nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2010‒01‒10
fifteen papers chosen by
Erik Thomson
University of Manitoba

  1. Adam Smith om språket By Sandelin, Bo
  2. Economists in the PITS? By Bruno S. Frey
  3. The Terrible Simplifers: Common Origins of Financial Crises and Persistent Poverty in Economic Theory and the new ‘1848 Moment’ By Erik S. Reinert
  4. How much do journal titles tell us about the academic interest and relevance of economic research? An empirical analysis By Felix Schlaepfer
  5. Design of stated preference surveys: Is there more to learn from behavioral economics? By Carlsson, Fredrik
  6. Why Are Economics Students More Selfish than the Rest? By Bauman, Yoram; Rose, Elaina
  7. Confidence in preferences By Hill, Brian
  8. Marx´Critique of the Currency Principle. By Kepa M. Ormazabal
  9. What Does Progress Mean? A Temptative Answer Following a Classical Approach By Marcella Corsi; Giulio Guarini
  10. The Two Triangles: what did Wicksell and Keynes know about macroeconomics that modern economists do not (consider)? By Ronny Mazzocchi; Roberto Tamborini; Hans-Michael Trautwein
  11. A Remark on Intensive Differential Rent and the Labour Theory of Value in Ricardo By Saverio M. Fratini
  12. Public and Private Stances in Economic Policies general Historical Notes on Social Services and the Specific Case of Italy in the first half of the XX Century By Daniela Parisi;
  13. Rotten Kids with Bad Intentions By Nick Netzer; Armin Schmutzler
  14. Governing the Business Enterprise: Ownership, Institutions, Society By Yuri Biondi
  15. Social Preferences-Literature Survey. By Jaromir Kovarik

  1. By: Sandelin, Bo (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Adam Smith on language. Like most 18th century scholars, Adam Smith was not restricted to one field. One of his interests, besides economics, was language, which may partly be a consequence of his Scottish origin and the low standing of the Scottish dialect. Smith's Lectures on Rhetoric and Belles Lettres deals with various aspects of language. Smith appears to be a purist, critical of French influence on the English language. Concerning rhetoric, different rules prevail for different kinds of presentation. In the long essay Considerations Concerning the First Formation of Languages and the Different Genius of original and compounded Languages Smith concludes that the first words were probably verbs. Furthermore, when old languages with complex morphologies were in contact, new languages with simpler morphologies but more complex syntaxes developed. As with his approach to the economy, Smith saw languages as systems of interdependent parts.<p>
    Keywords: Adam Smith; språk; language
    JEL: B31 Z11
    Date: 2009–12–09
  2. By: Bruno S. Frey
    Abstract: Academic economists today are caught in a "Publication Impossibility Theorem System" or PITS. In order to further their careers, they are required to publish in A-journals, but for the vast majority this is impossible because there are few slots open for them in such journals. Such academic competition maybe useful to generate hard work; however, there may be serious negative consequences: the wrong output may be produced in an inefficient way, the wrong people may be selected, and losers may react in a harmful way. This article suggests several ways to remedy this situation.
    Keywords: Academia; Economists; Publication; Journals; Incentives; Economic methodology
    JEL: A1 D02 I23
    Date: 2009–12
  3. By: Erik S. Reinert
    Abstract: One element explaining the financial crisis is what Hyman Minsky called ‘destabilizing stability’: long periods of stability lead to increasing vulnerability. This paper argues that similar mechanisms are at work inside economics: long periods of economic progress in the core countries lead to increasingly abstract and irrelevant economic theories (‘terrible simplifications’). This leads to turning points towards more relevant economic theories, referred to as ‘1848 moments’. The paper further outlines the key variables that need to be re-introduced into economic theory in order to furnish poor countries with the type of productive structures that makes it possible to eliminate poverty.
    Keywords: Uneven economic development, production-based economics, technological change, innovations, increasing returns, synergies
    JEL: A11 B10 F10 O57
    Date: 2009–12
  4. By: Felix Schlaepfer (Institute for Environmental Decision, Swiss Federal Institute of Technology Zurich)
    Abstract: Unlike in other disciplines, research output in economics is commonly measured based on the journal titles in which an author has published. Here, I examine how much output measures based on journal titles tell us about the academic interest and relevance of economic papers as measured by citation frequency. Using data from the 2008 Handelsblatt ranking of economists in German speaking countries and interdisciplinary citation data from the Web of Science, I find that researcher scores based on journal titles explain only about one fourth of the variation (variance) in article citations. When the top 10 (20) percent of the researchers according to journal title scores are excluded, the percentage of explained variation in citation frequency drops to 5 (3) percent. These findings empirically confirm the hypothesis that the measures of research output in economics promote narrow and complacent work that is of interest to few, even among an academic audience. They suggest that responsible hiring committees and funding institutions should re-examine existing standards in evaluation and abandon the heavy reliance on journal titles as a measure of individual research output.
