nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2023‒10‒30
five papers chosen by
Matthew Baker, City University of New York

  1. Long Run Consequences of Ethnic Conflict On Social Capital: Evidence from South Africa By Paz, Santiago
  2. Cognitive Limitations: Failures of Contingent Thinking By Niederle, Muriel; Vespa, Emanuel
  3. Can’t See the Forest for the IVs Re-examining the Cistercian “Pre-reformation Roots of the Protestant Ethic” By Nico Sonntag
  4. Quantifying Lottery Choice Complexity By Benjamin Enke; Cassidy Shubatt
  5. Utility of sacrifices: Reorientation of the utility theory By GC, Arun

  1. By: Paz, Santiago (Universidad de los Andes)
    Abstract: This paper studies the following research question: What are the consequences of historical ethnic conflict on contemporary levels of social capital? This question is relevant, since understanding the consequences of historical ethnic violence on contemporary social capital can provide useful inputs to design effective State-building policies. I exploit Mfecane, a period of ethnic upheaval in South African history, as a setting to examine the causal effects of historical ethnic conflict on contemporary levels of social capital. For this end, I use a combination of a historical approximation of the Mfecane warzone with geocoded data from the Afrobarometer project (2000-2016). Using an instrumental variables strategy, I find that historical ethnic conflict decreases contemporary trust in people among individuals living within the borders of Mfecane, while increasing trust in relatives and neighbors. Increases in in-group trust appear to be driven by the long run persistence of parochial altruism. Conversely, lower levels of betweengroup trust can be explained by the lack of economic incentives to cooperate with strangers in former warzones. These results are suggestive of a degree of substitutability between in-group and between-group social capital, at the community level.
    Keywords: Violence; Social Capital; Trust; Ethnic Conflict; South Africa
    JEL: D74 N00 O10 O12 O13 Q34
    Date: 2023–09–21
  2. By: Niederle, Muriel; Vespa, Emanuel
    Abstract: In recent years, experiments have documented a new mechanism that leads to failures of profit maximization: the failure of contingent thinking (FCT). This article summarizes key experimental findings, clarifies what constitutes an FCT, and outlines how FCTs can be tested in other environments. Subsequently, we relate FCTs to recent theoretical work on cognitive limitations in behavioral economics. Finally, we connect FCTs to suboptimal behavior documented in applied environments.
    Keywords: Economics, Applied Economics, Economic Theory, Behavioral and Social Science, Clinical Research, Basic Behavioral and Social Science, Applied economics, Economic theory
    Date: 2023–09–13
  3. By: Nico Sonntag (Johannes Gutenberg University Mainz)
    Abstract: I re-examine the claim made by Andersen, Bentzen, Dalgaard, and Sharp that the work ethic of the Cistercian order instigated the kind of cultural change attributed to Protestantism by Max Weber. Following a critical discussion of their historical and theoretical arguments, as well as an assessment of the original study design, I reconsider and expand upon their analyses of the positive associations between past Cistercian presence and early modern economic development as well as contemporary values. Theories about the historical origins of economic development can often only be tested indirectly. Moreover, the theories are often insufficient to deduce the precise specification of statistical models or to choose among competing ways to measure a theoretical construct with available historical data. For this reason, I conduct a systematic robustness check that takes into account a wide range of plausible model specifications. While the correlation between Cistercians and population growth remains robust, all models attempting to identify a causal effect either rely on specific and hard-to-justify choices concerning the operationalization of central constructs or fail to provide strong confirmatory evidence. Furthermore, additional analyses investigating the mediation effect of contemporary value orientations on economic indicators contradict the proposed mechanism. The text concludes by offering recommendations on how to systematically study the cultural and economic impact of Christian orders.
    JEL: N13 O11 Z12
    Date: 2023–10–11
  4. By: Benjamin Enke; Cassidy Shubatt
    Abstract: We develop interpretable, quantitative indices of the objective and subjective complexity of lottery choice problems that can be computed for any standard dataset. These indices capture the predicted error rate in identifying the lottery with the highest expected value, where the predictions are computed as convex combinations of choice set features. The most important complexity feature in the indices is a measure of the excess dissimilarity of the cumulative distribution functions of the lotteries in the set. Using our complexity indices, we study behavioral responses to complexity out-of-sample across one million decisions in 11, 000 unique experimental choice problems. Complexity makes choices substantially noisier, which can generate systematic biases in revealed preference measures such as spurious risk aversion. These effects are very large, to the degree that complexity explains a larger fraction of estimated choice errors than proximity to indifference. Accounting for complexity in structural estimations improves model fit substantially.
    Keywords: complexity, choice under risk, cognitive uncertainty, experiments
    Date: 2023
  5. By: GC, Arun
    Abstract: Utility theory is a pivotal concept in economics that provides insights into how an individual is motivated to act under budget constraints. The main assumption of this theory and the entire field of economics is that a rational human being and an individual derive utility from the consumption of goods and services under given budget constraints. The aim of this article is to explore these fundamental assumptions and introduce a new theoretical framework for deriving utility, which is termed the “utility of sacrifices”. Various methods were employed in the study, including a review of existing literature, an analysis of prevailing theories, and observations in real-world scenarios. The results show that, through observations, a “rational” human being derives utility from both consumption and voluntary sacrifices. Therefore, in conclusion, it is proposed that the total utility of an individual is the sum of these two components. This theoretical framework provides a more comprehensive understanding of human decision-making and behavior in economics. It also provides novel insights for future research and applications in economics.
    Keywords: utility; consumption; sacrifices; decision making; behavior
    JEL: B41 B5 B50 D1 D11
    Date: 2023–05

This nep-evo issue is ©2023 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.