nep-evo 2018-12-24 papers

on Evolutionary Economics

Issue of 2018‒12‒24
two papers chosen by
Matthew Baker
City University of New York

By:	Galor, Oded; Savitskiy, Viacheslav
Abstract:	This research explores the origins of loss aversion and the variation in its prevalence across regions, nations and ethnic group. It advances the hypothesis and establishes empirically that the evolution of loss aversion in the course of human history can be traced to the adaptation of humans to the asymmetric effects of climatic shocks on reproductive success during the epoch in which subsistence consumption was a binding constraint. Exploiting regional variations in the vulnerability to climatic shocks and their exogenous changes in the course of the Columbian Exchange, the research establishes that consistent with the predictions of the theory, individuals and ethnic groups that are originated in regions marked by greater climatic volatility have higher predisposition towards loss-neutrality, while descendants of regions in which climatic conditions tended to be spatially correlated, and thus shocks were aggregate in nature, are characterized by greater intensity of loss aversion.
JEL:	D81 D91 O10 O40 Z10
Date:	2018–11
URL:	http://d.repec.org/n?u=RePEc:cpr:ceprdp:13313&r=evo

A Theory of Conservative Revivals

By:	Iyigun, Murat (University of Colorado, Boulder); Rubin, Jared (Chapman University); Seror, Avner (Chapman University)
Abstract:	Why do some societies fail to adopt more efficient political and economic institutions in response to changing economic conditions? And why do such conditions sometimes generate conservative ideological backlashes and, at other times, progressive social and political movements? We propose an explanation that highlights the interplay - or lack thereof - between productivity, cultural beliefs and institutions. In our model, production shocks that benefit one sector of the economy may induce forward-looking elites to provide public goods associated with a different, more traditional sector that benefits their interests. This investment results in more agents generating cultural beliefs complementary to the provision of the traditional good, which in turn increases the political power of the traditional elite. Hence, productivity shocks in a more advanced sector of the economy can increase investment, political power, and cultural capital associated with the more traditional sector of the economy, in the process generating a revival of beliefs associated with an outdated economic environment.
Keywords:	institutions, conservatism, cultural beliefs, cultural transmission, institutional change, technological change
JEL:	D02 N40 N70 O33 O38 O43 Z10
Date:	2018–11
URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp11954&r=evo

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