    Keywords: citation index, incentives, publication, research evaluation, scientometrics
    JEL: A10
    Date: 2009–12
  5. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We discuss the design of stated preference (SP) surveys in light of findings in behavioral economics such as context dependence of preferences, learning, and differences between revealed and normative preferences. More specifically, we discuss four different areas: (i) revealed and normative preferences, (ii) learning and constructed preferences, (iii) context dependence, and (iv) hypothetical bias. We argue that SP methods would benefit from adapting to some of the findings in behavioral economics, but also that behavioral economics may gain insights from studying SP methods.<p>
    Keywords: stated preferences; behavioral economics
    JEL: C91 H40 Q51
    Date: 2009–12–09
  6. By: Bauman, Yoram (University of Washington); Rose, Elaina (University of Washington)
    Abstract: A substantial body of research suggests that economists are less generous than other professionals and that economics students are less generous than other students. We address this question using administrative data on donations to social programs by students at the University of Washington. Our data set allows us to track student donations and economics training over time in order to distinguish selection effects from indoctrination effects. We find that economics majors are less likely to donate than other students and that there is an indoctrination effect for non-majors but not for majors. Women majors and non-majors are less likely to contribute than comparable men.
    Keywords: altruism, public goods
    JEL: A13 D64
    Date: 2009–12
  7. By: Hill, Brian
    Abstract: Indeterminate preferences have long been a tricky subject for choice theory. One reason for which preferences may be less than fully determinate is the lack of confidence in one’s preferences. In this paper, a representation of confidence in preferences is proposed. It is used to develop an account of the role which confidence which rests on the following intuition: the more important the decision to be taken, the more confidence is required in the preferences needed to take it. An axiomatisation of this choice rule is proposed. This theory provides a natural account of when an agent should defer a decision; namely, when the importance of the decision exceeds his confidence in the relevant preferences. Possible applications of the notion of confidence in preferences to social choice are briefly explored.
    Keywords: Incomplete preference; Revealed preference; Confidence in preferences; Deferral of decisions; Importance of decisions; Social choice
    JEL: D01 D71
    Date: 2009–10–01
  8. By: Kepa M. Ormazabal (UPV/EHU)
    Abstract: The goal of this paper is to rescue the critique of Marx of the Currency Principle from its current oblivion. The ideas of Marx are extraordinarily interesting both from a theoretical and from a practical standpoint, as the theory of the Currency Principle remains right up today the theoretical basis of the restrictive monetary policies periodically applied by central banks in order to “stabilize the economy”, “contain inflation” and correct “excessive money creation”. The core of the Currency Principle was the principle that the central bank had to contract the circulation of banknotes “pari passu” with the contractions of the gold reserve. Marx contends, in agreement with the Banking School, that such a principle rests on a defective monetary theory and that it creates an artificial scarcity of means of payment; this drives up the interest rate to a level that is higher than that naturally required to liquidate the periodic overproduction brought about by the capitalist system.
    Keywords: currency principle, 100% reserve rule, money supply, monetary stabilization, crises
    JEL: B11 E42 E52
    Date: 2009–10–19
  9. By: Marcella Corsi (Sapienza” Università di Roma, Dipartimento di Studi Sociali, Economici, Attuariali e Demografici, Via A. Cesalpino 12, 00161, Roma); Giulio Guarini (Sapienza” Università di Roma, Dipartimento di Studi Sociali, Economici, Attuariali e Demografici, Via A. Cesalpino 12, 00161, Roma)
    Abstract: The purpose of our paper is to propose a definition of progress based on the relationship between economic development and civil development, according to the lesson of Classical authors, especially Adam Smith. Firstly, we analyze the interaction between economic development and civil development, in a circular cumulative causation, and the various causal relationships between these two elements. Secondly, we propose a synthetic index of progress, which on the one hand takes account of the different components of development (social, civil, economic and ecological) and on the other hand is based on the concept of ‘social sustainability’ of progress, defined as balanced improvement of all its dimensions.
    Keywords: Economic development, civil development, local development, social sustainability
    JEL: A1 A11 A13
    Date: 2009–12
  10. By: Ronny Mazzocchi; Roberto Tamborini; Hans-Michael Trautwein
    Abstract: The current consensus in macroeconomics, as represented by the New Neoclassical Synthesis, is to work within frameworks that combine intertemporal optimization, imperfect competition and sticky prices. We contrast this “NNS triangle” with a model in the spirit of Wicksell and Keynes that sets the focus on interest-rate misalignments as problems of intertemporal coordination of consumption and production plans in imperfect capital markets. We show that, with minimal deviations from the standard perfect competition model, a model structure can be derived that looks similar to the NNS triangle, but yields substantially different conclusions with regard to the dynamics of inflation and output gaps and to the design of the appropriate rule for monetary policy.
