nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2019‒02‒04
twenty-one papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. CasP's 'Differential Accumulation' versus Veblen's 'Differential Advantage' (Revised and Expanded) By Nitzan, Jonathan; Bichler, Shimshon
  2. Why Economics Must be an Evolutionary Science By Vicente Ferreira
  3. Theories and Practice of Agent based Modeling: Some practical Implications for Economic Planners By Hossein Sabzian; Mohammad Ali Shafia; Ali Maleki; Seyeed Mostapha Seyeed Hashemi; Ali Baghaei; Hossein Gharib
  4. The labour-augmented K+S model : a laboratory for the analysis of institutional and policy regimes By Giovanni Dosi; Marcelo C. Pereira; Andrea Roventini; Maria Enrica Virgillito
  5. The effects of labour market reforms upon unemployment and income inequlities : an agent based model By Giovanni Dosi; Marcelo C. Pereira; Andrea Roventini; Maria Enrica Virgillito
  6. Modelling the Evolution of Economic Structure and Climate Change: A Review By Tommaso Ciarli; Maria Savona
  7. Türkiye Ekonomisinde Sürükleyici Endüstri Analizi:2002-2012 Karşılaştırması By Alp, Esra; Kök, Recep; Başkol, Murat Ozan
  8. Macro and Micro Prudential Policies: Sweet and Lowdown in a Credit Network Agent Based Model By Ermanno Catullo; Federico Giri; Mauro Gallegati
  9. CEO power and board structure of banks: a developing country’s perspective By Adeabah, David
  10. The behavioural foundations of female entrepreneurship: what can experiments teach us? By Della Giusta, Marina; Clot, Sophie; Razzu, Giovanni
  11. Financialization in the EU and its consequences By Stefano Battiston; Mattia Guerini; Mauro Napoletano; Veronika Stolbova
  12. An Agent-Based Model to Explain the Emergence of Stylised Facts in Log Returns By Elena Green; Daniel M. Heffernan
  13. Income cash transfers and intrahousehold decision making By Cecilia Parada
  14. Institutional Work and Legitimation in the Construction of CSR Standards. The Case of ISO 26000 By Christoph Beat Stamm
  15. Diffusion of social values through the lens of US newspapers By Manning, Alan; Masella, Paolo
  16. Does Society Influence the Gender Gap in Risk Attitudes? Evidence from East and West Germany By Cornelia Chadi; Uwe Jirjahn
  17. The economization of education and the implications of the quasi-commodification of knowledge on higher education for sustainable development By Biberhofer, Petra
  18. Where Does the Fairtrade Money Go? How Much Consumers Pay Extra for Fairtrade Coffee and How This Value Is Split along the Value Chain By Helene Naegele
  19. How Prevalent Is Downward Rigidity in Nominal Wages? Evidence from Payroll Records in Washington State By Ekaterina S. Jardim; Gary Solon; Jacob L. Vigdor
  20. Variation in Women’s Success Across PhD Programs in Economics By Leah Platt Boustan; Andrew Langan
  21. Towards a Framework for Time Use, Welfare and Household-centric Economic Measurement By Diane Coyle; Leonard Nakamura

  1. By: Nitzan, Jonathan; Bichler, Shimshon
    Abstract: This paper clarifies a common misrepresentation of our theory of capital as power, or CasP. Many observers tend to box CasP as an ‘institutionalist’ theory, tracing its central process of ‘differential accumulation’ to Thorstein Veblen’s notion of ‘differential advantage’. This view, we argue, betrays a misunderstanding of CasP, Veblen or both. First, we are not Veblenians and certainly not institutionalists: Veblen’s theory was evolutionary, while CasP is deeply dialectical, and institutionalism, particularly its ‘new’ varieties, emphasizes and often promotes what holds capitalism together, whereas CasP critically examines both the underpinnings of capitalized power as well as the forces that threaten and undermine it. Second, CasP’s notion of differential accumulation is not only different from, but also diametrically opposed to Veblen’s differential advantage. Veblen, who wrote at the turn of the twentieth century, before the appearance of business indices and financial benchmarks, emphasized the absolute drive for ‘maximum profit’ and saw strategic sabotage merely as a power means to an economic end. By contrast, CasP, which was developed at the end of the twentieth century, sees power not only as a means of accumulation, but also – and perhaps more importantly – as its ultimate purpose. Accumulators, it argues, are conditioned and driven to augment not their profits and assets as such, but their relative power, and this means that, as symbolic bearers of power, these profits and assets should be measured not absolutely, but relatively to those of others – hence the imperative of differential accumulation.
