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on Business, Economic and Financial History |
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Issue of 2022‒05‒30
29 papers chosen by |
| By: | Carlson, Benny |
| Abstract: | The 1929 stock market crash on Wall Street is one of the most spectacular economic events of all times. In Sweden, leading economists got involved in a lively debate on the events on Wall Street before, during and after the crash. Three of them were particularly active. Gustav Cassel and Bertil Ohlin were not overly worried since they regarded the stock market mania and the panic as phenomena more or less disconnected from the rest of the economy. Their theoretical argument was that booms and busts upon a stock market cannot create or destroy capital or purchasing power. Johan Åkerman on the contrary warned repeatedly that a serious stock market crash was in the making and, once it had happened, that it would in many ways affect the entire economy. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:78ahc&r= |
| By: | Curott, Nicholas A.; Snow, Nicholas A. |
| Abstract: | In this paper we argue that Irving Fisher (1867-1947) is an unacknowledged pioneer of modern behavioral economics. Fisher’s behavioralist orientation is evident in his writings on alcohol prohibition. In these works, Fisher argued that behavioral anomalies prevent individuals from making rational choices regarding alcohol consumption. Fisher thought these anomalies arose from three sources: 1) incomplete information; 2) limited cognitive abilities; and 3) lack of will power. These are essentially the same barriers to rational choice identified by modern day New Paternalists. Therefore, we argue that Fisher’s work on Prohibition was a pioneering academic achievement that anticipated recent developments in economics, and not an unscientific diatribe, as previous commentators have presumed. Unlike modern day ‘New Paternalists,’ however, Fisher rejected minor alterations to the choice architecture and advocated outright prohibition instead. This helps to illustrate a potential slippery slope problem with modern new paternalist arguments that should be addressed. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:dv97k&r= |
| By: | Cervera-Ferri, Pablo; Insa-Sánchez, Pau |
| Abstract: | Historians of economic thought have carried out detailed studies of classical and marginalist approaches to value based on production cost and utility respectively, not to mention about the fusion of both interpretations by the neoclassical school. This is not the case with rareness value, a theory commonly attributed to Léon Walras, although Aristotle surely had rareness in mind when he first attempted to explain chrematistics. This article focuses on how our understanding of rareness has evolved from the earliest economic formulations to those of Auguste and Léon Walras, contesting Rothbard’s thesis that there is only one way in which the transmission of the utility theory of value can be tracked from scholasticism to the Austrian school. On the contrary, the concept of rareness continued to figure in some theories of value of the French Enlightenment, especially those that emerged within Calvinist circles, and was recovered in times of reaction against the dominant classicism. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:5nwcb&r= |
| By: | Sascha O. Becker; Steven Pfaff |
| Abstract: | Over many centuries, church and state have grown together, and apart. Sometimes linked like Siamese twins, sometimes in conflict with each other. This chapter discusses the major themes in the literature on church and state, some of the findings in the political economy of religion, and evaluates emerging directions in research on church-state relations. |
| Keywords: | Church, State, Secularization, Political Economy, Deregulation |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:auu:hpaper:102&r= |
| By: | Cummins, Neil; Clark, Gregory |
| Abstract: | Using a new database of 1.7 million marriage records for England 1837-2021 we estimate assortment by occupational status in marriage, and the intergenerational correlation of occupational status. We find the underlying correlations of status groom-bride, and father-son, are remarkably high: 0.8 and 0.9 respectively. These correlations are unchanged 1837-2021. There is evidence this strong matching extends back to at least 1754. Even before formal education and occupations for women, grooms and brides matched tightly on educational and occupational abilities. We show further that women contributed as much as men to important child outcomes. This implies strong marital sorting substantially increased the variance of social abilities in England. Pre-industrial marital systems typically involved much less marital sorting. Thus the development of assortative marriage may play a role in the location and timing of the Industrial Revolution, through its effect on the supply of those with upper-tail abilities. |
