nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2007‒11‒24
thirteen papers chosen by
Erik Thomson
University of Chicago

  1. Marco Fanno’s Tax Incidence Theory: A Formal Exposition By Arrigo Opocher
  2. A note on Rubinstein's ``Why are certain properties of binary relations relatively more common in natural language?" By Beard, Rodney
  3. Welfare Theory: History and Modern Results By Aronsson, Thomas; Löfgren, Karl-Gustaf
  4. Economic Analysis of the Legal Regulation of Religion in the USA and Germany By Jusic , Asim
  5. Why Should Happiness Have a Role in Welfare Economics? Happiness versus Orthodoxy and Capabilities By Gabriel Leite Mota
  6. Affective Decision Making: a Behavioral Theory of Choice By Anat Bracha; Donald J Brown
  7. Why the Econometrician is in Good Spirits – a workshop through the looking glass By Carl Hampus Lyttkens
  8. The Remarkable Place of the UV-Curve in Economic Theory By Rodenburg, Peter
  9. A Note on Dasgupta, Hammond, and Maskin's (1979) Domain Richness Condition By Bochet Olivier; Klaus Bettina
  10. Poverty traps: a perspective from development economics By Alice Nicole Sindzingre
  11. Monotheism (From a Sociopolitical and Economic Perspective) By Murat Iyigun
  12. Le développement durable : Que peut nous apprendre l’analyse économique ? By Charles Figuières; Hervé Guyomard; Gilles Rotillon
  13. L'éthique médicale peut-elle être indépendante de la politique économique ? By Philippe Abecassis; Philippe Batifoulier

  1. By: Arrigo Opocher (Università di Padova)
    Abstract: Marco Fanno’s contributions to the theory of supply at joint cost and the theory of demand for substitute goods contain some original analyses of tax incidence, based on a “less partial” application of the Marshallian supply and demand paradigm. Fanno’s overall theory, however, soon fell into oblivion, partially due to the enormous success of the emerging Hicks-Allen approach, at the end of the 1930s; and so did his more practical results. In this paper, we present a modern formalisation of Fanno’s tax incidence theory, which tries to do justice to a series of results which have still today some normative validity.
    JEL: B31 B13 H22
    Date: 2007–11
  2. By: Beard, Rodney
    Abstract: This note examines the complexity of complete transitive binary relations or tournaments using Kolmogorov complexity. The complexity of tournaments calculated using Kolmogorov complexity is then compared to minimally complex tournaments defined in terms of the minimal number of examples needed to describe the tournament. The latter concept is the concept of complexity employed by Rubinstein [6] in his economic theory of language. A proof of Rubinsein's conjecture on the complexity bound of natural language tournaments is provided.
    Keywords: Economics of language, Binary relations, Tournaments
    JEL: C79 Z00
    Date: 2001
  3. By: Aronsson, Thomas (Department of Economics, Umeå University); Löfgren, Karl-Gustaf (Department of Economics, Umeå University)
    Abstract: This paper contains a fairly brief, but self-contained, version of the history of welfare economics, as well as the more modern welfare results. We introduce public goods and asymmetric information, and we hint at some of the modern mechanism design results. The paper also contains a section on welfare measures in a dynamic economy.
    Keywords: Welfare Theory;
    JEL: D60
    Date: 2007–11–20
  4. By: Jusic , Asim
    Abstract: In this paper I analyze the legal regulation of religion in the US and Germany from rational choice perspective and the perspective of new institutional economics and constitutional political economy. Focus of the analysis is on the constitutional framework, legal status and funding of religious institutions and the establishment and free exercise jurisprudence of the US Supreme Court and German Federal Constitutional Court. I conclude that, as predicted by economics of religion, the legal regulation of religion in the US is more economically efficient in the sense that it motivates religious vitality and private religious funding however, this vitality benefits mostly strict churches and sects. On the other hand, legal regulation of religion in Germany, while establishing the de facto monopoly of the traditional religions, lowering religious vitality and translating, via legal system, religious norms into cultural ones, achieves another goal that is also economically efficient: it reduces overgrazing of moral goods and stabilizes social norms, which in turn reduces state transaction costs.
    Keywords: Law and Economics; Comparative Constitutional Law; Economics of Religion
    JEL: Z12 K00 K19
    Date: 2007–11–22
  5. By: Gabriel Leite Mota (Porto University, Faculty of Economics)
    Abstract: In this paper we try to understand how the Happiness Literature (HL) approach to Welfare Economics (WE) enriches it by enlarging its scope and power of analysis. To do so, we contrast the HL approach not only with Mainstream Welfare Economics (MWE) but also with the already established Sen’s Capabilities (SC) approach. We demonstrate (particularly for the cases of Income and Freedom) that these different theoretical approaches can imply different policy conclusions even when facing the same problems (mostly when switching from MWE to SC or HL) and that these different approaches have different domains of application (SC and HL with a wider domain than MWE). We also claim that the choice between MWE, SC and HL, even when the policy conclusions are similar, is connected with different axiomatic and philosophic foundations. We then conclude that HL stands out as an autonomous approach to WE with particular assumptions, techniques and policy conclusions.