    Keywords: capital as power,differential accumulation,differential advantage,evolutionary economics,institutionalism,power,Thorstein Veblen
    JEL: P16 B15 B25 B52 L P22 E23 D3
    Date: 2019
  2. By: Vicente Ferreira
    Abstract: This paper addresses the evolution of evolutionary thought in economics as an alternative to the dominant static view of the economy. A short history of the earlier institutional approach, announced by Thorstein Veblen’s 1898 paper ‘Why is economics not an evolutionary science?’, is presented alongside a discussion of its key methodological and philosophical aspects. Veblen’s critiques of neoclassical economics are also discussed. Then the role of evolutionary concepts in economics throughout the twentieth century is analysed, from later institutionalists to recent complexity and chaos theories. It is argued complexity approaches are developed in line with Veblen’s institutional theory, and may be incorporated in an evolutionary theoretical framework which constitutes a necessary alternative to the neoclassical paradigm, as it better describes and studies real-world socio-economic phenomena.
    Date: 2019–01
  3. By: Hossein Sabzian; Mohammad Ali Shafia; Ali Maleki; Seyeed Mostapha Seyeed Hashemi; Ali Baghaei; Hossein Gharib
    Abstract: Nowadays, we are surrounded by a large number of complex phenomena ranging from rumor spreading, social norms formation to rise of new economic trends and disruption of traditional businesses. To deal with such phenomena,Complex Adaptive System (CAS) framework has been found very influential among social scientists,especially economists. As the most powerful methodology of CAS modeling, Agent-based modeling (ABM) has gained a growing application among academicians and practitioners. ABMs show how simple behavioral rules of agents and local interactions among them at micro-scale can generate surprisingly complex patterns at macro-scale. Despite a growing number of ABM publications, those researchers unfamiliar with this methodology have to study a number of works to understand (1) the why and what of ABMs and (2) the ways they are rigorously developed. Therefore, the major focus of this paper is to help social sciences researchers,especially economists get a big picture of ABMs and know how to develop them both systematically and rigorously.
    Date: 2019–01
  4. By: Giovanni Dosi (Laboratory of Economics and Management); Marcelo C. Pereira (Universidade Estadual de Campinas); Andrea Roventini (Observatoire français des conjonctures économiques); Maria Enrica Virgillito (Scuola Superiore Sant'Anna)
    Abstract: In this work we discuss the research findings from the labour-augmented Schumpeter meeting Keynes (K+S) agent-based model. It comprises comparative dynamics experiments on an artificial economy populated by heterogeneous, interacting agents, as workers, firms, banks and the government. The exercises are characterised by different degrees of labour flexibility, or by institutional shocks entailing labour market structural reforms, wherein the phenomenon of hysteresis is endogenous and pervasive. The K+S model constitutes a laboratory to evaluate the effects of new institutional arrangements as active/passive labour market policies, and fiscal austerity. In this perspective, the model allows mimicking many of the customary policy responses which the European Union and many Latin American countries have embraced in reaction to the recent economic crises. The obtained results seem to indicate, however, that most of the proposed policies are likely inadequate to tackle the short-term crises consequences, and even risk demoting the long-run economic prospects. More objectively, the conclusions offer a possible explanation to the negative path traversed by economies like Brazil, where many of the mentioned policies were applied in a short period, and hint about some risks ahead.
    Keywords: Labour market ; Policy evaluation; Agent based model
    JEL: C63 E24 H53 J88
    Date: 2018–09
  5. By: Giovanni Dosi (Laboratory of Economics and Management); Marcelo C. Pereira (Universidade Estadual de Campinas); Andrea Roventini (Observatoire français des conjonctures économiques); Maria Enrica Virgillito (Scuola Superiore Sant'Anna)
    Abstract: This work analyses the effects of labour market structural reforms by means of the labour-augmented ‘Schumpeter meeting Keynes’ (KþS) Agent-Based model. We introduce a policy regime change characterized by a set of structural reforms on the labour market. Confirming a recent IMF report, the model shows how structural reforms reducing workers’ bargaining power and compressing wages tend to increase (a) unemployment, (b) functional income inequality and (c) personal income inequality. We further undertake a global sensitivity analysis on key variables and parameters which corroborates the robustness of our findings.