| JEL: | N0 B1 O52 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:wpaper:115008&r= |
| By: | Barbara Petrongolo |
| Abstract: | The influx of women into the workplace during the 20th century has been one of the most remarkable changes in the world of work. But in general, women are less likely to be employed than men, they are less likely to hold senior positions and they are paid less. Economists research the reasons for these gender-based inequalities and evaluate which policies can help to close the gaps. The Insights series is an introduction to the work of the Centre for Economic Performance. While the centre's roots are in labour economics, it has been an interdisciplinary research centre, since it was set up in 1990. Each Insight explains how economists go about investigating the big questions in each topic, the contribution CEP researchers have made to both academic understanding and policy-making - and the questions that are still to be answered. |
| Keywords: | gender, inequality, Wages |
| Date: | 2021–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepins:05&r= |
| By: | Leila Davis; Joao de Souza |
| Abstract: | This paper builds on the literature analyzing the aggregate profit rate to describe profitability across the distribution of firms in the post-1970 U.S. economy. While median profitability mirrors well-established aggregate patterns, including a falling rate of profit through the mid- 1980s and a recovery thereafter, it also masks a striking post-1980 widening of the distribution. In this paper, we document this widening of the profitability distribution, and identify factors driving changes in profit rates at each end of the distribution. At the top, we show that, while top-end operational profit rates (operational returns on tangible capital) soar after 1980, this rise disappears when accounting for financial and intangible assets. We show that firms with high operational profit rates hold large stocks of financial and intangible assets, relative to those with high total profitability, but that larger shares of these assets fail to translate into higher returns on all assets. Thus, once accounting for post-1980 changes in asset composition, growth in top profit rates disappears. At the bottom, profit rates of the least profitable quintile of U.S. nonfinancial corporations become systematically and increasingly negative after the early 1980s. We show that this decline reflects persistently negative average profitability in new post-1970 cohorts, rather than falling profitability within continuing firms. |
| Keywords: | Profit rates; intangible assets; cash; entry dynamics |
| JEL: | B5 L1 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:mab:wpaper:2022-01&r= |
| By: | Fiorito, Luca |
| Abstract: | This paper provides a reconstruction of the debate on “social value” among early marginalists in the US. This will be done in three steps. The first section analyses John B. Clark’s approach to social value as presented in his Distribution of Wealth; the second section deals with other influential contemporaries who adopted a similar social value perspective, with a main focus on Edwin R. A. Seligman; the third section discusses those critics who, with due differences in emphasis and style, animated the debate over social value, reviewing (among others) the contributions of Herbert J. Davenport, Joseph Schumpeter, Benjamin Anderson, John Maurice Clark, and George P. Watkins, the final section presents some conclusions. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:kznuj&r= |
| By: | Desmarais-Tremblay, Maxime (Goldsmiths, University of London); Bee, Michele |
| Abstract: | This paper proposes a genealogy of the concept of homo œconomicus as it emerged from the methodological debate on the economic agent of political economy. If Mill gave birth to the economic man in his 1836 Essay “On the Definition of Political Economy,” he certainly did not baptize him. The expression was introduced by Francis A. Walker after Mill passed away in the 1870s. Economic man acquired its Latin name of homo œconomicus under the pen of French Catholic economist Claudio Jannet in 1878. Yet, only at the end of the century did Maffeo Pantaleoni (1889) proudly reclaim homo œconomicus as a building block of pure economics. In reaction to the evolutionary hedonism of Pantaleoni, Vilfredo Pareto then cleansed the concept of homo œconomicus and realized the Millian project of an abstract science based on an economic agent. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:nf8xw&r= |
| By: | Ballandonne, Matthieu; Cersosimo, Igor |
