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on Evolutionary Economics |
| By: | Davis, John B.; Boianovsky, Mauro; (Department of Economics Marquette University; Department of Economics Marquette University) |
| Abstract: | Douglass North was central to the emergence of New Institutional Economics. Less well known are his later writings where he became interested in complexity theory. He attended the second economics complexity conference at the Santa Fe Institute in 1996 on how the economy functions as a complex adaptive system, and in his 2005 Understanding the Process of Economic Change incorporated this thinking into his argument that market systems depend on how institutions evolve. North also emphasized in the 2005 book the role belief played in evolutionary processes, and drew on cognitive science, especially the famous ‘scaffolding’ idea of cognitive scientist Andy Clark – the idea that the brain and the world ‘collaborate’ to address our computational and informational needs. This chapter discusses how North’s thinking about institutions and change reflected these later investigations. It concludes with comments on his late thoughts about the problem of violence. |
| Keywords: | Douglass North, New Institutional Economics, complexity theory, cognitive science, scaffolding, Andy Clark, violence |
| JEL: | B20 B30 B41 B52 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:mrq:wpaper:2024-01&r=evo |
| By: | Matthias Flückiger; Mario Larch; Markus Ludwig; Luigi Pascali |
| Abstract: | In the latter half of the fourth millennium BC, our ancestors witnessed a remarkable transformation, progressing from simple agrarian villages to complex urban civilizations. In regions as far apart as the Nile Valley, Mesopotamia, Central Asia, and the Indus Valley, the first states appeared together with writing, cities with populations exceeding 10, 000, and unprecedented socio-economic inequalities. The cause of this “Urban Revolution” remains unclear. We present new empirical evidence suggesting that the discovery of bronze and the ensuing long-distance trade played a crucial role. Using novel panel data and 2SLS techniques, we demonstrate that trade corridors linking metal mines to fertile lands were more likely to experience the Urban Revolution. We propose that transit bottlenecks facilitated the emergence of a new taxing elite. We formally test this appropriability theory and provide several case studies in support. |
| JEL: | D02 F10 H10 N40 O43 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1423&r=evo |
| By: | Neha Deopa; Daniele Rinaldo |
| Abstract: | Do religions codify ecological principles? This paper explores theoretically and empirically the role religious beliefs play in shaping environmental interactions. We study African Traditional Religions (ATR) which place forests within a sacred sphere. We build a model of non-market interactions of the mean-field type where the actions of agents with heterogeneous religious beliefs continuously affect the spatial density of forest cover. The equilibrium extraction policy shows how individual beliefs and their distribution among the population can be a key driver of forest conservation. The model also characterizes the role of resource scarcity in both individual and population extraction decisions. We test the model predictions empirically relying on the unique case of Benin, where ATR adherence is freely reported. Using an instrumental variable strategy that exploits the variation in proximity to the Benin-Nigerian border, we find that a 1 standard deviation increase in ATR adherence has a 0.4 standard deviation positive impact on forest cover change. We study the impact of historically belonging to the ancient Kingdom of Dahomey, birthplace of the Vodun religion. Using the original boundaries as a spatial discontinuity, we find positive evidence of Dahomey affiliation on contemporary forest change. Lastly, we compare observed forest cover to counterfactual outcomes by simulating the absence of ATR beliefs across the population. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.13673&r=evo |
| By: | Thomas Epper (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management F-59000 Lille, France); Julien Senn (Department of Economics, Zurich University. Blümlisalpstrasse 10, 8006 Zurich, Switzerland); Ernst Fehr (Department of Economics, Zurich University. Blüumlisalpstrasse 10, 8006 Zurich, Switzerland) |