    Keywords: Labor market; Structural reforms; Income distribution; Inequality; Unemployment; Growth
    JEL: C63 E02 E12 E24 O11
    Date: 2017–12
  6. By: Tommaso Ciarli (SPRU, University of Sussex, UK); Maria Savona (SPRU, University of Sussex, UK)
    Abstract: We discuss how different models assessing climate change integrate aspects of structural change that are crucial to improve understanding of the relation between changes in the environment and in the economy. We identify six related aspects of structural change, which have significant impact on climate change: sectoral composition, industrial organisation, technology, employment, final demand, and institutions. Economic models vary substantially with respect to the aspects of structural change that they include, and how they model them. We review different modelling families and compare these differences: integrated assessment models (IAM), computable general equilibrium (CGE) models, structural change models (SCM), ecological macroeconomics models in the Keynesian tradition (EMK) and evolutionary agent based models (EABM). We find that IAM and CGE address few of the aspects of structural change identified; SCM focus on the sectoral composition; and EKM study final demand and employment structure. But all these models are aggregate and omit the complexity of the interactions between structural and climate change. EABM have explored a larger number of aspects of structural change, modelling their emergence from the interaction of microeconomic actors, but have not yet exploited their potential to study the interactions among interrelated aspects of structural and climate change.
    Keywords: Strucural change, climate change, economic modelling
    Date: 2019–01
  7. By: Alp, Esra; Kök, Recep; Başkol, Murat Ozan
    Abstract: Interindustry analysis that researches alterations in qualitative and quantitative structures of industrial activity is being used as an analytical tool in the matter of monitoring development performance of economy. The aim of this study is to calculate backward linkages by Leontief approach and forward linkages by Ghosh approach based on 2002 and 2012 input output tables and analyse evolution in key sectors. Linkage findings reflecting the 'feedback' and 'stimulant' power of industries are utilized as indicators for optimization in allocation of resources and taking investment decisions. Findings of the study reveal that "manufacture of chemicals, chemical products", "manufacture of fabricated metal products", "recycling" and "research and "development" industries have lost the property of being key industry in relevant period. However only "basic metals” became as a key industry thereby reducing its import dependency. By the results of this study, it is expected to contribute to policymakers in developing policy.
    Keywords: Input-Output Model, Linkage Effects, Key Sector Analysis
    JEL: C67 L00 L6
    Date: 2017–01–30
  8. By: Ermanno Catullo (Department of Economics and Social Sciences, Universita' Politecnica delle Marche); Federico Giri (Department of Economics and Social Sciences, Universita' Politecnica delle Marche); Mauro Gallegati (Department of Economics and Social Sciences, Universita' Politecnica delle Marche)
    Abstract: The paper presents an agent based model reproducing a stylized credit network that evolves endogenously through the individual choices of rms and banks. We introduce in this framework a anancial stability authority in order to test the e ects of different prudential policy measures designed to improve the resilience of the economic system. Simulations show that a combination of micro and macro prudential policies reduces systemic risk, but at the cost of increasing banks' capital volatility. Moreover, agent based methodology allows us to implement an alternative meso regulatory framework that takes into consideration the connections between firms and banks. This policy targets only the more connected banks, increasing their capital requirement in order to reduce the di usion of local shocks. Our results support the idea that the meso prudential policy is able to reduce systemic risk without a ecting the stability of banks'capital structure.
    Keywords: Micro prudential policy; Macro prudential policy; Credit Network; Meso prudential policy; Agent based model
    JEL: E50 E58 G18 G28 C63
    Date: 2019–01
  9. By: Adeabah, David
    Abstract: This study examines the implications of CEO power on the board structure of banks in the Ghanaian banking industry. Using a unique hand-collected dataset in respect of 21 commercial banks in Ghana for the 2009 – 2017 periods, the results show that CEO power underscores the absence or lack of gender composition of bank boards and constrains independent directors, while incentivizing larger board size in banks. Meanwhile, ownership structure and listing status critically underpin the CEO power effect on bank board structure, such that the actual sign of the marginal effect of CEO power on bank board structure varies with ownership structure and listing status. Overall, the study contributes to the understanding of the global antecedent of bank corporate governance (i.e. board structure) by providing an understanding of the implications of social connection hypothesis on bank board structure in a developing country's context.
