nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2008‒04‒15
eleven papers chosen by
Erik Thomson
University of Chicago

  1. Neuroeconomics: A Critique of 'Neuroeconomics: A Critical Reconsideration' By Stanton, Angela A.
  2. The Political Economy Of The Human Right To Water By Manuel Couret Branco; Pedro Damião Henriques
  3. The rationality of expectations formation and excess volatility. By Julio Davila
  4. Religion & Economic Growth and Development By Nath, Sushmit
  5. An uncertain dollar: The Wall Street Journal, the New York Times and the monetary crisis of 1971 to 1973 By Tiago Mata
  6. Theory of profit from Islamic perspective By Hasan, Zubair
  7. Formal Institutions and Subjective Well-Being: Revisiting the Cross-Country Evidence. By Bjørnskov, Christian; Dreher, Axel; Fischer, Justina AV
  8. The Descriptive and Predictive Adequacy of Theories of Decision Making Under Uncertainty/Ambiguity By John D Hey; Gianna Lotito; Anna Maffioletti
  10. A Farewell to Critical Junctures: Sorting Out Long-run Causality of Income and Democracy By Erich Gundlach; Martin Paldam
  11. From Royal Academy of Science to Reserach Institute of Society - long term policy convergence of Swedish Knowledge intermediaries By Kaiserfeld, Thomas