    Keywords: Happiness, Capabilities, Welfare Economics, Welfrae Policies
    JEL: D63 D60 I31 I38
  6. By: Anat Bracha; Donald J Brown
    Date: 2007–11–15
  7. By: Carl Hampus Lyttkens
    Abstract: This paper aims to explore the determinants of research-related quality of life (RRQoL) of econometricians in health economics. It is well-known (standard expression for not bothering to look up the references) that an extensive literature deals with the measurement and determinants of health-related quality of life (HRQoL) of the general population. However, if the standard neo-classical paradigm applies (self-interested, utility-maximising behaviour, etc), scientists are of course much more interested in the wellbeing of scientists than of other people. In addition to its intrinsic interest, this is an important issue for public policy. Analogously to the extra-welfarist approach in health economics (Hurley 2000), we may assume that the purpose of allocating funds to the scientific community is to maximise their RRQoL. We may safely assume that this interpretation is endorsed by the scientists in question (supplier-induced demand). While these issues are of considerable general interest, the analysis here focuses on individuals engaged in econometrics and health economics, due to the availability of a unique data set from the 16th European Workshop on Econometrics and Health Economics (cf. section 4). The analysis is based on a scientific principle established by Sellar & Yeatman (1975[1930]), who showed that “history is what you can remember.”1 This led them to such eloquent deductions as the observation (p. 83) that after the Glorious Revolution England was ruled by an orange (Williamanmary) or that the Danish conquest of England was a Good Thing as it was the cause of Alfred the Cake (p.16).2 Similarly, economics can be defined as those economic analyses that are memorable. Hence it comprises such important findings as the deadweight loss of Christmas (Waldfogel 1993)3 or that males can maximise their survival probability by becoming 185 centimetres tall or more (Fogel 1994).4 Following the Sellar-Yeatman principle, the analysis below is based on the author’s recollection from the Workshop in question. To minimise recollection bias, the first draft of the paper was composed during the very early morning flight (06.55 am) from Bergen to Copenhagen (survival analysis).5
    Date: 2007–11
  8. By: Rodenburg, Peter
    Abstract: The purpose of this paper is to provide an analysis of the impact the UV-curve had on economic theory and to provide an account of the subsequent radical changes in its place and role over the decades since its first appearance in 1958. The paper traces the historical development of the UV-curve and argues that the role of the UV-curve has changed from a measuring device to a graphical representation of full employment to an axiom necessary for matching models of unemployment. This changing role is best understood in the light of a paradigmatic change from Keynesianism to neoclassical search theory.
    Keywords: UV-curve; Beveridge-curve; Theories of Unemployment; UV-analysis; Matching models; History of Economic Thought
    JEL: B21 J63 B22 J64
    Date: 2007–11–16
  9. By: Bochet Olivier; Klaus Bettina (METEOR)
    Abstract: We discuss a problem concerning Dasgupta, Hammond, and Maskin''s (1979) definition of a rich domain and a very well-known result they established for these domains: on rich domains, if a social choice function is implementable in Nash strategies, then it is truthfully implementable in dominant strategies Dasgupta, Hammond, and Maskin''s (1979, Theorem 7.2.3). This result is cited many times in later papers, e.g., Laffont and MaskinL(1982, Theorem 4) and Maskin (1985, Theorem 7). Dasgupta, Hammond, and Maskin''s (1979) proof of this result essentially is based on showing that (Maskin) monotonicity implies strategy-proofness (or equivalently independent person-by-person monotonicity IPM).In the sequel we abbreviate Dasgupta, Hammond, and Maskin (1979) by DHM. We describe DHM''s model in Section 2.In Section 3 we first construct an example of a DHM rich domain and a social choice function that is monotonic but not strategy-proof (Example 1). This suggests that DHM''s rich domain definition is not sufficient to show that monotonicity implies strategy-proofness (or that Nash implementability implies truthful implementability in dominant strategies). We then investigate which step in DHM''s proof is problematic - since DHM do not give a direct proof of the result, we reproduce Maskin’s (1985) proof. In Section 4, we consider the presentation of Dasgupta, Hammond, and Maskin''s (1979) definition of a rich domain in the Maskin and Sjöström (2002). It turns out that there definition of a rich domain is different from DHM''s original definition. With this adjusted richness condition the proof that monotonicity implies strategy-proofness is correct.