    Keywords: CEO Power,Board Structure,Gender Diversity,Board Size,Board Independence,Social Connection
    JEL: G21 G30 G32
    Date: 2018
  10. By: Della Giusta, Marina; Clot, Sophie; Razzu, Giovanni
    Abstract: We bridge the women entrepreneurship literature with the experimental economics literature on gender, with the aim to contribute a different perspective on the barriers and opportunities for women entrepreneurs, and one that we hope can help both fields by questioning some of the implicit assumptions that are often made (and used in policy) about the reasons for the differences observed between male and female headed businesses. In the course of the discussion we also revisit the definition of entrepreneur and the role of risk aversion in both neoclassical theory and in the identity perspective and draw implications in the context of the digital age and its potential to level the playing field between women and men in business venture.
    Keywords: women entrepreneurs, preferences, experiments
    JEL: D01 J24 J71
    Date: 2019
  11. By: Stefano Battiston (Centre d'analyse et de mathématique sociale (CNRS/EHESS)); Mattia Guerini (Scuola Superiore Sant'Anna); Mauro Napoletano (Observatoire français des conjonctures économiques); Veronika Stolbova
    Abstract: Building on ISIGrowth research, in this policy brief we present empirical evidence on the patterns of increasing financialization in the EU in the last two decades, an analysis of its possible adverse effects on several objectives of the EU 2030 agenda, including inclusive growth, innovation, inequality and financial stability. We conclude by providing some policy insights and recommendations. The notion of financialization reflects, on the one hand, the engagement of non-financial firms into financial activities not directly related to production, and, on the other hand, the relative size of the financial sector with respect to the overall economy. Several empirical indicators show that financialization has been increasing in the Euro Area in the last two decades. This finding is important because while financialization has been so far mostly considered to be a driver for growth and innovation, there is today a wealth of theoretical arguments and empirical evidence pointing to the detrimental effects of excessive financialization for growth, innovation, inequality and financial stability. First, excessive financialization depresses economic growth because it implies that a larger fraction of credit is directed toward unfruitful investment projects, possibly generating economic crises (e.g. via housing price bubbles). Second, financialization has negative impact on innovation because the separation between actors taking risks from innovation and actors extracting rents from innovation implies lower share of reinvested profits (e.g. via short-termism and share buy-backs). Third, financialization contributes to inequality by strengthening top earners’ bargaining power in terms of higher wages and lower taxation, as well as by burdening public budgets with fiscal assistance to financial institutions in time of crisis. Fourth, financialization may lead to financial instability by increasing both the leverage of interconnected financial institutions and the risk of mispricing of large asset classes (e.g. the dynamics of leverage and mispricing of mortgage backed securities in the run of the 2008 financial crisis). We suggest some countermeasures that could help containing excessive financialization, including: (i) fostering the demand in the real sector; (ii) establishing mission-oriented programs by going beyond the traditional conceptual framework to fix market failures and aim to create markets where they may not exist at all; (iii) encouraging the alignment of top managers’ compensation schemes with long-term profit and corporate social responsible goals; (iv) studying the possibility of setting a minimal ratio on banks for lending to the real economy (to non-real estate sectors); (v) studying the possibility of setting a maximal level of intra-financial leverage for financial institutions.
    Date: 2018–04
  12. By: Elena Green; Daniel M. Heffernan
    Abstract: This paper outlines an agent-based model of a simple financial market in which a single asset is available for trade by three different types of traders. The model was first introduced in the PhD thesis of one of the authors, see reference [1]. The simulated log returns are examined for the presence of the stylised facts of financial data. The features of leptokurtosis, volatility clustering and aggregational Gaussianity are especially highlighted and studied in detail. The following ingredients are found to be essential for the production of these stylised facts: the memory of noise traders who make random trade decisions; the inclusion of technical traders that trade in line with trends in the price and the inclusion of fundamental traders who know the "fundamental value" of the stock and trade accordingly. When these three basic types of traders are included log returns are produced with a leptokurtic distribution and volatility clustering as well as some further statistical features of empirical data. This enhances and broadens our understanding of the fundamental processes involved in the production of empirical data by the market.