| Abstract: | Quantitative techniques have received increasing attention in the history and methodology of economics. Nonetheless, a “text as data” approach has mostly been overlooked and its applicability to the history of economics remains to be examined. To understand what we gain from such quantitative techniques in relation to existing historical analyses, we apply some “text as data” techniques to Adam Smith’s The Theory of Moral Sentiments and The Wealth of Nations. We explore the books’ topics, styles, and sentiments. We show how word frequency analysis can be used to examine the differences between the books, shed light on conceptual discussions and reveal an important stylistic aspect, specifically Smith’s use of personal pronouns. Style analysis shows the similarities and differences in terms of lexical richness and readability between the two books. Finally, we show the limitations of a third technique, sentiment analysis, when applied to historical economic texts. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:mg3zb&r= |
| By: | Espinel, Camila Orozco |
| Abstract: | Milton Friedman is usually presented as an economist characterized by his empirical approach to economics. His binary classification of economics into positive means and normative ends relies on the empirical content of predictions. Throughout his career, he used extensive, data-based statistical techniques. While important scholarly attention has been devoted to Friedman’s academic and political trajectories, his methodological prescriptions, and the development of economics at the University of Chicago, we know much less about the interplay of these elements. This paper proposes an intertwined reading of them. My aim is threefold. First, to understand Friedman’s work and methodological choices, I relate his empirical approach to his early training in statistics. Second, I articulate Friedman’s understanding of economics as an empirical policy science to the process of building the image of economists as neutral advisers in the policymaking process. Third, I claim that Friedman’s empirical methodological framework, developed while in the Economics Department of the University of Chicago, established the guidelines for an institutional long-term project that shaped it. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:yab86&r= |
| By: | Gonzálvez, Francisco Jorge Rodríguez |
| Abstract: | This study addresses the incompatibility question between the corporate organization of industry and a system based on the general recognition of economic rights and freedoms in Continental Western Europe. A dissociation/identification model based on a comparative analysis verifies the consistency of the premise that makes the emergence of economic rights only possible after suppressing the corporations of trades. The model stems coherently from the ideas of eighteenth-century political economists and crystallizes in reform policies aimed at eliminating corporate elements contrary to economic freedoms. The results directly link the intellectual model and the actual expressions of economic rights within the declarations written at the end of the old regime. While dissociation creates an opportunity for corporate continuity within a framework of recognized economic freedoms, the French identification model implies the suppression of corporations. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:r9t3e&r= |
| By: | Khalil, Elias |
| Abstract: | Friendship-and-love expresses musings about wellbeing—while “wellbeing” is the economist’s substantive satisfaction. Insofar as altruism is about wellbeing, it must differ from friendship-and-love. However, what is the basis of the difference between substantive satisfaction and friendship-and-love? The answer can be found in Smith’s Theory of Moral Sentiments, chapter 2: how “mutual sympathy” differs from “sympathy.” Smith scholars generally miss the uniqueness of “mutual sympathy” and, indeed, fold it under Smith’s “sympathy” (and “empathy”)—with one exception. Robert Sugden highlights the uniqueness of mutual sympathy. However, he goes to the other end, i.e., folds it under Smith’s sympathy-and-empathy”. This paper aims to avoid the folding in either direction. While mutual sympathy originates love-based sociality (friendship-and-love), sympathy-and-empathy originates interest-based sociality (wellbeing that includes altruism). This paper concludes that friendship is neither reducible to altruism nor vice versa. Further, this paper distinguishes this problem from the question regarding the socialization of the individual. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:ygpmq&r= |
| By: | Mhamed Ben Salah; Cédric Chambru; Maleke Fourati |
| Abstract: | We study the effect of exposure to colonial public primary education on contemporary education outcomes in Tunisia. We assemble a new data set on the location of schools with the number of pupils by origin, along with population data during the French protectorate (1881–1956). We match those with contemporary data on education at both district and individual level. We find that the exposure of local population to colonial public primary education has a long-lasting effect on educational outcomes, even when controlling for colonial investments in education. A one per cent increase in Tunisian enrolment rate in 1931 is associated with a 1.69 percentage points increase in literacy rate in 2014. Our results are driven by older generations, namely individuals who attended primary schools before the 1989/91 education reform. We suggest that the efforts undertaken by the Tunisian government after independence to promote schooling finally paid off after 40 years and overturned the effects of history. |
