nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2009‒08‒22
nine papers chosen by
Erik Thomson
University of Manitoba

  1. Who do heterodox economists think they are? By Andrew Mearman
  2. "The Second End of Laissez-Faire -- Bootstrapping Nature of Money and Inherent Instability of Capitalism" By Katsuhito Iwai
  3. Students’ perceptions of economics:Identifying demand for further study By Don J. Webber; Andrew Mearman
  4. Does pluralism in economics education make better educated, happier students? A qualitative analysis. By Andrew Mearman; Tim Wakeley; Gamila Shoib; Don J. Webber
  5. Beyond Procedural Equity and Reciprocity By Nadine Chlaß; Werner Güth; Topi Miettinen
  6. How universal is happiness? By Veenhoven, Ruut
  7. The Poverty of Statistics By Freeman, Alan
  8. Endogenous Information Acquisition in Coordination Games By David P. Myatt; Chris Wallace
  9. Life Satisfaction By Arie Kapteyn; James P. Smith; Arthur Van Soest

  1. By: Andrew Mearman (Department of Economics, University of the West of England, UK)
    Abstract: This paper attempts to engage with the established debate on the nature of heterodox economics. However, it starts from the position that previous attempts to classify and identify heterodox economics have been biased towards a priori definition. The paper aims to inform the discussion of the nature of heterodoxy with some empirical analysis. The paper examines survey data collected from a small/medium-sized sample of AHE members on the core concepts in economics. The paper applies factor analysis to the data. It also applies principles of biological taxonomy, and thence cluster analysis to the problem. The paper finds that within the self-identified community of self-identified heterodox economists there is little agreement as to whether members are pluralist, or what their attitude is to the mainstream. Indeed, there is little agreement on any core concepts or principles. The paper argues that there is little structure to heterodox economics beyond that provided by pre-existing (or constituent) schools of thought. Based on this study, heterodox economics appears a complex web of interacting individuals and as a group is a fuzzy set. These results would lead us to question further strict distinctions between heterodox, mainstream and pluralist economists.
    Keywords: heterodox economics, survey, factor analysis, cluster analysis
    JEL: B5 C19
    Date: 2009–08
  2. By: Katsuhito Iwai (Faculty of Economics, University of Tokyo)
    Abstract: "Globalization" can be interpreted as a grand experiment of the laissez-faire doctrine of neoclassical economics that the wider and the deeper markets cover the capitalist economy, the more efficient and the more stable it would become. The "once a hundred years" global economic crisis of 2007-9 demonstrated the grand failure of this grand experiment. Following the lead of Wicksell and Keynes, this article argues that capitalist economy is subject to an inevitable trade-off between efficiency and stability because of its essentially "speculative" nature. First, financial markets need, for their risk-diversifying function, the participation of a large number of risk-taking speculators. But competition among professional speculators is like a Keynesian beauty-contest that constantly exposes financial markets to risks of bubble and bust. Second and more fundamentally, the article maintains that "money" that is the capitalist economy's ultimate source of efficiency is also its ultimate source of instability. Indeed, Wicksell's Interest and Prices showed how a monetary disequilibrium sets off cumulative inflation or deflation, and Keynes' General Theory then pointed out that it is the stickiness of money wage that saves capitalist economy from its inherent instability, albeit at the expense of full employment. This article also contends that such monetary instability has manifested itself in the current crisis in the forms of the collapse of liquidity in the whole financial markets as well as of the decline of confidence on dollar as the global capitalism's key currency.
    Date: 2009–08
  3. By: Don J. Webber (Department of Business Economics, Auckland University of Technology and Department of Economics, UWE, Bristol); Andrew Mearman (Department of Economics, University of the West of England, UK)
    Abstract: Most university departments aspire to increase their quantity of students. The objective of this empirical study is to ascertain whether it is possible to identify students who would demand more economics study. Using data on student perceptions of economics and the application of logistic regression, K-means clustering, ANOVA and Tukey’s HSD statistical techniques we reveal distinct clusters of students, including a small cluster of students who appear to be more open to further study.
    Keywords: Students; Demand for economics
    JEL: A22 A29
    Date: 2009–08
  4. By: Andrew Mearman (Department of Economics, University of the West of England, UK); Tim Wakeley (Griffith University, Australia); Gamila Shoib (Griffith University, Australia); Don J. Webber (Department of Business Economics, Auckland University of Technology and Department of Economics, UWE, Bristol)
    Abstract: This paper contributes to the debate on pluralism in the Economics curriculum. Here pluralism means a diversity of theoretical perspectives. One set of pedagogical arguments for pluralism are those found in ‘liberal’ philosophy of education. To this end, the first part of the paper presents arguments for pluralism based on ‘liberal’ pedagogical arguments. The paper also notes more instrumental arguments for pluralism; and barriers to such an approach. Finally, the paper considers new primary evidence from focus groups on student perceptions of economics. This evidence shows support for the arguments that a pluralist curriculum is popular and develops cognitive capacities of criticism, comparison and analysis – exactly those argued for in (liberal) pedagogical discussion – as well as judgement, understanding and writing skills. However, pluralism as a teaching strategy may be more difficult for those delivering it.
    Keywords: Students; pedagogy, pluralism, perceptions, focus groups
    JEL: A22 B4 B5
    Date: 2009–08
  5. By: Nadine Chlaß (Friedrich Schiller University Jena, Germany); Werner Güth (Max Planck Institute of Economics, Jena, Germany); Topi Miettinen (SITE Stockholm School of Economics, Sweden.)