    Date: 2019–01
  13. By: Cecilia Parada (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: Changes in the individual income affect many dimensions within the households mainly through the variation of the bargaining power. In this paper, we estimate the impact of an income cash transfer to low-income households in Uruguay (PANES) on the probability of couples separation, changes in the families´structure, distribution of domestic tasks and the likelihood women be household head. Exploiting the discontinuity in the eligibility indicator to the program and the fact that only one of the household members receive the cash transfer, our results suggest that PANES rise the probability of being in the same marital status as in the baseline and introduce stability in the number of family members. These results show, also persistence in the short term once they stop perceiving the benefit. There are no changes in the performance in households task among the members that receive the cash transfer, but there heterogenous effects if we consider the receiptor's sex. Finally, although there are near 80% of female receivers, we do not find any change in the probability of being the household head.
    Keywords: intrahousehold decisions making, cash transfers
    JEL: D13 J12
    Date: 2018–12
  14. By: Christoph Beat Stamm (Institut de Géographie et Durabilité, Université de Lausanne - Institut de Géographie et Durabilité - UNIL - Université de Lausanne, Université de Montréal [Montréal])
    Abstract: This paper studies the initiation and construction of transnational CSR standards and looks at the case of ISO 26000. By focussing on the actors and by applying the concept of institutional work, the analysis distinguishes between six forms of institutional work which had been undertaken: the creation of the standard (discursive/substantial), the mobilization of support (internal/external), and the organization of an inclusive space for discussion (consultation/negotiation). On the one hand, the social position of the initiators and of the organization that produces the standard as well as the external conjuncture can either hamper or facilitate the construction of a standardization project. On the other hand, certain forms of institutional work can foster the legitimation of the project. Legitimacy, potentially bestowed by an interested audience, is a necessary condition for the recognition and adoption of the standard by corporations. The analysis reveals the legitimation mechanisms in the initial construction of a CSR standard and shows that the amount of the different forms of institutional work varies depending on the specific context of a standardization initiative.
    Date: 2019–01–07
  15. By: Manning, Alan; Masella, Paolo
    Abstract: Changing attitudes are the result of a battle for hearts and minds in which agents for and against change try to persuade others. We know very little about this process. This paper develops a methodology for measuring sentiments for and against an idea in the media which we apply to attitudes to gay rights. We uncover several stylized facts: First, the expression of both pro- and anti-gay sentiments in U.S. newspapers follow an S-shaped pattern, characteristic of diffusion processes. Anti-gay sentiment starts its diffusion process later but it catches up with pro-gay sentiments. Second, in the year gay marriages are introduced we observe a dramatic increase in coverage of both pro- and anti-gay sentiment; the increase in the latter is larger. The rise in coverage is still present in the three years subsequent to the institutional change. Third, we document the existence of substantial spatial autocorrelation in media coverage of sentiment.
    Keywords: social attitudes; gay marriage
    JEL: B5
    Date: 2018–07
  16. By: Cornelia Chadi; Uwe Jirjahn
    Abstract: Previous international research has shown that women are more risk averse than men. This gives rise to the question whether the gender gap in risk attitudes is shaped by the social environment. We address this question by examining risk attitudes among East and West Germans. Originated from different family policies during Germany’s separation, East Germans have more equal gender roles than West Germans. Thus, if the gender gap reflects socially constructed norms, it should be smaller among East Germans. Using data of the German Socio-Economic Panel (SOEP), our empirical analysis confirms this prediction. Specifically with respect to career and financial matters, the gender gap in risk tolerance is smaller among East Germans. We find no evidence that the East German gender gap has converged to the higher West German level after reunification. By contrast, the West German gap has narrowed over time.