| Keywords: | Colonial investment, primary education, Tunisia |
| JEL: | D10 N37 N47 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:411&r= |
| By: | Cédric Chambru; Paul Maneuvrier-Hervieu |
| Abstract: | Social conflict pervades human society and fulfils a number of essential functions in its development and transformation, including the creation of new norms and institutions. The Historical Social Conflict Database (HiSCoD) is an ongoing project designed to provide to scholars and society at large with a set of resources for analysing social conflict from the Middle Ages to the late 19th century. Based on original archival research and existing repositories, the aim is to provide a global database of social conflict in past societies by collecting, aggregating, documenting and harmonising data. As of today, the database contains data more than 20,000 instances of conflict, from fiscal scuffles to urban revolts involving thousands of individuals. For every event, we provide information on the date, location, type of conflict, and, when possible, number of participants, participation of women, and a summary of events. Each individual event is documented through a hierarchical system of forms using XML-EAD technology. This article describes the data collection process and presents some descriptive statistics. |
| Keywords: | Event data, sub-national, social conflict, riot, violence, protest |
| JEL: | D74 H56 N00 N90 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:407&r= |
| By: | Elazar, Yiftah |
| Abstract: | What explains the ambition to get rich? Adam Smith is clear that commercial ambition, the passionate desire for great wealth, is not simply a desire to satisfy one’s material needs. His argument on what underlies it, however, is not obvious. I review three possibilities suggested by Smith’s work and the scholarly literature – vanity, the love of system, and the desire for tranquility – and conclude that none of them captures the underlying motive of commercial ambition. Instead, I argue that Smith understands commercial ambition as a misguided desire for excellence. Ambitious pursuers of wealth are driven by the desire to deserve and to enjoy recognition for their excellence, but their judgment of what is truly excellent is corrupted by the standards of a wealth-worshipping society. Instead of appealing to the moral standpoint of the impartial spectator, they construct in their minds and follow a corruptive moral guide: the wealth-worshipping spectator. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:j5pt6&r= |
| By: | Toke S. Aidt (Faculty of Economics, University of Cambridge); Jean Lacroix (Université Paris-Saclay, Faculté Jean Monnet, RITM); Pierre-Guillaume Méon (Centre Emile Bernheim, Université libre de Bruxelles) |
| Abstract: | This paper studies a new mechanism that allows political elites from a non-democratic regime to survive a democratic transition: connections. We document this mechanism in the transition from the Vichy regime to democracy in post-World War II France. The parliamentarians who had supported the Vichy regime were purged in a two-stage process where each case was judged twice by two di erent courts. Using a di erence-in-di erences strategy, we show that Law graduates, a powerful social group in French politics with strong connections to one of the two courts, had a clearance rate that was 10 percentage points higher than others. This facilitated the persistence of that elite group. A systematic analysis of 17,589 documents from the defendants' dossiers is consistent with the hypothesis that the connections of Law graduates to one of the two courts were a major driver of their ability to avoid the purge. We consider and rule out alternative mechanisms. |
| Keywords: | Purges, Political transitions, Elite persistence, Connections |
| JEL: | D73 K40 N44 P48 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:dia:wpaper:dt202204&r= |
| By: | Dominic Rohner |
| Abstract: | Conflicts such as civil wars have manifold negative consequences on human development. In this survey article the existing literature is reviewed on the impact of conflict on educational attainment, health outcomes, inter-group trust and generalized social capital, as well as economic outcomes. It is stressed that four dimensions of adverse consequences from war exposure can give birth to four corresponding vicious cycles and war traps. Finally, a series of policies for peace are discussed, including policies that boost productivity and human capital accumulation, that foster inter-group trust and interaction, and that strengthen democratic institutions and governance. |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:22.08&r= |
| By: | Volckart, Oliver |
