nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2018‒10‒15
four papers chosen by
Matthew Baker
City University of New York

  1. Relative Income and Happiness: An Experiment By Ifcher, John; Zarghamee, Homa; Houser, Daniel; Diaz, Lina
  2. Methods and Concepts in Economic Complexity By Andres Gomez-Lievano
  3. Economics in the Anthropocene: species extinction or steady state economics By Joeri (J.) Sol
  4. Bandits in the Lab By HOELZEMANN, Johannes; KLEIN, Nicolas

  1. By: Ifcher, John (Santa Clara University); Zarghamee, Homa (Barnard College); Houser, Daniel (George Mason University); Diaz, Lina (George Mason University)
    Abstract: John Stuart Mill claimed that "men do not desire merely to be rich, but richer than other men." Do people desire to be richer than others? Or is it that people desire favorable comparisons to others more generally, and being richer is merely a proxy for this ineffable relativity? We conduct an online experiment absent choice in which we measure subjective wellbeing (SWB) before and after an exogenous shock that reveals to subjects how many experimental points they and another subject receive, and whether or not points are worth money. We find that subjects like receiving monetized points significantly more than non-monetized points but dislike being "poorer" than others in monetized and non-monetized points equally, suggesting relative money is valued only for the relative points it represents. We find no evidence that subjects like being "richer" than others. Subgroup analyses reveal women have a strong(er) distaste for being "richer" and "poorer" (than do men), and conservatives have a strong(er) distaste for being "poorer" (than do progressives). Our experimental-SWB approach is easy to administer and can provide some insights a revealed-preference approach cannot, suggesting that it may complement choice-based tasks in future experiments to better estimate preference parameters.
    Keywords: subjective well-being, relative income, others' income, income comparisons, happiness, experiments
    JEL: C91 D31 D63 I31
    Date: 2018–08
  2. By: Andres Gomez-Lievano
    Abstract: Knowhow in societies accumulates as it gets transmitted from group to group, and from generation to generation. However, we lack of a unified quantitative formalism that takes into account the structured process for how this accumulation occurs, and this has precluded the development of a unified view of human development in the past and in the present. Here, we summarize a paradigm to understand and model this process. The paradigm goes under the general name of the Theory of Economic Complexity (TEC). Based on it, we present a combination of analytical, numerical and empirical results that illustrate how to characterize the process of development, providing measurable quantities that can be used to predict future developments. The emphasis is the quantification of the collective knowhow an economy has accumulated, and what are the directions in which it is likely to expand. As a case study we consider data on trade, which provides consistent data on the technological diversification of 200 countries across more than 50 years. The paradigm represented by TEC should be relevant for anthropologists, sociologists, and economists interested in the role of collective knowhow as the main determinant of the success and welfare of a society.
    Date: 2018–09
  3. By: Joeri (J.) Sol (University of Amsterdam)
    Abstract: At the dawn of the Anthropocene, continued economic growth carries the risk of irreversibly damaging the global carrying capacity. Using the International Union for the Conservation of Nature Red List of Threatened Species (2016), I calculate expected extinction rates during the coming century for 557 regions. I illustrate that these rates exceed the planetary boundary formulated by Rockström et al. (2009) virtually everywhere and increase with population density and GDP per capita. By doing so, this paper contributes to an ongoing debate whether absolute or relative scarcity is more relevant to economic thought. My findings suggest that the conservation of nature requires degrowth and the transition to a global steady state economy. “I cannot, therefore, regard the stationary state of capital and wealth with the unaffected aversion so generally manifested towards it by political economists of the old school. I am inclined to believe that it would be, on the whole, a very considerable improvement on our present condition.” John S. Mill (1848, Book 4, Chapter 6)
    Keywords: Biodiversity; Conservation; Economic growth; IUCN Red List; Population; Steady state economics
    JEL: Q57 O47
    Date: 2018–10–07
  4. By: HOELZEMANN, Johannes; KLEIN, Nicolas
    Abstract: We test Keller, Rady, Cripps’ (2005) game of strategic experimentation with exponential bandits in the laboratory. We find strong support for the prediction of free-riding because of strategic concerns. We also find strong evidence for behavior that is characteristic of Markov perfect equilibrium: non-cutoff behavior, lonely pioneers and frequent switches of action.
    Keywords: Strategic experimentation; exponential bandits; learning; dynamic games; Markov perfect equilibrium; continuous time; laboratory experiments; eye tracking
    JEL: C73 C92 D83 O32
    Date: 2018

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