nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2014‒08‒25
five papers chosen by
Matthew Baker
City University of New York

  1. The Diffusion of Development: Along Genetic or Geographic Lines? By Campbell, Douglas L.; Pyun, Ju Hyun
  2. State History and Economic Development: Evidence from Six Millennia By Borcan, Oana; Olsson, Ola; Putterman, Louis
  3. Applying Insights from Behavioral Economics to Policy Design By Madrian, Brigitte
  4. Global population growth, technology, and Malthusian constraints: a quantitative growth theoretic perspective By Bruno Lanz; Simon Diet; Tim Swanson
  5. Honesty and Trade By Michael T. Rauh; Giulio Seccia

  1. By: Campbell, Douglas L.; Pyun, Ju Hyun
    Abstract: Why are some peoples still poor? Recent research suggests that a society’s “genetic distance”—a measure of the time elapsed since two populations had common ancestry—to the United States is a significant predictor of development even after controlling for an ostensibly exhaustive list of geographic, historical, religious and linguistic variables. We find, by contrast, that the correlation of genetic distance from the US and GDP per capita disappears with the addition of controls for geography including distance from the equator and a dummy for sub-Saharan Africa.
    Keywords: Genetics, Economic Development, Geography, Climatic Similarity
    JEL: O10 O33 O40
    Date: 2014–08
  2. By: Borcan, Oana (Department of Economics, School of Business, Economics and Law, Göteborg University); Olsson, Ola (Department of Economics, School of Business, Economics and Law, Göteborg University); Putterman, Louis (Brown University)
    Abstract: All since the rise of the first civilizations, economic development has been closely intertwined with the evolution of states. In this paper, we contribute to the literature on state history and long-run economic development in four ways. First, we extend and complete the state history index from Bockstette, Chanda and Putterman (2002) by coding the experience with states from the first state origins, 3500 BCE, up until 2000 CE. Second, we explore empirically the relationship between time since transition to agriculture and state age, as well as subsequent state history. Our estimated unconditional correlation implies that a 1000 year earlier transition to agriculture is associated with a 470 years earlier emergence of state institutions. We show how this relationship differs between indigenously- and externally- originated states. Third, we show that the relationship between our extended state history index and current levels of economic development has the shape of an inverted u. The results reflect the fact that countries that were home to the oldest states, such as Iraq, Egypt and China, are poorer today than younger inheritors of their civilizations, such as Germany, Denmark and Japan. This pattern was already in place by 1500 CE and is robust to adjusting for migrations during the colonial era. Finally, we demonstrate a very close relationship between state formation and the adoption of writing.
    Keywords: state history; comparative development
    JEL: N00 O11 O43 O50
    Date: 2014–08–12
  3. By: Madrian, Brigitte
    Abstract: The premise of this article is that an understanding of psychology and other social science disciplines can inform the effectiveness of the economic tools traditionally deployed in carrying out the functions of government, which include remedying market failures, redistributing income, and collecting tax revenue. An understanding of psychology can also lead to the development of different policy tools that better motivate desired behavior change or that are more cost-effective than traditional policy tools. The article outlines a framework for thinking about the psychology of behavior change in the context ofmarket failures. It then describes the research on the effects of a variety of interventions rooted in an understanding of psychology that have policy-relevant applications. The article concludes by discussing how an understanding of psychology can also inform the use and design of traditional policy tools for behavior change, such as financial incentives.
    Date: 2014
  4. By: Bruno Lanz; Simon Diet; Tim Swanson
    Abstract: We study the interactions between global population, technological progress, per capita income, the demand for food, and agricultural land expansion over the period 1960 to 2100. We formulate a two-sector Schumpeterian growth model with a Barro-Becker representation of endogenous fertility. A manufacturing sector provides a consumption good and an agricultural sector provides food to sustain contemporaneous population. Total land area available for agricultural production is finite, and the marginal cost of agricultural land conversion is increasing with the amount of land already converted, creating a potential constraint to population growth. Using 1960 to 2010 data on world population, GDP, total factor productivity growth and crop land area, we structurally estimate the parameters determining the cost of fertility, technological progress and land conversion. The model closely fits observed trajectories, and we employ the model to make projections from 2010 to 2100. Our results suggest a population slightly below 10 billion by 2050, further growing to 12 billion by 2100. As population and per capita income grow, the demand for agricultural output increases by almost 70% in 2050 relative to 2010. However, agricultural land area stabilizes by 2050 at roughly 10 percent above the 2010 level: growth in agricultural output mainly relies on technological progress and capital accumulation.
    Date: 2014–07
  5. By: Michael T. Rauh (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Giulio Seccia (University of Shouthampton)
    Abstract: There is substantial evidence that many parents value honesty in their children and that trust is an important determinant of trade. There is also evidence that certain institutions (i.e., religious institutions) foster trust, trade, and economic growth. In this paper we consider a parent who can enroll her child in an imperfect institution which can make her child honest with some probability less than one. We assume that institutional membership is observable so that institutions serve as both imperfect socialization technologies and potentially informative signals that such socialization has taken place. We provide necessary and sucient conditions for nonzero investments in honesty in the two main benchmark models of exchange under asymmetric information: the basic two-type screening model and a game-theoretic version of Akerlof's market for lemons. Consistent with the evidence, we show that when non-zero socialization occurs in equilibrium it improves economic performance by increasing allocative eciency in the screening model and reducing adverse selection in the market for lemons.
    Keywords: deception, exchange, honesty, institutions, religion, trade, trust
    JEL: D02 D03 D82 Z1
    Date: 2014–04

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