| Abstract: | The paper starts out from the insight that success or failure of the common currency, on which the diet of the Holy Roman Empire agreed in 1559, cannot be assessed against how modern currencies are functioning. Rather, the benchmark is provided by historical criteria, primarily by the aims of the political authorities that joined the union. The analysis finds that there were two overriding aims: 1) preventing high-ranking economic agents from exploiting their social standing in order to push up prices and rents, and 2) removing the conditions that allowed Gresham’s Law to undermine monetary stability. The participants in the union tried to reach the first aim by retaining regional small change in addition to the Empire-wide larger units. While there is limited evidence for the common currency preventing the functioning of Gresham’s Law within the Empire up to the immediate run-up to the Thirty Years War (1618-48), it failed to prevent inflation and the inflow of foreign coinage. However, in neither respect the post1559 Empire differed from other contemporary polities. On balance, therefore, the Empire’s common currency can be considered a success. |
| JEL: | E42 E52 N13 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:wpaper:115007&r= |
| By: | Roy E. Bailey; Timothy J. Hatton; Kris Inwood |
| Abstract: | We estimate the correlates of death and injury in action during the First World War for a sample of 2,400 non-officer British servicemen who were born in the 1890s. Among these 13.1 percent were killed in action and another 23.5 percent were wounded. But for a serviceman who enlisted in the infantry at the beginning of the war and remained in the army, the probability of being killed in action was 29 percent and the probability of being either killed or wounded in action was 64 percent. We examine, for ordinary soldiers, the hypothesis that death and injury was more likely for those from higher socioeconomic backgrounds as is suggested in the literature on the ‘lost generation’. While this applies when comparing officers with other ranks it does not apply among the ordinary soldiers who comprised 95 percent of the army. |
| Keywords: | First World War; British servicemen; Death or injury in action |
| JEL: | I12 J47 N44 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:auu:hpaper:103&r= |
| By: | Guldi, Melanie (University of Central Florida); Rahman, Ahmed S. (Lehigh University) |
| Abstract: | This paper assesses the causal impact of greater market access on demographic transition during the latter half of the 19th century in the United States. We construct new measures of fertility changes and measures of railroad access at the county level from 1850 – 1890. We are able to document market-access-induced changes in fertility due to both extensive margins (shifts in occupations with different average fertility rates) and intensive margins (changes in fertility within each occupation class). Both our theoretical model and empirical results suggest that declining fertility in counties mainly occurred through extensive margins. We further discover that fertility changes occurred mainly through strengthening patterns of specialization, rather than through greater industrialization or urbanization, suggesting that demographics diverged within the United States during this period. |
| Keywords: | demographic transition, market access, railroads, fertility, agricultural production, manufacturing production |
| JEL: | J11 J13 N11 N31 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15215&r= |
| By: | Thilo N. H. Albers; Charlotte Bartels; Moritz Schularick |
| Abstract: | German history over the past 125 years has been turbulent. Marked by two world wars, revolutions and major regime changes, as well as a hyperinflation and three currency reforms, expropriations and territorial divisions, it provides unique insights into the role of country-specific shocks in shaping long-run wealth dynamics. This paper presents the first comprehensive study of wealth and its distribution in Germany since the 19th century. We combine tax and archival data, household surveys, historical national accounts, and rich lists to analyze the evolution of the German wealth distribution over the long run. We show that the top 1% wealth share has fallen by half, from close to 50% in 1895 to 27% today. Nearly all of this decline was the result of changes that occurred between 1914 and 1952. The interwar period and the wealth taxation in the aftermath of World War II stand out as the great equalizers in 20th century German history. After unification in 1990, two trends have left their mark on the German wealth distribution. Households at the top made substantial capital gains from rising business wealth while the middle-class had large capital gains in the housing market. The wealth share of the bottom 50% halved since 1990. Our findings speak to the importance of historical shocks to the distribution and valuations of existing wealth in explaining the evolution of the wealth distribution over the long run. |
