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on History and Philosophy of Economics |
| By: | David Colander |
| Abstract: | From the movie, Inside Job, one gets the sense that economists are ethically challenged because they take payments for writing papers that say what the funders of their research want them to say. This paper takes issue with that and suggests that the more serious ethical problem of economics has little to do with the funding of economic research. It has to do with lack of humility. It argues that economists have a tendency to convey more scientific certainty in their policy positions than the theory and evidence objectively would allow. Too many economists are willing to make seemingly definitive scientific statements about policy based on models, that they know, or should know, are highly imperfect. To deal with that problem, this paper suggests that applied economists should see themselves as engineers, not as applied scientists. It argues that doing so is important because engineering has a broader and more humble methodology than does science. Because applied economists are essentially engineers, the paper argues that an Economist’s Code of Ethics can be closely based on the National Society of Professional Engineer’s Code of Ethics. |
| Keywords: | code of ethics; methodology; science; humility; applied; moral |
| JEL: | A1 B0 B4 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:mdl:mdlpap:1103&r=hpe |
| By: | Ilgmann, Cordelius |
| Abstract: | Given the renewed interest in negative interest rates as method for removing the floor to nominal interest rates, this article offers a concise review of Gesell's life, work and its place in the history of economic thought. It provides a brief biographical sketch of Gesell, demonstrating both his relative prominence as a social reformer during the interwar years as well as his close affiliation with anarchism. The article then gives a concise summary of Gesell's theory of effective demand and interest as expounded in the Natural Economic Order, the former being neglected by most scholars working on the subject. Finally, it is demonstrated that Keynes endorsement of Gesell as a strange, unduly neglected prophet is another piece of evidence for rejecting Hick's classic interpretation of the General Theory. If one takes Keynes extensive discussion of Gesell's theory of interest as a key for understanding the General Theory, Keynes main innovation of General Theory becomes a monetary theory of interest based on uncertainty that results in liquidity preference. The limited literature on Keynes' link to Gesell, published mainly in the 1940s, has however been widely ignored in the debate about the General Theory. -- |
| Keywords: | History of Economic Thought,Theory of Interest,Negative Interest Rates,John Maynard Keynes,Silvio Gesell |
| JEL: | B19 B22 B31 E49 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cawmdp:23&r=hpe |
| By: | David Laidler (University of Western Ontario) |
| Abstract: | Irving Fisher's encounter with the Quantity theory of Money began in the 1890s, during the debate about bimetallism, and reached its high point in 1911 with the publication of The Purchasing Power of Money. His most important refinement of the theory, derived from his recognition of bank deposits as means of exchange, was to treat their out of equilibrium recursive interaction with inflation as integral to it. This treatment underlay both his 1920s work on the business cycle as a "dance of the dollar" and his advocacy of subjecting monetary policy to a legislated price stability rule, initially to be based on his "compensated dollar" scheme. Fisher's failure to recognize the onset of the Great Depression even as it was happening was directly related to his faith in the quantity theory's seeming implication that price level stability in and of itself guaranteed the continuation of prosperity, while his subsequent work on the debt deflation theory of great depressions initially failed to repair the damage that this failure did to his reputation, and to that of the quantity theory. In the 1930s Fisher nevertheless remained an active supporter of various schemes to reflate and then stabilize the price level. His subsequent influence on the quantity theory based Monetarist counter-revolution that began in the 1950s lay, directly, in its deployment of his analysis of expected inflation on nominal interest rates, and, indirectly, in its espousal of the case for subjecting monetary policy to a legislated rule. |
| Keywords: | Quantity theory; Price level; Inflation; Deflation; Business cycle; Depression; Money; Interest; Fisher effect |
| JEL: | B1 B2 B3 E3 E4 E5 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:uwo:uwowop:20111&r=hpe |
| By: | Luca Fiorito |
| Abstract: | The aim of this paper is to analyze American economists’ influence in the passing of the Clayton and Federal Trade Commission Acts (1914). Specifically, it is argued and documented that American economists were important in this process in two ways. Many economists exercised an “indirect” influence by discussing in academic journals and books problems concerning trusts, combinations, and the necessary measures to preserve the working of competitive markets. At least as importantly, if not more so, some economists took an active role in the reform movement both contributing to draft proposals for the amendment of existing antitrust legislation and providing help and advice during the Congressional debates which led to the passing of the FTC and Clayton Acts. Among these, we will focus primarily, albeit not exclusively, on the contribution of John Bates Clark. |
| JEL: | B13 B14 B15 K21 L41 L42 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:623&r=hpe |
| By: | Frank A.G. den Butter (VU University Amsterdam); Harro B.J.B. Maas (Utrecht University) |
