nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2022‒11‒07
thirteen papers chosen by
Matthew Baker
City University of New York

  1. Historical pathogen prevalence and the radius of trust By Pantelis Kammas; Vassilis Sarantides
  2. Community, state and market: Understanding historical water governance evolution in Central Asia By Amirova, Iroda; Petrick, Martin; Djanibekov, Nodir
  3. Why known unknowns may be better than knowns, and how that matters for the evolution of happiness By Stennek, Johan
  4. Demographic Transitions across Time and Space By Delventhal, Matthew J.; Fernández-Villaverde, Jesús; Guner, Nezih
  5. Measuring Socially Appropriate Social Preferences By Carpenter, Jeffrey P.; Robbett, Andrea
  6. Norm-Signalling Punishment By Daniele Nosenzo; Erte Xiao; Nina Xue
  7. Promoting socially desirable behaviors through persuasion and commitment: Experimental evidence By Cécile Bazart; Mathieu Lefebvre; Julie Rosaz
  8. Can Economics Become More Reflexive ? Exploring the Potential of Mixed-Methods By Rao,Vijayendra
  9. Cultural homophily and collaboration in superstar teams By Gabor Bekes; Gianmarco I. P. Ottaviano
  10. Culture, Children and Couple Gender Inequality By Jessen, Jonas
  11. Proximity, Similarity, and Friendship Formation: Theory and Evidence By A. Arda Gitmez; Rom\'an Andr\'es Z\'arate
  12. The Power and Roots of Aspirations : A Survey of the Empirical Evidence By Fruttero,Anna; Muller,Noel; Calvo-Gonzalez,Oscar
  13. Complexity research in economics: past, present and future By Nomaler, Önder; Verspagen, Bart

  1. By: Pantelis Kammas (Athens University of Economics and Business, Patission 76, Athens 10434, Greece); Vassilis Sarantides (Athens University of Economics and Business, Patission 76, Athens 10434, Greece)
    Abstract: What explains the emergence of cooperation among individuals and what determines the range of situations in which humans cooperate? In this study, we build on the pathogen stress hypothesis to explore the role of infectious diseases on the radius of trust (i.e., on whether trust was restricted towards a narrow circle of familiar others or, in contrast, involved a much wider circle of strangers) in different societies through the years. Our analysis develops and employs both contemporary and historical measures of radius of trust and takes place along four layers, namely at: (i) cross-country level, (ii) cross-country individual level, (iii) pre-industrial ethic group level, and (iv) using data on second-generation migrants. Empirical findings across all layers of analysis clearly indicate that historical pathogen prevalence is robustly and negatively associated with the radius of trust that the reference point of in-groups is restricted to the closest circle of familiar others. In other words, lethal disease environments seem to increase the distance between out-group and in-group trust, decreasing consequently the radius of people who are deemed trustworthy.
    Keywords: pathogens; radius of trust; persistence
    JEL: N00 Z10
    Date: 2022–10
  2. By: Amirova, Iroda; Petrick, Martin; Djanibekov, Nodir
    Abstract: In Central Asia, community water governance institutions emerged and prevailed for a long time. By employing an analytical modelling approach using variants of the evolutionary Hawk-Dove game, we scrutinise three epochs' (pre-Tsarist, Tsarist and Soviet) coordination mechanisms and qualitatively compare them in the efficiency spectrum. We find that the pre-Tsarist community water governance setting, due to its synergetic and pluralistic aspects, was associated with higher efficiency than the Tsarist and Soviet periods' settings. The pre-Tsarist community arrangement linked irrigation duties with benefits. Our analytical model reveals how the Tsarist Russian regulation that replaced the election-sanctioning element with a de-facto system appointing the irrigation staff and paying them fixed wages corrupted the well-established pre-Tsarist decentralised water governance. We term this move the "Kaufman drift". Resulting inadequacies in the water governance could have been averted either by restoring the community mechanism's election-sanctioning attribute or else with an alternative approach such as privatising water resources. With the use of the "Krivoshein game," we produce an alternative scenario for the region where we envisage the potential consequences of the water privatisation. Modelling history might not disentangle the complex nature of water governance evolution fully, however, the heuristics we use in the analysis assist in guiding the diagnosis of the matter and its solution. This makes our study well-timed for contemporary Central Asia. The analyses assess current water management's chances to return to ancient principles of election-sanctioning and perspectives of private irrigation water rights.