  1. By: Stanton, Angela A.
    Abstract: Some economists believe that the work of neuroeconomists threatens the theory of economics. Glenn Harrison’s paper “Neuroeconomics: A Critical Reconsideration” attempts to set the score, though the points he makes are hidden behind the fumes of his anger (Glenn W. Harrison 2008). The field of neuroeconomics is barely into its teenage years; and it is trying to do what? Redesign the field of economics developed over a hundred years? No, that is not what neuroeconomics is trying to do, in spite of all the efforts of some economists trying to place it into that shoebox. Neuroeconomics is a Mendelian-Economics of sort; it is a science that is able to generate data by fixing the environment to some degree and looking to see each individual’s choices from the initiation of the decision-making process to its outcome. Standard economics (SE), on the other hand, looks at the average of the outputs of many individuals and proposes how the human chose those outcomes. The two fields, neuroeconomics and SE, are evaluating two sides of the same coin; one with and the other without ceteris paribus; they are not necessarily in conflict with one another.
    Keywords: A debate over the field of Neuroeconomics
    JEL: C90 D01 B41
    Date: 2008–03–25
  2. By: Manuel Couret Branco (Universidade de Évora,Departamento de Economia); Pedro Damião Henriques (Universidade de Évora,Departamento de Economia)
    Abstract: Water being essential to human survival, a political economy directed to satisfying human basic needs, should be especially concerned with the issue of water availability and distribution. Why is there such inequality in its distribution? This inequality represents a serious violation of a human right, as it will be developed in the paper and therefore should not be tolerated. The issue this paper wishes to address concerns the role played by economics in the unequal assertion of every people’s human right to clean water.First of all, what are we talking about when we talk about economics? A rapid overview can identify at least twenty schools of economic thought, from neoclassic to evolutionary, from Marxist to post-Keynesian. If one had to be accurate, a paper on the impact of economics on the human right to water human rights would then have to be divided in at least twenty chapters. The sort of economics we will be referring to in this paper results from a considerably narrower point of view: economics, here, will be mainstream economics, the school of thought which dominates not only within the academia, but also within the political cabinets and the media. More specifically, this paper will examine how mainstream economics discourse can be conflictive with human rights in general and the right to water in particular.First, within mainstream economic analysis satisfying wants implies the use of concepts like prices, supply and demand, or cost and benefit, and therefore, the issue is ability to pay, in other words purchasing power. With rights, on the other hand, the issue is quite different; the heart of the matter here concerns entitlement, the criteria according to which an individual should qualify to enjoy rights, purchasing power being obviously excluded as well as the consequences of the use of such criteria. Therefore it is perfectly admissible for economics to exclude from access to water those that do not have the capability to pay violating the basic principles of human rights. Second, by putting emphasis on the market as the default regulation institution, mainstream economics also hinders the human right to water because on one hand market is inefficient in reaching universal coverage of water supply and on the other hand it is an unaccountable institution and human rights purveyors need by principle to be submitted to democratic control.
    Keywords: Human Rights, Right to Water, Economic Theory, Market.
    JEL: A13 B40 I30 Q25
    Date: 2008
  3. By: Julio Davila (Centre d'Economie de la Sorbonne et Paris School of Economics)
    Abstract: I establish, in simple deterministic overlapping generations economies, that if each agent holds rationally formed expectations in the sense that any other expectations justifying his choices imply a smaller likelihood for the history he observes with limited memory, then there are rationally formed expectations equilibria exhibiting an excess volatility that no rational expectations equilibrium can match. Given that the limited records or finite memory case may arguably be the relevant one from a positive viewpoint, this result suggests that the possibility of excess volatility as an equilibrium phenomenon has been downplayed by the use of the rational expectations hypothesis.
    Keywords: Expectations, rationality, volatility.
    JEL: D51 D84 D91
    Date: 2008–02
  4. By: Nath, Sushmit
    Abstract: This paper deals with the interlinkages between religious beliefs and practices and the economic growth and development of a particular country or region. In the paper I have reviewed some empirical work carried out in the recent times to explain the relationship between religion and growth. I have also tried to present Adam Smith's view on the subject and how it could be understood in the present context. The paper ends with a case study of the state of Gujarat in India, which shows the relationship between religious riots and economic growth.
    Keywords: Religion; Economics of Religion; Religion and Growth; Gujarat; Riots; Weber
    JEL: Z12 C23 C01
    Date: 2007–11
  5. By: Tiago Mata (ISEG, Technical University of Lisbon, Portugal)
    Abstract: In August 15, 1971, President Nixon announced the unilateral suspension of the convertibility of the dollar into gold, a foundation of the world monetary system since the Second World War. The media and economic experts were caught by surprise, neither could foresee the immediate consequences of the decision or what would be the architecture of the emerging international monetary system. From 1971 to 1973, the money markets and the value of the dollar became a news, an opinion, an editorial item in both the New York Times and the Wall Street Journal. I examine this record to question how was anxiety about the dollar resolved in media communication? Media narratives were not uniform between and within the two newspapers. What distinguished the Times and Journal's coverage was their diverse framing of the dollar as political, financial or economic object. I conclude that media uncertainty about the dollar was less an outcome of failing expert knowledge as it was a consequence of the dollar's multiple cultural significations.
    Keywords: Economic Journalism, dollar, Smithsonian, Nixon shock, media narratives
    JEL: A11 B29 F33 N20
    Date: 2008–04
  6. By: Hasan, Zubair
    Abstract: This work examines the theory of profit in mainstream microeconomics from Islamic perspective. It does not deal with various profit theories in their historical order. Instead, it adopts an issue-wise approach and discusses questions such as what is profit, what are its sources of emergence,what is the relationship between profit and other factor rewards - interest rent and wages - with reference to distributive justice
    Keywords: Islam; risk; uncertainty; innovations; wages; interest; rent;entrepreneur; competition
    JEL: D33
    Date: 2008
  7. By: Bjørnskov, Christian (Dept. of Economics, Aarhus School of Business, University of Aarhus); Dreher, Axel (ETH Zurich, KOF Swiss Economic Institute); Fischer, Justina AV (Dept. of Economics, Stockholm School of Economics)
    Abstract: A long tradition in economics explores the association between the quality of formal institutions and economic performance. The literature on the relationship between such institutions and happiness is, however, rather limited. In this paper, we revisit the findings from recent cross-country studies on the institutions-happiness association. Our findings suggest that the conclusions reached by previous studies are fairly sensitive to the specific measure of ‘happiness’ used. In addition, the results indicate that the welfare effects of policies may differ across phases of a country’s economic development. This bears important policy implications which we discuss in the concluding section of the paper.
    Keywords: Happiness; Well-Being; institutions; policy implications; democracy; rule of law; government efficiency
    JEL: H10 H40 I31
    Date: 2008–04–02
  8. By: John D Hey; Gianna Lotito; Anna Maffioletti
    Abstract: In this paper we examine the performance of theories of decision making under uncertainty/ambiguity from the perspective of their descriptive and predictive power, taking into account the relative parsimony of the various theories. To this end, we employ an innovative experimental design which enables us to reproduce ambiguity in the laboratory in a transparent and non-probabilistic way. We find that judging theories on the basis of their theoretical appeal, or on their ability to do well in testing contexts, is not the same as judging them on the basis of their explanatory and predictive power. We also find that the more elegant theoretical models do not perform as well as simple rules of thumb.
    Keywords: Ambiguity, Bingo Blower, Choquet Expected Utility, Decision Field Theory, Decision Making, Expected Utility, Hurwicz Criterion, (Gilboa and Schmeidler) MaxMin EU, (Gilboa and Schmeidler) MaxMax EU, (Ghirardato) Alpha-Model, MaxMin, MaxMax, Minimum Regret, Prospect Theory, Uncertainty.
    JEL: D81 C91
    Date: 2008–04
  9. By: Gabriele, Alberto; Schettino, Francesco
    Abstract: This paper argues that, during the present historical period, only one mode of production is sustainable, which we call the modern mode of production (MMP). Nevertheless, there can be (both in theory and in practice) enough differences among the specific forms of MMP prevailing in different countries as to justify the identification of distinct socioeconomic formations, one of them being market socialism (MS). In its present stage of evolution, MS in China and Vietnam allows for a rapid development of productive forces, but it is seriously flawed from other points of view. We argue that the development of a radically reformed and improved form of MS is far from being an inevitable historical necessity, but constitutes a theoretically plausible and auspicable possibility
    Keywords: Socialism, Mode of Production, Market Socialism
    JEL: P11 P36
    Date: 2007–09–14
  10. By: Erich Gundlach; Martin Paldam
    Abstract: We consider the empirical relevance of two opposing hypotheses on the causality between income and democracy: The Democratic Transition claims that rising incomes cause a transi¬tion to democracy, whereas the Critical Junctures hypothesis denies this causal relation. Our empirical strategy is justified by Unified Growth Theory, which hypothe¬sizes that the present international income differences have roots in the prehistoric past. Thus, we use prehistoric measures of biogeography as instruments for modern income levels, and find a large long-run causal effect of income on the degree of democracy. This result rejects the Critical Junctures hypothesis, which is an important part of the Primacy of Institutions view.
    Keywords: Long-run growth, Democracy, Unified growth theory, biogeography
    JEL: B O1
    Date: 2008–03
  11. By: Kaiserfeld, Thomas (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: In this paper, the formation of intermediary organizations of knowledge transfer in Sweden during the Cold War will be described and analysed. Here, intermediary organizations of knowledge transfer are defined as organizations aiming to transfer knowledge between knowledge producers and potential knowledge users (knowledge intermediaries for short). In theory, such organizations supply a platform for interaction between economic and academic life with problem-solving potential as well as development capability for the former and research opportunities for the latter.
    Keywords: knowledge intermediaries; policy convergence; innovation systems; system evolution
    JEL: N00 O25 O30
    Date: 2008–04–02

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