    Abstract: Most research in economics models agents somehow motivated by outcomes. Here, we model agents motivated by procedures instead, where procedures are defined independently of an outcome. To that end, we design procedures which yield the same expected outcomes or carry the same information on other's intentions while they have different outcome-invariant properties. Agents are experimentally confirmed to exhibit preferences over these which link to psychological attributes of their moral judgment.
    Keywords: procedural preferences, experiment, procedural fairness
    JEL: C78 D63 Z13
    Date: 2009–08–12
  6. By: Veenhoven, Ruut
    Abstract: There is a longstanding discussion on whether happiness is culturally relative or not. The following questions are addressed in that context: 1) Do we all assess how much we like our life? 2) Do we appraise our life on the same grounds? 3) Are the conditions for happiness similar for all of us? 4) Are the consequences of happiness similar in all cultures? 5) Do we all seek happiness? 6) Do we seek happiness in similar ways? 7) Do we enjoy life about equally much? The available data suggest that all humans tend to assess how much they like their life. The evaluation draws on affective experience, which is linked to gratification of universal human needs and on cognitive comparison which is framed by cultural standards of the good life. The overall appraisal seems to depend more on the former, than on the latter source of information. Conditions for happiness appear to be quite similar across the world and so are the consequences of enjoying life or not. There is more cultural variation in the valuation of happiness and in beliefs about conditions for happiness. The greatest variation is found in how happy people are.
    Keywords: happiness; life satisfaction; cultural relativism; human nature; utilitarianism
    JEL: Z10 I00 D60
    Date: 2008–10–13
  7. By: Freeman, Alan
    Abstract: This paper is a prepublication version of a paper accepted for publication by Third World Quarterly. It offers a critique of the picture of world growth and world inequality generally disseminated by international agencies. The positive view commonly presented depends, it shows, on the widespread consensus that economic performance should be measured using ‘Purchasing Power Parity’ (PPP) statistics, instead of market exchange rates. Although originally conceived narrowly as a basis for comparing living standards, PPP indicators are now promoted, with scant pause for critical thought, as a unique and unexceptionable standard for comparing and aggregating national income statistics. To get to the heart of the flaws in the PPP concept, this article adopts a unique approach: it accepts the claims made on their behalf at face value. It shows that, even on the basis of these claims, the wrong conclusions have been drawn, which in turn shows that they are not fit for purpose. By comparing PPP and Market Exchange Rate measures of inequality it shows that what really took place, in the closing decades of the last century, was a systematic reduction in the prices of consumption goods in the third world. PPP statistics have concealed this underlying and unsustainable trend, allowing it to be packaged as a stable reduction in poverty. Neither genuine growth, nor lasting and sustainable poverty reduction, were achieved over this period. The fall in the price of consumer goods masked a systematic failure, for much of the third world, to overcome the central problem of development – the high price of capital goods, which PPP statistics understate and, intermediate goods, which PPP statistics completely omit.
    Keywords: Inequality; Development; Value Theory; Temporalism; World Systems Theory; Dependency Theory; Globalization; TSSI; General Equilibrium
    JEL: O10 C0 B4
    Date: 2008–12–01
  8. By: David P. Myatt; Chris Wallace
    Abstract: In the context of a “beauty contest” coordination game (in which pay-offs depend on the proximity of actions to an unobserved state variable and to the average action) players choose how much costly attention to pay to various informative signals; they endogenously select information sources and how carefully to listen to them. Each signal has an underlying accuracy (how precisely it identifies the state variable) and a clarity (how easy it is for players to understand what the signal says). The unique information-acquisition equilibrium has interesting properties: only a subset of signals are assigned positive weight and attention; these are the clearest signals available, even if such signals have poor underlying accuracy; the size of the subset shrinks as the complementarity of players’ actions becomes more acute; and, if actions are more complementary, the information endogenously acquired in equilibrium is more public in nature.
    Keywords: Coordination games, Information acquisition, Publicity, Beauty-contest games
    JEL: C72 D83
    Date: 2009
  9. By: Arie Kapteyn; James P. Smith; Arthur Van Soest
    Abstract: The authors analyze the determinants of global life satisfaction in two countries (The Netherlands and the U.S.), by using both self-reports and responses to a battery of vignette questions. They find global life satisfaction of happiness is well-described by four domains: job or daily activities, social contacts and family, health, and income. Among the four domains, social contacts and family have the highest impact on global life satisfaction, followed by job and daily activities and health. Income has the lowest impact. As in other work, they find that American response styles differ from the Dutch in that Americans are more likely to use the extremes of the scale (either very satisfied or very dissatisfied) than the Dutch, who are more inclined to stay in the middle of the scale. Although for both Americans and the Dutch, income is the least important determinant of global life satisfaction, it is more important in the U.S. than in The Netherlands. Indeed life satisfaction varies substantially more with income in the U.S. than in The Netherlands.
    Keywords: happiness, life satisfaction, vignettes, reporting bias
    JEL: I31 J28 D31
    Date: 2009–07

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