    Keywords: Community/Rural/Urban Development, Resource /Energy Economics and Policy
    Date: 2022
  3. By: Stennek, Johan (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Rayo and Becker (2007) model happiness as an imperfect measurement tool: It provides a partial ordering of alternative courses of actions. In this note, decisionmakers use their inability to rank two actions, to infer rankings of other pairs of actions. It is demonstrated that coarser happiness information actually increases the power of inference. As a result behavior is maximizing, not merely satisficing, almost independent of how coarse the happiness information is. Moreover, to support inference, evolution selects a happiness function with different properties than the one maximizing direct sensory information.
    Keywords: Indirect evolutionary approach; utility function
    JEL: B52 D91 I31
    Date: 2022–10
  4. By: Delventhal, Matthew J. (Claremont McKenna College); Fernández-Villaverde, Jesús (University of Pennsylvania); Guner, Nezih (Universitat Autònoma de Barcelona)
    Abstract: The demographic transition –the move from a high fertility/high mortality regime into a low fertility/low mortality regime– is one of the most fundamental transformations that countries undertake. To study demographic transitions across time and space, we compile a data set of birth and death rates for 186 countries spanning more than 250 years. We document that (i) a demographic transition has been completed or is ongoing in nearly every country; (ii) the speed of transition has increased over time; and (iii) having more neighbors that have started the transition is associated with a higher probability of a country beginning its own transition. To account for these observations, we build a quantitative model in which parents choose child quantity and educational quality. Countries differ in geographic location, and improved production and medical technologies diffuse outward from Great Britain, the technological leader. Our framework replicates well the timing and increasing speed of transitions. It also produces a strong correlation between the speeds of fertility transition and increases in schooling similar to the one in the data. Keywords: Demographic transition, skill-biased technological change, diffusion.
    Keywords: demographic transition, skill-biased technological change, diffusion
    JEL: J13 N3 O11 O33 O40
    Date: 2022–09
  5. By: Carpenter, Jeffrey P. (Middlebury College); Robbett, Andrea (Middlebury College)
    Abstract: We extend the literature structurally estimating social preferences by accounting for the desire to adhere to social norms. Our representative agent is strongly motivated by norms and failing to account for this causes us to overestimate how much agents care about helping those who are worse off. We endogenously identify latent preference types that replicate previous estimates; however, accounting for the normative appropriateness of decisions reveals different motives. Rather than being mostly altruistic, participants are better described as strong altruists or norm followers. Our results (which are robust to moral wiggle room) thus recast prior findings in a new light.
    Keywords: experiment, social norms, social preferences, altruism, moral wiggle room, structural estimation, finite mixture models
    JEL: C91 D01 D91 D63 D30 C49
    Date: 2022–09
  6. By: Daniele Nosenzo (Department of Economics and Business Economics, Aarhus University); Erte Xiao (Monash University); Nina Xue (Monash University)
    Abstract: The literature on punishment and prosocial behavior has presented conflicting findings. In some settings, punishment crowds out prosocial behavior and backfires, in others, however, it promotes prosociality. We examine whether the punisher’s motives can help reconcile these results through a novel experiment in which the agent’s outcomes are identical in two environments, but in one punishment is self-serving (i.e., potentially benefits the punisher) while in the other it is other-regarding (i.e., potentially benefits a third party). We find that self-regarding punishment reduces the social stigma of selfish behavior, while other-regarding punishment does not. As a result, self-serving punishment is less effective at encouraging compliance and is more likely to backfire compared to other-regarding punishment. Our findings have implications for the design of punishment mechanisms and highlight the importance of the punisher’s motives in the norm-signalling function of punishment.