| Abstract: | The empirical evidence on the existence of social preferences—or lack thereof—is predominantly based on student samples. Yet, knowledge about whether these findings can be extended to the general population is still scarce. In this paper, we compare the distribution of social preferences in a student and in a representative general population sample. Using descriptive analysis and a rigorous clustering approach, we show that the distribution of the general population’s social preferences fundamentally differs from the students’ distribution. In the general population, three types emerge: an inequality averse, an altruistic, and a selfish type. In contrast, only the altruistic and the selfish types emerge in the student population. We show that differences in age and education are likely to explain these results. Younger and more educated individuals—which typically characterize students—not only tend to have lower degrees of other-regardingness but this reduction in other-regardingness radically reduces the share of inequality aversion among students. Differences in income, however, do not seem to affect social preferences. We corroborate our findings by examining nine further data sets that lead to a similar conclusion: students are far less inequality averse than the general population. These findings are important in view of the fact that almost all applications of social preference ideas involve the general population. |
| Keywords: | Social Preferences, Altruism, Inequality Aversion, Preference Heterogeneity, Subject pools, Sample Selection |
| JEL: | C80 C90 D30 D63 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:ies:wpaper:e202401&r=evo |
| By: | Avner Seror (Aix-Marseille Univ., CNRS, AMSE, Marseille, France) |
| Abstract: | This paper shows how to recover behavioral biases from revealed preference ranking implied by choices. The approach formalizes and unifies well-known behavioral models, including salience thinking, inattention, and logarithmic perception, thereby accounting for many well-documented choice puzzles. I show that this approach provides a way to filter out choice data from behavioral biases explaining rationality breaches before fitting parametric utility models. The approach is applied to workhorse data sets of the literature on choice under risk and scanner consumer choices. |
| Keywords: | Decision Theory, revealed preference, Behavioral Economics |
| JEL: | D91 D11 D81 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:2401&r=evo |
| By: | Miles S. Kimball; Collin B. Raymond; Jiannan Zhou; Junya Zhou; Fumio Ohtake; Yoshiro Tsutsui |
| Abstract: | Collecting and analyzing panel data over the last four U.S. presidential elections, we study the drivers of self-reported happiness. We relate our empirical findings to existing models of elation, reference dependence, and belief formation. In addition to corroborating previous findings in the literature (hedonic asymmetry/hedonic loss aversion, hedonic adaptation and motivated beliefs), we provide novel results that extend the literature in four dimensions. First, happiness responds to changes relative to both the political status quo (i.e., the incumbent presidential party) and the expected electoral outcome, providing support for two major hypotheses regarding reference point formation. Individuals exhibit hedonic loss aversion to deviations from expectations, but hedonic loss neutrality to changes from the status quo. Second, the speed of hedonic adaptation to deviations from the status quo is significantly slower than the speed of hedonic adaptation to surprises. Third, expectations affect happiness in a nonlinear way, consistent with Gul’s model of disappointment aversion, but contrary to other influential reference-dependent models. Fourth, both “objective” and motivated subjective beliefs matter for the happiness reactions, although subjective beliefs matter more. |
| JEL: | D03 D72 D91 I31 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32078&r=evo |
| By: | Kwabena Donkor; Lorenz Goette; Maximilian W. Müller; Eugen Dimant; Michael Kurschilgen |
| Abstract: | This paper examines how beliefs and preferences drive identity-conforming consumption or investments. We introduce a theory that explains how identity distorts individuals’ beliefs about potential outcomes and imposes psychic costs on benefiting from identity-incongruent sources. We substantiate our theoretical foundation through two lab-infield experiments on soccer betting in Kenya and the UK, where participants either had established affiliations with the teams involved or assumed a neutral stance. The results indicate that soccer fans have overoptimistic beliefs about match outcomes that align with their identity and bet significantly higher amounts on those than on outcomes of comparable games where they are neutral. After accounting for individuals’ beliefs and risk preferences, our structural estimates reveal that participants undervalue gains from identity-incongruent assets by 9% to 27%. Our counterfactual simulations imply that identity-specific beliefs account for 30% to 44% of the investment differences between neutral observers and supporters, with the remainder being due to identity preferences. |
| Keywords: | identity, investments, beliefs |
| JEL: | D91 G41 Z10 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10860&r=evo |