| Keywords: | wealth inequality, portfolio heterogeneity, saving, wealth taxation |
| JEL: | D31 E01 E21 H20 N30 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9739&r= |
| By: | Elert, Niklas (Research Institute of Industrial Economics (IFN)); Johansson, Dan (Örebro University School of Business); Stenkula, Mikael (Research Institute of Industrial Economics (IFN)); Wykman, Niklas (Örebro University School of Business) |
| Abstract: | The institutional literature suggests that long-term tax incentives are crucial for entrepreneurs, but studies on this topic are hampered by theoretical and empirical problems related to how to define and measure entrepreneurial income. We resolve these problems by drawing on a theoretical definition of the entrepreneur as an owner, which enables us to identify entrepreneurship empirically by means of investments made by active owners of closely held firms. Using detailed Swedish tax data, we analyze the tax incentives for such owner-entrepreneur investments from 1862 to 2018, thereby highlighting the evolution of a general institutional phenomenon through a long-run, in-depth, country-specific analysis. We calculate the annual marginal effective tax rate (METR) on capital income for investments, distinguishing between average- and top-income entrepreneurs, and between three sources of finance. We identify five tax regimes that indicate substantial differences in institutional quality over time according to the magnitude of the METR and METR differences between average- and top-income entrepreneurs and across sources of finance. Increased taxation of owner-entrepreneurs helps explain the absence of new large entrepreneurial firms in Sweden after World War II, while improved incentives can be associated with Sweden’s recent entrepreneurial renaissance. |
| Keywords: | high-impact entrepreneurship; institutional quality; arginal effective tax rates; tax regimes; tax reforms |
| JEL: | H21 H31 H32 L25 L26 N44 |
| Date: | 2022–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:oruesi:2022_004&r= |
| By: | Pablo Delgado (Universidad de Zaragoza, Departamento de Economía Aplicada e Historia Económica e Instituto Agroalimentario de Aragón, IA2 (Universidad de Zaragoza-CITA), Facultad de Economía y Empresa, Gran Via 4, 50005 Zaragoza, España); Vicente Pinilla (Universidad de Zaragoza, Departamento de Economía Aplicada e Historia Económica e Instituto Agroalimentario de Aragón, IA2 (Universidad de Zaragoza-CITA), Facultad de Economía y Empresa, Gran Via 4, 50005 Zaragoza, España) |
| Abstract: | From the second half of the twentieth century, two facts characterized western societies from a nutritional point of view. On the one hand, the culmination of the nutritional transition and a trend towards a global homogeny diet. On the other hand, in high-income societies emerged two different food consumption models. The raise in the intake of agri-industrial food products characterizes the first food consumption model. The second model is characterized by both the reduction of caloric intake and the increase in the consumption of elaborated, sophisticated and processed foodstuff. Using Spain as a study case, the aim of this work how was the inequality evolution by income and region during the culmination of the modern nutritional transition and in the raise of each food consumption model. Specifically, we display the evolution of the inequalities in the consumption of dairy products, meat and alcoholic beverages from 1964 to 2018. By exploiting direct sources of food consumption, we show that around 1960, not all social classes and regions had culminated the modern nutritional transition but around 1980/90 all types of disparities had disappeared. However, during the last decades, new types of inequalities are emerging in the access to some elaborated food products. |
| Keywords: | nutritional transition, inequality, dairy products, meat, wine, alcoholic beverages |
| JEL: | N34 N54 O13 R21 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:ahe:dtaehe:2112&r= |
| By: | Drakopoulos, Stavros A. |
| Abstract: | Τhe idea that social influences and social interactions play a central role on individual economic decisions has had a long presence in the history of economics. With the emergence of marginalism, this idea went into background and the concept of atomistic individual became established in mainstream economic rationality. Starting in the 1970’s, there were some attempts to reintroduce non-atomistic preferences in mainstream microeconomic theory in the form of social interactions, interdependent preferences, keeping up with the Joneses, social identity, social preferences, and status concerns. Social preferences have started to have a growing impact among mainstream microeconomics with the advent of behavioral economics, but still they are not in the hard core of the standard theory of choice. The paper argues that atomistic preferences are still prevalent, especially in the form of the assumption of representative agent. It also focuses on the role of methodological individualism and on the theoretical implications of relaxing the assumption of atomistic individual, as main explanations of the resilience of the mainstream economic rationality. |