    Keywords: Punishment, norms, stigma, crowd out, experiment
    JEL: C91 C72 D02
    Date: 2022–10–19
  7. By: Cécile Bazart (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Mathieu Lefebvre (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Julie Rosaz (BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC), CEREN - Centre de Recherche sur l'ENtreprise [Dijon] - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC))
    Abstract: Through a series of experiments, this paper tests the relative efficiency of persuasion and commitment schemes to increase and sustain contribution levels in a Voluntary Contribution Game. The design allows us to compare a baseline consisting of a repeated public good game to four treatments of the same game in which we successively introduce a persuasion message, commitment devices, and communication between subjects. Our results suggest that these non-monetary procedures significantly increase cooperation and reduce the decay of contributions across periods.
    Keywords: Communication,Persuasion,Commitment,Voluntary contribution mechanism
    Date: 2022–12
  8. By: Rao,Vijayendra
    Abstract: This paper argues that Economics can learn from Cultural Anthropology and Qualitative Sociologyby drawing on a judicious mix of qualitative and quantitative methods to become more “reflexive.” It arguesthat reflexivity, which helps reduce the distance between researchers and the subjects of their research, has four keyelements: cognitive empathy, the analysis of narratives (potentially enhanced by machine learning), understandingprocess, and participation (involving respondents in research). The paper provides an impressionistic andnon-comprehensive review of mixed-methods relevant to development economics and discrimination to illustrate these points.
    Keywords: Human Rights,Gender and Development,Financial Sector Policy,Social Cohesion,ICT Applications
    Date: 2022–01–28
  9. By: Gabor Bekes; Gianmarco I. P. Ottaviano
    Abstract: One may reasonably think that cultural preferences affect collaboration in multinational teams in general, but not in superstar teams of professionals at the top of their industry. We reject this hypothesis by creating and analyzing an exhaustive dataset recording all 10.7 million passes by 7 thousand professional European football players from 138 countries fielded by all 154 teams competing in the top 5 men leagues over 8 sporting seasons, together with full information on players' and teams' characteristics. We use a discrete choice model of players' passing behavior as a baseline to separately identify collaboration due to cultural preferences (`choice homophily') from collaboration due to opportunities (`induced homophily'). The outcome we focus on is the `pass rate', defined as the count of passes from a passer to a receiver relative to the passer's total passes when both players are fielded together in a half-season. We find strong evidence of choice homophily. Relative to the baseline, player pairs of same culture have a 2.42 percent higher pass rate due to choice, compared with a 6.16 percent higher pass rate due to both choice and opportunity. This shows that choice homophily based on culture is pervasive and persistent even in teams of very high skill individuals with clear common objectives and aligned incentives, who are involved in interactive tasks that are well defined, readily monitored and not particularly language intensive.
    Keywords: organizations, teams, culture, homophily, diversity, language, globalization, big data, panel data, sport
    Date: 2022–10–07
  10. By: Jessen, Jonas (European University Viadrina, Frankfurt / Oder)
    Abstract: This paper examines how culture impacts within-couple gender inequality. Exploiting the setting of Germany's division and reunification, I compare child penalties of East Germans who were socialised in a more gender egalitarian culture to West Germans socialised in a gender-traditional culture. Using a household panel, I show that the long-run child penalty on the female income share is 23.9 percentage points for West German couples, compared to 12.9 for East German couples. The arrival of children also leads to a greater increase in the female share of housework and child care for West Germans. I add to the main findings by using time-use diary data from the German Democratic Republic (GDR) and reunified Germany, which provides a rare insight into gender inequality in the GDR and allows me to compare the effect of having children in the GDR to the effects in East and West Germany after reunification. Lastly, I show that attitudes towards maternal employment are more egalitarian among East Germans, but that the arrival of children leads to more traditional attitudes for both East and West Germans. The findings confirm that socialisation has a strong impact on child penalties and that family policies may have an impact on gender inequality through social learning in the long run.