    JEL: E20 E31 E32 E52 D84
    Date: 2009
  11. By: Saverio M. Fratini
    Abstract: One of the foundations of the labour theory of value used by Ricardo in the Principles is that rent does not enter into commodity prices. In response to objections raised by Malthus and Say, Ricardo defended this idea by arguing that even where all cultivated land pays rent, the last dose of capital employed on the land does not and no rent is therefore involved in the price of the product of this capital. We will show that this claim, which has been believed true by several generations of economists, is based on a misleading argument and in fact incorrect. In particular, we will show that the intensive differential rent paid on land of the worst quality under cultivation enters into the agricultural product price and so, even in the most favourable case, commodities are no longer exchanged at a ratio corresponding to the relative quantities of labour they embody.
    Keywords: differential rent, labour theory of value, methods of production, Ricardo, Sraffa, Smith
    JEL: B12 D46
    Date: 2009
  12. By: Daniela Parisi (DISCE, Università Cattolica di Milano);
    Abstract: During the first half of the XX century, both in Europe and North America, a profound dissatisfaction with the numerous different social insurance, unemployment, health and old age insurance systems began to make itself felt. The essay deals with the attitudes of the Western world, and in particular with the Italian one. As regards the United States, debate has spread since the second half of the XIX century on the so-called welfare work, and on welfare capitalism. In Europe social security systems began with their establishment by Bismarck’s German government. In the second half of the 19th century the role played by local administrations augmented in several countries. Unfair distribution was considered to be the condition of the system that made it impossible to abolish need. In Italy assistance indicates a vast system of coordinated activities aimed at reforms that may contextualize arising social questions and define policies to solve them. The Italian regime basically followed the German model of welfare state, implementing social insurance in order to integrate and control the country. The solutions sprang from philanthropy and religious motivations, and also from the fear of the poor as potential criminals or rebels. After World War I legislation was issued predominantly on assistance to the disabled and on accident insurance. In the interwar period the solutions were strictly linked to the corporativistic-authoritarian formulation of the Fascist political system. In the immediate post-second WW period politicians and economists were inspired by the principle of universal social security and public services, and favoured interdependence among people in society.
    Keywords: History of political economy; History of economic policy; Social services; William Beveridge; Francesco Vito.
    JEL: B2 B3
    Date: 2009–11
  13. By: Nick Netzer (Socioeconomic Institute, University of Zurich); Armin Schmutzler (Socioeconomic Institute, University of Zurich)
    Abstract: We examine a “Rotten Kid” model (Becker 1974) where a player with social preferences interacts with an egoistic player. In contrast to previous models, we assume that social preferences are intention-based rather than outcome-based. In a very general multi-stage setting we show that any sequential reciprocity equilibrium must involve mutually unkind behavior of both players, endogenously generating negative emotions rather than positive altruism. In a large class of two-stage games that includes principalagent and gift-giving games, this prevents equilibrium from being materially Pareto efficient. Compared to the subgame-perfect equilibrium without social preferences, efficiency is still generally increased. On the other hand, the materialistic player has lower whereas the reciprocal player has higher material payoffs, so that reciprocity does not increase equity: For sufficiently strong reciprocity concerns, the materialistic player ends up with a negligible share of the gains from trade.
    Keywords: Reciprocity, Psychological Games, Moral Hazard, Gift Giving
    Date: 2009–12
  14. By: Yuri Biondi (CERAG - Centre d'études et de recherches appliquées a la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II, PREG - Pole de recherche en économie et gestion - CNRS : UMR7176 - Polytechnique - X)
    Abstract: For those concerned with nature and role of the business firm in economy and society, these are challenging times. Past and ongoing financial crises and scandals have focused attention on the system of regulation, governance and disclosure in a way many may never have imagined and few welcomed. Those shortcomings relate to the primacy of shareholder value that frames and shapes the received system. Not only do reforms appear to be necessary to protect shareholders as well as other stakeholders, but also a different understanding of the relationship between the Share Exchange and the business firm. This paper introduces the proceedings of the EAEPE international conference at the CNAM (Paris, on 22 and 23 May 2008). From different disciplines and perspectives, all the featured authors will critically discuss the received system and look for a more comprehensive approach integrating accounting, economics, and law of the business enterprise.
    Date: 2009–07–30
  15. By: Jaromir Kovarik (Universidad de Alicante)
    Abstract: This papeer surveys the theories of social preferences. Social preferences are based on that people not only care about their own well-being, but they have a certain concern whith payoffs and/or actions of others. We classify two approaches: distributional and intention-based models, and later discuss models that combine both theories. In order to provide a better illustration of the discussed models, we derive predictions of these models for two classic experimental protocols: ultimatum game and public good game whith punishment. These predictions are compared with the stylized facts of these two games.
    Date: 2009–09–08

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