| Abstract: | This paper investigates the history of the shift from expert to model based monetary policy analysis at the Dutch Central Bank (DNB) in the postwar period up to the middle of the nineteen-eighties. For reasons that will become clear expert based reasoning at DNB was referred to as normative impulse analysis. Our focus is on two aspects of this shift: (i) from an expert based monetary analysis to a model based analysis of channels of monetary transmission, and (ii) from the top down way of monetary analysis where the president of DNB acted as the monetary expert that was in line with the hierarchical organisation of DNB to the bottom up modelling approach that was set up by a group of newly hired young academic outsiders and destabilized DNB's organisation. The resulting econometric model enabled DNB to regain some of its argumentative strength in the Dutch policy arena that had become dominated by the econometric model of the Dutch Planning Bureau (of wh ich Tinbergen was the first director), but also led to tensions within DNB's organisation. In spite of efforts to incorporate the main aspects of Holtrop's monetary analysis within the model, its concomitant new research group appeared difficult to integrate within the hierarchical organisation of DNB. The model analysis resulted in the MORKMON model which replaced Holtrop's analysis in the mid 1980s and was regularly used in policy analysis and forecasting of DNB until 2011, when the model was replaced by the DELFI model. |
| Keywords: | Dutch monetarism; history of economic modelling; monetary policy |
| JEL: | B23 C52 E58 |
| Date: | 2011–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20110161&r=hpe |
| By: | Bruno Amable (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, CEPREMAP - Centre pour la recherche économique et ses applications, IUF - Institut Universitaire de France - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique); Elvire Guillaud (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Stefano Palombarini (LED - Laboratoire d'économie dyonisien - Université Paris 8 - Vincennes Saint-Denis) |
| Abstract: | There are many apparent similarities between the current political and economic situations of France and Italy. The mainstream view is that at least part of the neo-liberal strategy could be a solution to the economic problems of both variants of the European model of capitalism. However, the difficulties met by the implementation of these strategies by Sarkozy and Berlusconi lead to believe that the success or failure of neo-liberalisation has less to do with its (lack of) macroeconomic merits than with the stability of the socio-political alliances that support it. In this respect, France and Italy are markedly different. This paper shows that even if the "hard core" of the neoliberal social bloc is roughly the same in both countries, this core constitutes a minority of the electorate ; a neoliberal strategy must therefore rely on an extended social coalition, which might not be similar between countries. The Great Recession revealed part of the structural characteristics that set both countries apart. The aim of this article is to show that the consideration of the different socio-political alliances found in each country can help to understand how Italy and France ended up on different economic trajectories. |
| Keywords: | Institutions, model of capitalism, neoliberal reforms, political crisis. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00639450&r=hpe |
| By: | Francesco Passarelli |
| Abstract: | This paper describes policy alternatives as lotteries, and studies how policy preferences are distorted by the cognitive anomalies postulated by Prospect Theory. Loss aversion induces a status quo bias. However, due to the reflection effect, the bias is asymmetric: too moderate attitudes toward a good reform or a good candidate, and too low severity toward bad politics. The reflection effect also determines low loyalty in partisan voting and weak concerns about partisan issues. Preferences about nonpartisan issues are independent of wealth because people use the status quo as a reference point. Ambitious platforms have more chances to pass than incremental and detailed changes because people are risk seeking in the realm of losses. In general, according to Prospect Theory the policy conflict within the society is smoother than under full rationality. Moreover, a pure majority system yields either prolonged conservatism or a radical abandonment of the status quo. |
| Keywords: | prospect theory, behavioral economics, voting behavior, behavioral political economy |
| JEL: | C9 D72 D81 H1 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:slp:islawp:islawp39&r=hpe |
| By: | Martinho, Vítor João Pereira Domingues |
| Abstract: | Much has been said lately about entrepreneurship, so it seems important to leave here some personal analysis on this topic. The issues outlined here result from a work in about a year in which because a personal and professional obligations it was doing some research on these issues. This is an interesting topic that has not yet expired and on which there is much to research, do it is an area where there are many challenges. -- |
| Keywords: | entrepreneurship,entrepreneurs,innovation |
| JEL: | O55 O32 L26 M13 O31 |
| Date: | 2011–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:50907&r=hpe |
| By: | Conrads, Julian (University of Cologne); Irlenbusch, Bernd (University of Cologne) |
| Abstract: | In his classic article "An Essay on Bargaining" Schelling (1956) argues that ignorance might actually be strength rather than weakness. We test and confirm Schelling's conjecture in a simple take-it-or-leave bargaining experiment where the proposer can choose between two possible offers. Option A always gives the proposer a higher payoff than option B. The payoff of the responder depends on the (randomly determined) state of nature, i.e., in state s2 payoffs of the two players are aligned while they are not in state s1. The responder is always informed about the actual state. The proposer knows the actual state in our first treatment but not in the second. We find that proposers indeed benefit from ignorance because the responders accept almost all offers (even the unfavorable ones) if the payoffs of the responder have not been transparent for the proposer. In additional treatments we investigate situations where the proposer can deliberately remain ignorant. One could assume that remaining ignorant on purpose would be punished by the responder at least if an unfavorable outcome results. Surprisingly, we find that strategically remaining ignorant tends to be beneficial for the proposer particularly if the responder does not know with certainty whether it was the proposer's intention to remain ignorant or whether it was not her intention. |
| Keywords: | strategic ignorance, bargaining, intentions, experiment |
| JEL: | C72 C78 C91 D63 D82 D83 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6087&r=hpe |
