Lance Davis

Davis and North's central thesis is that institutional arrangements (the rules, property-rights structures, and organizational forms governing economic activity) are not exogenous backdrops but are *induced*: economic actors create or change institutions when the expected benefits of a new arrangement exceed the costs of bringing it into being, typically because a shift in relative prices, technology, or market size has opened a previously unexploited profit opportunity. The unit of analysis is the "institutional arrangement" and the trigger is a change in the structure of potential gains (Davis & North, *Institutional Change and American Economic Growth*, 1971; DOI 10.1017/cbo9780511561078). For the reviewer, this is the primary lens: any claim that space governance "must" arrive by treaty, regulator, or property rights is incomplete until it specifies *who has the incentive to bear the cost of building the institution, and when the opportunity makes it worthwhile.*

In *Mammon and the Pursuit of Empire*, Davis and Huttenback subjected the political economy of British imperialism (1860–1912) to a quantitative accounting that asked, concretely, whether empire paid - and for whom. Their finding was that empire was, in aggregate, a poor investment for the British economy as a whole but a profitable transfer to a narrow class of investors and officials, financed by the broad taxpayer: the returns were privatized and the costs socialized (Davis & Huttenback, *Mammon and the Pursuit of Empire*, 1986; review/metadata DOI 10.2307/2596079 and 10.1016/0305-750x(88)90035-6). The Davis method is to refuse the aggregate slogan and build the disaggregated ledger of beneficiaries and bearers. For the reviewer, this is the sharpest weapon against space-economics proposals that assert a national or global "benefit" without naming the specific actors whose returns and costs are being summed.

Across his career Davis studied how capital markets form, integrate, and mobilize savings into investment - most famously the long convergence of regional interest rates in the post-bellum United States and the evolution of the institutions (intermediaries, exchanges, information channels) that lowered the cost of moving capital to its highest-return uses (Davis & Gallman, *Evolving Financial Markets and International Capital Flows: Britain, the Americas, and Australia, 1865–1914*, 2001; DOI 10.1163/2468-1733_shafr_sim0401102). The diagnostic question is whether the *institutions of finance* exist to channel capital to a new frontier at a tolerable cost, and how those institutions evolve as the frontier matures. For space, this directly frames the financing of a capital-intensive, long-horizon, high-risk industry.

Davis brought modern portfolio reasoning to economic history, analyzing nineteenth-century British overseas investment as a risk-return diversification decision rather than as mere imperial appetite, and quantifying the benefits investors actually obtained from international diversification given the information and instruments of the era (Davis & Cull / related, *British Investment Overseas 1870–1913: A Modern Portfolio Theory Approach*, NBER 2005; DOI 10.3386/w11266; and the broader capital-flows literature, e.g. Obstfeld & Taylor, *Globalization and Capital Markets*, NBER 2002; DOI 10.3386/w8846). The reviewer uses this to interrogate whether a proposed space-investment thesis correctly prices the risk, the illiquidity, and the diversification value of the asset, rather than treating "the space economy" as a single undifferentiated bet.

Davis was a founder of cliometrics: the application of explicit economic theory and quantitative measurement (including the disciplined use of counterfactuals) to historical questions, replacing impressionistic narrative with testable, numbers-backed claims. The method demands that a causal claim be operationalized into measurable variables and that the relevant counterfactual be specified (the *Handbook of Cliometrics*, 2024, DOI 10.1007/978-3-031-35583-7, codifies the field Davis helped found). For the reviewer this is a meta-standard: a space-economics or space-policy dissertation must put a number on its central magnitude and state the counterfactual against which a policy or institution is being judged.

Implicit in Davis & North and explicit in the cliometric tradition is that institutions arrive with a *lag* and carry *history*: the institutional response to a new opportunity is shaped by the rules and organizations already in place, and the timing of the response (early, late, or never) is itself the thing to be explained. Institutions that "should" exist on a pure cost-benefit reading may fail to appear because the actors who would benefit cannot organize to bear the up-front cost, or because an incumbent arrangement blocks them. This frames the recurring space puzzle: everyone agrees orbital debris is a negative externality, yet the corrective institution does not arrive.