nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2005‒01‒23
three papers chosen by
Matthew Baker
US Naval Academy, USA

  1. Evolutionary Theories of Cultural Change: An Empirical Perspective By R. R. Nelson
  2. Social Interactions and Economic Behavior By Giulio Zanella
  3. Discrete Choice with Social Interactions and Endogenous Memberships By Giulio Zanella

  1. By: R. R. Nelson
    Abstract: The last quarter century has seen a renaissance of the proposal that the processes Darwin put forth as driving biological evolution also provide a plausible theoretical framework for analysis of the evolution of human culture. Modern proponents of the idea that human culture evolves through broad Darwinian processes, involving variation and selective retention, of course recognize that the idea is not a new one. There is no doubt, however, that in recent years the idea has become particularly fashionable among scholars. Many advocates of the position use the term "Universal Darwinism", generally believed to have been coined by Richard Dawkins (1983), to denote the theory they are trying to develop. Because it is better known, in what follows I will use that term to denote the broad idea, which I endorse, rather adopting here David Hull’s term "General Selection Processes" (1988) to denote the class of dynamic mechanisms one can see operative in particular form in both biological and cultural change. However, I share with Hull the belief that many of the recent attempts to extend Darwinian theory to human culture have stayed too close to biology, and indeed a narrow perspective on biology. In particular, my concern here is that, while a general theory of evolution driven by variation and selective retention would appear highly relevant to analysis of changes over time in many aspects of human culture, some of the specific features that we now know are involved in the evolution of species, particularly entities like genes, and mechanisms like inclusive fitness, may not carry over easily.
  2. By: Giulio Zanella
    Abstract: This paper is a critical introduction to the new wave of economic literature on the effect of social interactions on individual behavior and aggregate economic outcomes. I refer to this research program, also known as new social economics, as the socioeconomic analysis of behavior, to distinguish it from the more popular economic analysis of social behavior. I discuss the main features of so-called interactions-based models, and I show how they help us to understand substantive economic phenomena. In order to restrict the focus, I choose five possible applications: matching in the labor market, welfare participation, poverty traps and inequality, investor behavior, and consumer behavior. Then I dwell upon two key undecided questions: (i) why economic behavior is affected by social interactions, and (ii) how the social context is shaped by rational individuals. Finally, I briefly discuss the main empirical routes so far used.
    Keywords: new social economics, social interactions, neighborhood effects, social networks, social norms, social multiplier
    JEL: D10 D85 Z13
    Date: 2004–11
  3. By: Giulio Zanella
    Abstract: This paper tackles the issue of self-selection in social interactions models. I develop a theory of sorting and behavior, when the latter is subject to social influences, extending the model developed by Brock and Durlauf (2001a, 2003) to allow for equilibrium group formation. Individuals choose a group, and a behavior subject to an endogenous social effect. The latter turns out to be a segregating force, and stable equilibria are stratified. The sorting process may induce, inefficiently, multiple behavioral equilibria. Such a theory serves as a means to solve identification and selection problems that may undermine the empirical detection of social effects on individual behavior. I exploit the theoretical model to build a nonlinear (in the social effect) selection correction term. Such a term allows identification, and solves the selection problem that arises when individuals can choose the group whose effect the researcher is trying to disentangle. The resulting econometric model, although relying on strict parametric assumptions, indicates a viable alternative when reliable instrumental variables are not available, or randomized experiments not possible.
    Keywords: social interactions, neighborhood effects, sorting, self-selection, nested logit, identification of social effects
    JEL: C25 D85 E19 Z13
    Date: 2004–11

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