| By: | Declerck C.H.; Boone Ch.; Kiyonari T. |
| Abstract: | Shame is often considered a moral emotion with action tendencies shaped by natural selection to elicit socially beneficial behavior. Yet, unlike guilt or other social emotions, prior experimental studies do not indicate that incidental shame boosts prosocial behavior. Based on the affect as information theory, we hypothesize that incidental feelings of shame increase cooperative behavior, but only for self-interested individuals, and only in situations where shame is relevant with regards to its action tendency of avoiding reputation losses. To test this hypothesis, cooperation levels are compared between a classic prisoner’s dilemma (where “defect” may result from multiple motives) and a sequential prisoner’s dilemma (where “defect” is the result of intentional greediness). The results indicate that, as hypothesized, proself individuals cooperate more following incidental shame, but only in a sequential prisoner’s dilemma. Hence ashamed proselfs become inclined to cooperate when they believe they have no way to hide their greediness, and not necessarily because they want to make up for earlier wrong-doing. |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:ant:wpaper:2011018&r=hpe |
| By: | Prinz, Aloys; Bünger, Björn |
| Abstract: | In this paper, Happy Income is introduced as an indicator of physical and socio-psychic wellbeing. It is constructed on the assumption that socio-economic well-being is based on objective circumstances, such as personal income as well as on a subjective evaluation of life. In combining these factors, Happy Income is a cardinal measure of overall well-being in a given country. Therefore, Happy Income is not subject to the limitations of purely ordinally scaled indicators, i.e. it is not restricted by an upper bound, which may be one explanation of the Easterlin paradox. The Happy Income concept is employed to measure social well-being in various different European countries. The results are compared to these countries' score on Ruut Veenhoven's Happy Life Years. It is argued that Happy Income is a valuable complement to other indicators of well-being at an aggregated level. -- |
| Keywords: | Happiness research,Happy Income,Happy Life Years,Subjective Well-being |
| JEL: | I10 I31 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cawmdp:15&r=hpe |
| By: | Simone Galperti |
| Abstract: | I analyze common agency games in which the principals, and possibly the agent,have private information. I distinguish between games in which the principals delegate the fi nal decisions to the agent, and games in which they retain some decision power after offering their mechanisms. I show that,in contrast with mechanism design models with one informed Myerrson's Inscrutability Principle fails when there are many informed principals. I also find that, in contrast with common agency models with uninformed principals, the Delegation Principle (Menu Theorem) fails when principals are informed. I then focus on Perfect Bayesian Equilibria in which principals offer their mechanisms without randomizing. I characterize the outcomes of arbitrary games with delegation as outcomes of a new game in which principals offer menus and send cheap-talk signals. Next, I characterize the outcomes of arbitrary games without delegation as outcomes of a new game in which principals offer menus of direct revelation mechanisms, to which they truthfully report their types. JEL Code: C18, C53, D89 |
| Keywords: | Common agency, informed principals, Inscrutability Principle, Delegation Principle, menus, signals, direct revelation mechanisms. |
| Date: | 2011–30–31 |
| URL: | http://d.repec.org/n?u=RePEc:nwu:cmsems:1541&r=hpe |
| By: | Mogilner, Cassie (University of PA); Aaker, Jennifer (Stanford University); Kamvar, Sepandar (MIT) |
| Abstract: | Consumers want to be happy, and marketers are increasingly trying to appeal to consumers' pursuit of happiness. However, the results of six studies reveal that what happiness means varies, and consumers' choices reflect those differences. In some cases happiness is defined as feeling excited, and in other cases happiness is defined as feeling calm. The type of happiness pursued is determined by one's temporal focus, such that individuals tend to choose more exciting options when focused on the future, and more calming options when focused on the present moment. These results suggest that the definition of happiness, and consumers' resulting choices, are dynamic and malleable. |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:2084&r=hpe |
| By: | Nagore Iriberri (Universitat Pompeu Fabra); José Ramón Uriarte (UPV/EHU) |
| Abstract: | We study a society inside which two official languages, the majority language A and the minority language B, are in contact and compete for the same social functions. We propose a non-cooperative game to capture some features of this competitive situation. In the game, there are two types of players: the bilingual one who speaks both A and B and the monolingual one who speaks only A. The information about which type is each player is private. A real life situation captured by the game is that in many interactions bilingual players must decide under incomplete information about which language to use. One implication of this information structure is that while A satisfies the main properties of a public good, B does not. Another implication is that it may have dangerous consequences on the language diversity of the society. We show that in many equilibria bilingual players fail to coordinate in their preferred language and end up using the majority language A. |
| Date: | 2011–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:ikerla:200624&r=hpe |
| By: | Baten, Joerg; Julia, Muschallik |
| Abstract: | How many economic historians are there in the world? In which countries or world regions are they concentrated? Can we explain differences in the number of economic historians who are participating in world congresses, and which determinants encourage or limit participation propensity? Using an e-mail questionnaire, we analyse the global situation of this discipline. Overall 59 countries were available to be surveyed in this overview. We estimate the overall number of economic historians in the world to be around 10,400 scholars. |
| Keywords: | Economic history; world; survey |
| JEL: | N01 A11 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34704&r=hpe |