    Keywords: Economics ;
    Date: 2007
  10. By: Alice Nicole Sindzingre
    Abstract: The concepts of coordination and cooperation are widely used in economics, and particularly in game theory. They were also at the foundation of development economics at the time of WWII, with Paul Rosenstein-Rodan highlighting the existence of intersectoral spillovers effects, multiple equilibria and underdevelopment traps. These concepts returned to the forefront of development theory in the 1970s with the notions of coordination failure and poverty traps, as well as the research on social norms. One example was Samuel Bowles’ seminal concept of ‘institutional poverty traps’, i.e. highly inegalitarian institutions that persist even though they are inefficient. Membership institutions are of particular relevance in developing countries, and therefore in development economics. The paper explores the cognitive dimensions of coordination failures and institutional traps; it reveals that local institutions in developing countries may be efficient and examines the conditions in which norms create poverty traps, in particular membership norms. Firstly, it is argued that institutions and norms are key causes of the formation and persistence of poverty traps. Institutions and norms are complex cognitive devices, some beliefs and norms appear to be particularly resilient and difficult to revise. Secondly, it is shown that no particular institutional form is ex ante a cause of poverty traps: depending on contexts, the same institutional forms can be efficient or inefficient. It is the combination of multiple elements – economic and political environment, and social norms - that create thresholds effects and entrap groups into low equilibria. Thirdly, it is argued that the norms that organise group membership, because they involve beliefs that are difficult to revise, are typical factors of poverty traps.
    Keywords: Poverty traps, coordination failures, social norms
    Date: 2007
  11. By: Murat Iyigun (University of Colorado, CID, Harvard University and IZA)
    Abstract: The Axial Age, which lasted between 800 B. C. E. and 200 B. C. E., covers an era in which the spiritual foundations of humanity were laid simultaneously and independently in various geographic areas, and all three major monotheisms of Judaism, Christianity and Islam were born between 1200 B. C. E. and 622 C. E. in the Middle East. In this paper, I offer a taxonomy to comprehensively characterize the impact of monotheism on early economic development. Monotheist religions produced a paradigm shift in sociopolitical institutions because they (a) involve a strong degree of increasing returns to scale and the natural monopoly powers commensurate with it, (b) not only personalize the spiritual exchange relationship between the individual and the one deity, but also, due to the fact that this relationship extends into the afterlife as well, enhance individual accountability, and (c) expand their adherents’ time horizon beyond biological life and impact the time discount between one’s lifetime and the after-life. Taken together, these features suggest that the spread of monotheism ought to have promoted sociopolitical stability. Utilizing original historical data between 2500 B. C. E. and 1750 C. E. on 105 limited access orders, such as dynasties, kingdoms and empires, I show that monotheism had a positive and statistically significant impact on the length of reign as well as the average geographical size of social orders. Thus, I find empirical evidence that the birth and adoption of monotheistic religions aided early development both in the West and the Near East until the advent of the Industrial Revolution.
    Keywords: economic development, religion, institutions
    JEL: C72 D74 N33 N43 O10
    Date: 2007–10
  12. By: Charles Figuières; Hervé Guyomard; Gilles Rotillon
    Abstract: L’objectif de cet article est de montrer comment la recherche en économie aborde et analyse le concept de développement durable, ses significations et ses conséquences. A cette fin, nous avons privilégié un fil directeur qui peut être résumé sous la forme de deux questions : Comment la préoccupation pour la durabilité modifie-t-elle la manière dont les économistes étudient les problèmes de développement et de croissance ? Comment intervenir de façon à infléchir les comportements des agents individuels et des institutions dans un sens plus durable Pour répondre à la première question, on mobilisera les outils de la macroéconomie de la croissance. Pour répondre à la deuxième, on utilisera principalement le cadre de référence de l’économie de l’environnement et des ressources naturelles (pour une présentation synthétique de l’économie de l’environnement, voir, par exemple, Bontems et Rotillon, 2003 ; pour une présentation synthétique de l’économie des ressources naturelles, voir, par exemple, Rotillon, 2005). [...].
    Date: 2007–01
  13. By: Philippe Abecassis; Philippe Batifoulier
    Abstract: Health economics often portrays medical ethics as a source of resistance to cost cutting measures within the health system. This paper challenges the opposition by showing that medical ethics is influenced by a welfare state that is in the process of constructing a market in health provision. In this increasingly mercantile context, medical ethics themselves have come to reflect market values.
    Keywords: Health, Health system, medical ethics, political frame of reference
    Date: 2007

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