it works.Also, I highly doubt that someone would say, "I have an idea for a new invention or innovation, but I can only make $750 million off of it. If I could make $1 billion, I'd do it, but $750 million isn't enough money."The claim laid out by Acemoglu et al seems almost counter-intuitive.
Dylan Matthews's take.