| Keywords: | Economic Rationality; Individual Preferences; Methodological Individualism, Representative Agent |
| JEL: | B20 B40 D10 D91 |
| Date: | 2022–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112944&r= |
| By: | Antonio Ciccone; Jan Nimczik |
| Abstract: | After the end of World War II in 1945, millions of refugees arrived in what in 1949 became the Federal Republic of Germany. We examine their effect on today’s productivity, wages, income, rents, education, and population density at the municipality level. Our identification strategy is based on a spatial discontinuity in refugee settlement at the border between the French and US occupation zones in the South-West of post-war Germany. These occupation zones were established in 1945 and dissolved in 1949. The spatial discontinuity arose because the US zone admitted refugees during the 1945-1949 occupation period whereas the French zone restricted access. By 1950, refugee settlement had raised population density on the former US side of the 1945-1949 border significantly above density on the former French side. Before the war, there never had been significant differences in population density. The higher density on the former US side persists entirely in 2020 and coincides with higher rents as well as higher productivity, wages, and education levels. We examine whether today’s economic differences across the former border are the result of the difference in refugee admission; the legacy of other policy differences between the 1945-1949 occupation zones; or the consequence of socio-economic differences predating WWII. Taken together, our results indicate that today’s economic differences are the result of agglomeration effects triggered by the arrival of refugees in the former US zone. We estimate that exposure to the arrival of refugees raised income per capita by around 13% and hourly wages by around 10%. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9679&r= |
| By: | Poitras, Geoffrey |
| Abstract: | Contributors to cobweb theory include many leading economists of the 20th century. From early beginnings in 1930, cobweb theory played a key role in evolving perceptions of market stability arising from recursive linear models with endogenous dynamics. The focal point of this evolution in cobweb theory is the transition from naive to adaptive to rational price expectations. After a review of the pre-history, this paper examines the first wave of linear cobweb theory initiated by Tinbergen, Schultz and Ricci and proceeds to consider the evolution of price expectations in the second wave of cobweb models associated with endogenous cycles in commodity markets. Finally, the role of modern cobweb theory in discussions surrounding the stability of market equilibrium and the connection to processes with rational expectations is assessed. |
| Date: | 2022–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:xsemj&r= |
| By: | Olivier Gergaud; Victor Ginsburgh; Juan D. Moreno-Ternero |
| Abstract: | The outcome of the famous 1976 Judgment of Paris, a blind wine tasting of ten wines by eleven judges, brought American wines to the forefront of the wine business. A Californian wine, the 1973 Stag’s Leap Wine Cellars S.L.V. Cabernet Sauvignon, was declared the winner, surpassing four highly prized French wines (Château Mouton-Rothschild, 1970; Château Montrose, 1970; Château Haut-Brion, 1970; and Château Léoville Las Cases, 1971). We collect ratings from experts for (almost) all vintages of the same ten wines over the years 1968-2021 and find that the S.L.V. Cabernet Sauvignon is far from being first. We conclude that either the 1973 vintage was overrated by the experts who tasted it in 1976, or 1973 was merely an outlier in this winery. |
| Keywords: | 1976 Judgment of Paris; 1973 S.L.V. Cabernet Sauvignon; wines; ratings; tracking quality. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/342693&r= |
| By: | Helge Liebert; Beatrice Mäder |
| Abstract: | This paper investigates the returns to health care provision during the mortality transition. We construct a new panel data set covering German municipalities from 1928 to 1936. The endogeneity of health care supply is addressed by using the expulsion of Jewish physicians from statutory health insurance as exogenous variation in regional physician supply. Increases in the supply of physicians reduce infant mortality and mortality from common childhood diseases. Using a semiparametric control function approach, we find diminishing marginal returns to health care provision. The results are consistent with historical trends in infant mortality over the 20th century. |
| Keywords: | infant mortality, physicians, health care supply, mortality transition, semiparametric IV |
| JEL: | I10 I18 N34 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9699&r= |