    Keywords: cultural norms, gender inequality, child penalty
    JEL: J16 J22 D1
    Date: 2022–09
  11. By: A. Arda Gitmez; Rom\'an Andr\'es Z\'arate
    Abstract: Can proximity make friendships more diverse? To address this question, we propose a learning-driven friendship formation model to study how proximity and similarity influence the likelihood of forming social connections. The model predicts that proximity affects more friendships between dissimilar than similar individuals, in opposition to a preference-driven version of the model. We use an experiment at selective boarding schools in Peru that generates random variation in the physical proximity between students to test these predictions. The empirical evidence is consistent with the learning model: while social networks exhibit homophily by academic achievement and poverty, proximity generates more diverse social connections.
    Date: 2022–10
  12. By: Fruttero,Anna; Muller,Noel; Calvo-Gonzalez,Oscar
    Abstract: Aspirations have become a common theme in empirical economics studies, but there is no unified understanding of the range of outcomes they influence, the factors that shape them, and how to measure them. This paper surveys this growing literature. The paper argues that there is compelling evidence to consider aspirations as a useful lens to analyze human behavior and development outcomes, at the individual and aggregate levels, in poorer and richer countries. The empirical evidence aligns with the theory that high aspirations can lead individuals to achieve better educational, labor market, and other outcomes and can contribute to making countries more equal and prosperous. The empirical evidence also confirms that the mix of social and circumstantial factors shaping aspirations tends to hinder the aspirations of the disadvantaged—such as the poor, immigrants, and women—and can contribute to vicious circles of poverty, high inequality, low social mobility, and low growth. However, high aspirations should not be considered as an end in themselves as they can backfire, with deleterious effects, if unmatched with opportunities. Further, the paper argues that definitional and measurement issues can affect the understanding of the topic and that studies should more explicitly describe their measures of aspirations to ensure that divergent underlying concepts are not mistaken.
    Keywords: Educational Sciences,Inequality,Labor Markets,Economic Assistance,Access of Poor to Social Services,Services&Transfers to Poor,Disability,Poverty Assessment,Poverty Impact Evaluation,Poverty Lines,Poverty Monitoring&Analysis,Small Area Estimation Poverty Mapping,Poverty Diagnostics
    Date: 2021–07–02
  13. By: Nomaler, Önder (RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn); Verspagen, Bart (RS: GSBE MGSoG, RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn, RS: UNU-MERIT Theme 1)
    Abstract: In this paper, we provide a brief overview of the field of complexity research in economics, and discuss directions of research that we consider to be promising in terms of solving open issues. We start the survey of the field with the research that emerged in the 1990s, when under the influence of earlier developments in the natural sciences (e.g., thermodynamics and chaos theory), the term complexity became in fashion to refer to theoretical ideas about how "ordered" patterns at an aggregate level can emerge from interaction between heterogenous agents at the microeconomic level. This gave rise to the notion of self-organization in dissipative systems, or "order at the edge of chaos" to describe economic dynamics. Because disequilibrium plays a large role in these theories, these ideas worked very well in combination with a Schumpeterian view of the economy, which also stresses disequilibrium. In the current literature, economic complexity is mainly used to refer to the application of quantitative methods based on networks that can be created on the basis of very fine-grained data on production or trade. These data are used to produce aggregate measures of development, as well as to describe how production structures may evolve over time. This literature developed largely disconnected to the earlier complexity literature. The new economic complexity paradigm is largely void of economic theory, and instead aims to provide a set of data reduction techniques that are used to characterize development. With regard to outlook for complexity research in (Schumpeterian) economics, on the one hand, we feel that the potential for analyzing the economy as a dissipative, out-of-equilibrium system has not been fully exploited yet. In particular, we propose that - in line with the field of "Big History" (which aims to describe and analyze a coarse history of the universe since the Big Bang) - there is work to be done on the larger issues in economics, in particular climate change and sustainability.
    JEL: B52 O30 O31 O33
    Date: 2022–07–07

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