    Keywords: Risk Preferences, Gender Roles, Nurture, Family Policy
    JEL: D91 J16 P51
    Date: 2019
  17. By: Biberhofer, Petra
    Abstract: This paper analyses an ongoing economization trend in the sphere of higher education (HE) and discusses its implications on higher education for sustainable development (HESD). The sources of this trend are connected with neoliberalism understood as a political project that seeks to extend competitive market forces, consolidate a market-friendly constitution, and promote individual freedom. In global HE neoliberalism, decision-makers, be it educational, scientific, or other, are pressured to assess how their activities impact financially on the individual, organizational, and institutional levels and/or the imperatives of an internationally competitive economy. The paper provides a contemporary analysis of the rise of neoliberalism in HE, understood as the specific trend of an academic capitalist knowledge/learning regime explained by Jessop's six analytic distinct and potentially overlapping stages of economization. This analysis is based on a review of European policies from 2006 until 2017 and explains characteristics of current economization strategies. Their core principles relating to higher education are about improving economic performance based on knowledge and innovation. Smart growth is defined politically as the main purpose of HE and positioning students as future workers, with the right higher skills, as the means. The relevance of students' skills higher education institutions (HEI) are urged to develop highly depend on business demands. European policies are driven by a comprehensive entrepreneurial agenda restructuring the organizational mechanisms in HE. Accountability towards the labour market and skills performance of students set this agenda. Funding strategies rest on strong industry ties and diversification of revenue streams depend on HEI capability to establish tech-driven knowledge alliances between research, education and business. These new intermediary and powerful alliances drive economization strategies, influence curriculum development and decide on relevant higher level skills. Respective learning practices are oriented strongly towards developing entrepreneurial and digital skills based on personalized learning environments. Currently HESD adapts towards a neoliberal education agenda rather than preventing further shifts from a capitalist towards a competitive financialized economy. A profound critique would have to question the dominant economization trends in higher education i.e. the very purpose of education and the current raison d¿etre of HEI. The core of the critique might build on new institutionalized learning environments allowing deep, social learning and, hence, the potential of HEI to act as social catalysts empowering collective and disruptive agency.
    Keywords: economization, higher education, sustainable development, neoliberalism, knowledge-based economy
    Date: 2019
  18. By: Helene Naegele
    Abstract: Fairtrade certification aims at transferring wealth from the consumer to the farmer; however, coffee passes through many hands before reaching final consumers. Bringing together retail, wholesale, and stock market data, this study estimates how much more consumers are paying for Fairtrade-certified coffee in US supermarkets and finds estimates around $1 per lb. I then assess how this price premium is split between the different stages of the value chain: most of the premium goes to the roaster's profit margin, while the retailer surprisingly makes smaller absolute profits on Fairtrade-certified coffee, compared to conventional coffee. The coffee farmer receives about a fifth of the price premium paid by the consumer, but it is unclear how much of this (quantity-dependent) benefit goes toward the payment of (quantity-independent) license fees.
    Keywords: Coffee, Fairtrade, Price premium, Value chain, Voluntary sustainability standards
    JEL: L15 L31 L66 O13 Q01
    Date: 2019
  19. By: Ekaterina S. Jardim; Gary Solon; Jacob L. Vigdor
    Abstract: For more than 80 years, many macroeconomic analyses have been premised on the assumption that workers’ nominal wage rates cannot be cut. The U.S. evidence on this assumption has been inconclusive because of distortions from reporting error in household surveys. Following a British literature, we reconsider the issue with more accurate wage data from the payroll records of most employers in the State of Washington over the period 2005-2015. For every one of the 40 four-quarters-apart periods for which we observe year-to-year wage changes, we find that at least 20 percent of job stayers experience nominal wage reductions.
    JEL: E24 J3
    Date: 2019–01
  20. By: Leah Platt Boustan; Andrew Langan
    Abstract: We document wide and persistent variation in women’s representation and success across graduate programs in economics. Using new data on early career outcomes for recent graduates, including first job placement, publications and promotion, we compare (anonymized) departments on outcomes for women relative to men graduating from the same program. We then conduct interviews with faculty and former students from five programs higher and lower relative outcomes. We find that departments with higher outcomes for women also hire more women faculty, facilitate advisor-student contact, provide collegial research seminars, and are notable for senior faculty with awareness of gender issues. We offer our qualitative evidence as the first step in learning about “what works” in expanding women’s representation in economics.
    JEL: A11 J16
    Date: 2019–01
  21. By: Diane Coyle; Leonard Nakamura
    Abstract: What is meant by economic progress and how should it be measured? The conventional answer is growth in real GDP over time or compared across countries, a monetary measure adjusted for the general rate of increase in prices. However, there is increasing interest in developing an alternative understanding of economic progress, particularly in the context of digitalization of the economy and the consequent significant changes internet use is bringing about in production and household activity. This paper discusses one alternative approach, combining an extended utility framework considering time allocation over paid work, household work, leisure and consumption with measures of objective or subjective well-being while engaging in different activities. Developing this wider economic welfare measure would require the collection of time use statistics as well as well-being data and direct survey evidence, such as the willingness to pay for leisure time. We advocate an experimental set of time and well-being accounts, with a particular focus on the digitally-driven shifts in behavior.
    Keywords: Time use, well-being, GDP
    JEL: D11 D60 I31
    Date: 2019–01

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