nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2021‒06‒28
seven papers chosen by
Matthew Baker
City University of New York

  1. Rational inattention: a review By Maćkowiak, Bartosz; Matějka, Filip; Wiederholt, Mirko
  2. Islamic economics: morality, rationality, and research By Hasan, Zubair
  3. The Family as a Social Institution By Natalie Bau; Raquel Fernández
  4. Costs, incentives, and institutions in bridging evolutionary economic geography and global production networks By Rodríguez-Pose, Andrés
  5. The Voltage Effect in Behavioral Economics By John List
  6. Group-identity and long-run cooperation: an experiment By Gabriele Camera; Lukas Hohl
  7. Growth, War, and Pandemics: Europe in the Very Long-run By Prados de la Escosura, Leandro; Rodríguez-Caballero, Carlos Vladimir

  1. By: Maćkowiak, Bartosz; Matějka, Filip; Wiederholt, Mirko
    Abstract: We review the recent literature on rational inattention, identify the main theoretical mechanisms, and explain how it helps us understand a variety of phenomena across fields of economics. The theory of rational inattention assumes that agents cannot process all available information, but they can choose which exact pieces of information to attend to. Several important results in economics have been built around imperfect information. Nowadays, many more forms of information than ever before are available due to new technologies, and yet we are able to digest little of it. Which form of imperfect information we possess and act upon is thus largely determined by which information we choose to pay attention to. These choices are driven by current economic conditions and imply behavior that features numerous empirically supported departures from standard models. Combining these insights about human limitations with the optimizing approach of neoclassical economics yields a new, generally applicable model. JEL Classification: D8
    Keywords: information choice, rational inattention
    Date: 2021–06
  2. By: Hasan, Zubair
    Abstract: The lead paper of Asad Zaman (2021) – Islamic alternatives to the secular morality embedded in modern economics– under review, is lucid and well documented; it speaks of his scholarship. The author talks of secular moral values ingrained in secular economics. Among them, the learned author focuses on ‘pleasure and profit’ as the goals of modern economics and scarcity buried in its foundations. He regards these two as definitional for secular rationality leading to positivism and what it implies. Since this view, in his opinion, is devoid of human traits like compassion, equity, and altruism, he proposes an Islamic alternative as a replacement. While some observations of the author in this regard are well-meaning and well taken, we shall evaluate the author’s critique of mainstream positions to see if they need rejection or reform for compatibility with Islamic norms. We shall argue that reform is a better alternative than refusal.
    Keywords: Morality, Rational behavior, Positivism, Islamic norms, Research issues.
    JEL: B4 C0 Z1
    Date: 2020–07–01
  3. By: Natalie Bau; Raquel Fernández
    Abstract: This handbook chapter focuses on important interactions between the family and culture. We discuss the wide range of global variation in family institutions, variation which is in part sustained by cultural differences, and important recent changes in family structures. The chapter discusses why different family institutions arise, when they persist, and what forces may lead them to change. Furthermore, it examines changes in key family outcomes, such as the rise of female labor force participation, the decline in marriage, and the increase in divorce. These changes have been accompanied by and interact with cultural change. Finally, we show how cultural institutions related to the family, such as son preference, co-residence traditions, polygyny, and marriage payments, affect decision-making within the family and interact with policy. We conclude that studying the family in a vacuum, without accounting for the role of culture, may lead to misleading conclusions regarding the effects of policies, macroeconomic shocks, or technological change.
    JEL: I0 J11 J12 J13 J14 J16 O11 O12
    Date: 2021–06
  4. By: Rodríguez-Pose, Andrés
    Abstract: Two of the most influential strands in economic geography and regional studies – evolutionary economic geography and global production networks – have run on parallel tracks with limited cross-fertilization. The Regional Studies Annual Lecture 2020 paper by Henry Yeung proposes building bridges across both strands to improve our understanding of the uneven distribution and evolution of economic activity across the world. He puts forward the concept of strategic coupling as the foundation of such bridges. In this reply I argue that strategic coupling will not suffice, unless the variations in costs and incentives for engaging in networks and the different capacity of cities and regions to assimilate the benefits of innovation diffusion through networks are taken into consideration.
    Keywords: evolutionary economic geography; global production networks; strategic coupling; institutions; Taylor & Francis deal
    JEL: F23 L22 R58
    Date: 2021–06–03
  5. By: John List
    Abstract: All happy families are alike; each unhappy family is unhappy in its own way. -Leo Tolstoy, Anna Karenina
    Date: 2021
  6. By: Gabriele Camera (Economic Science Institute, Chapman University and DSE, University of Bologna); Lukas Hohl (University of Basel)
    Abstract: We stress-test the limits of the power of group identity in the context of cooperation by constructing laboratory economies where participants confront an indefinitely repeated social dilemma as strangers. Group identity is artificially induced by ran-dom assignment to color-coded groups, and reinforced by an initial cooperation task played in-group and in fixed pairs. Subsequently subjects interact in-group and out-group in large economies, as strangers. Indefinite repetition guarantees full cooperation is an equilibrium. Decision-makers can discriminate based on group aÿliation, but cannot observe past behaviors. We find no evidence of group biases. This suggests that group e ects are less likely to emerge when players cannot easily observe and compare characteristics on which to base categorizations and behaviors.
    Keywords: large groups, indefinitely repeated game, social norms
    JEL: C70 C90 D03
    Date: 2021
  7. By: Prados de la Escosura, Leandro; Rodríguez-Caballero, Carlos Vladimir
    Abstract: This paper contributes to the debate on the origins of modern economic growth in Europe from a very long-run perspective using econometric techniques that allow for a long-range dependence approach. Different regimes, defined by endogenously estimated structural shocks, coincided with episodes of pandemics and war. The most persistent shocks occurred at the time of the Black Death and the twentieth century's world wars. Our findings confirm that the Black Death often resulted in higher income levels, but reject the view of a uniform long-term response to the Plague while evidence a negative reaction in non-Malthusian economies. Positive trend growth in output per head and population took place in the North Sea Area (Britain and the Netherlands) since the Plague. A gap between the North Sea Area and the rest of Europe, the Little Divergence, emerged between the early seventeenth century and the Napoleonic Wars lending support to Broadberry-van Zanden's interpretation.
    Keywords: little divergence; Long-run Growth; Malthusian; Pandemics; war
    JEL: E01 N10 N30 N40 O10 O47
    Date: 2020–05

This nep-evo issue is ©2021 by Matthew Baker. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.