nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2010‒03‒13
ten papers chosen by
Erik Thomson
University of Manitoba

  1. Marx on absolute and relative wages By Levrero, Enrico Sergio
  2. Theory of Social Returns in Portfolio Choice with Application to Microfinance By Gregor Dorfleitner; Michaela Leidl; Johannes Reeder
  3. Modelling of the Inflation-Unemployment Tradeoff from the Perspective of the History of Econometrics By Duo Qin
  4. Trust in Second Life By John Duffy
  5. A Critical Analysis of Dimensions and Curve Fitting Practice in Economics By Kozo Mayumi; Mario Giampietro; Jesus Ramos-Martin
  6. Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism By Alpar Lošonc
  7. Fibonacci Hierarchies for Decision Making By Yucel, Eray; Tokel, Emre
  8. The paradox of toil By Gauti Eggertsson
  9. Extending the production dice game. By Lambrecht, Marc; Creemers, Stefan; Boute, Robert; Leus, Roel
  10. The use of the concept of event in enterprise ontologies and requirements engineering literature. By Hens, Pieter; Snoeck, Monique; Poels, Geert; De Backer, Manu

  1. By: Levrero, Enrico Sergio
    Abstract: The aim of this paper is to clarify some aspects of Marx's analysis of the determinants of wages and of the peculiarities of labour as a commodity, concentrating upon three related issues. The first is that of Marx's notion of the subsistence (or natural) wage rate: subsistence wage will be shown to stem, according to Marx, from socially determined conditions of reproduction of an efficient labouring class. The second issue refers to the distinction between the natural and the market wage rate that can be found in Marx, and his critique of Ricardo's analysis of the determinants of the price of labour. Finally, Marx's analysis of the effects of technical progress on both absolute and relative wages will be considered, also relating it back to the long-standing debate on the Marxian law of the falling rate of profit.
    Keywords: Marx; subsistence wage; wages and productivity; Marxian law of the falling rate of profit
    JEL: B51 E25 B14
    Date: 2009–09
  2. By: Gregor Dorfleitner (University of Regensburg, Germany); Michaela Leidl (University of Regensburg, Germany); Johannes Reeder (University of Regensburg, Germany)
    Abstract: We complement standard portfolio theory à la Markowitz by adding a social dimension. We distinguish between two main setups, taking social returns as stochastic in the first, but as deterministic in the second. Two main features need to be introduced: Every asset must be assigned a (distribution of) social return(s), and the investor has to cherish social returns. The former comes with measurement problems, whereas the latter is mainly a problem of choice of a suitable utility representation. The focus of this paper is on the theoretical fundamentals and the practical implications of social returns. We apply each version of the theoretical model to a different realm. In the deterministic setup, we look at an investor who faces a small number of assets: the S&P Euro Index, the EuroMTS Global Index, and the responsAbility Global Microfinance, where we assign a social return only to the microfinance investment fund. In the second application with stochastic social returns, we estimate statistical moments of social returns of various microfinance institutions and address the question how microfinance investment funds should allocate funds to microfinance institutions.
    JEL: G11 G21 G32 D64 D81
    Date: 2010–02
  3. By: Duo Qin (Queen Mary, University of London)
    Abstract: This paper examines the history of econometrics through a particular case study - modelling the tradeoff between inflation and unemployment. It focuses on the questions of what econometric tools modellers would choose to model the tradeoff, how their choices helped shape the ways that they obtained, interpreted and theorised the empirical evidence and how their different concerns and the different problems that they encountered has fed back into the development of econometrics. The study reveals that much of the interaction between econometrics and economics involved modellers taking certain tradeoffs between theory and data, and their different positions generated disputes, factions as well as confusions. It also reveals that the history of modelling the tradeoff mirrors the evolving process of how the Cowles structural modelling paradigm in econometrics became consolidated, challenged, reformed or abandoned.
    Keywords: Phillips curve, History of econometrics
    JEL: B23
    Date: 2010–02
  4. By: John Duffy
    Abstract: Some issues are raised with regard to conducting economic decision-making experiments in virtual worlds. The issues are illustrated via a visit to an experimental laboratory on Second Life. Some suggestions for addressing these issues are proposed.
    JEL: C72 C92 C93 C99
    Date: 2008–02
  5. By: Kozo Mayumi (Faculty of Integrated Arts and Sciences, The University of Tokushima); Mario Giampietro (Institut de Ciencia i Tecnologia Ambientals, Universitat Autònoma de Barcelona); Jesus Ramos-Martin (Departament d'Economia i d'Història Econòmica, Universitat Autònoma de Barcelona)
    Abstract: When dealing with sustainability we are concerned with the biophysical as well as the monetary aspects of economic and ecological interactions. This multidimensional approach requires that special attention is given to dimensional issues in relation to curve fitting practice in economics. Unfortunately, many empirical and theoretical studies in economics, as well as in ecological economics, apply dimensional numbers in exponential or logarithmic functions. We show that it is an analytical error to put a dimensional unit x into exponential functions ( a x ) and logarithmic functions ( x a log ). Secondly, we investigate the conditions of data sets under which a particular logarithmic specification is superior to the usual regression specification. This analysis shows that logarithmic specification superiority in terms of least square norm is heavily dependent on the available data set. The last section deals with economists’ “curve fitting fetishism”. We propose that a distinction be made between curve fitting over past observations and the development of a theoretical or empirical law capable of maintaining its fitting power for any future observations. Finally we conclude this paper with several epistemological issues in relation to dimensions and curve fitting practice in economics.
    Keywords: dimensions, logarithmic function, curve fitting, logarithmic specification
    JEL: C01 C13 C51 C65
    Date: 2010–02
  6. By: Alpar Lošonc (Faculty of Technical Sciences, Department for Social Sciences, Novi Sad, Serbia)
    Date: 2009–11
  7. By: Yucel, Eray; Tokel, Emre
    Abstract: All decisions are practically made within a chainwise social setup named a decision-making chain (DMC). This paper considers some cases of an idea (a project proposal) propagating through an organizational DMC. Survival of a proposal through successive links of the DMC depends on the relative power of those links, in addition to proposal’s intrinsic value. Then it is not impossible to reject a good proposal or to fail to reject a bad proposal, either of which may generate undesired, though not detrimental, outcomes. We consider here a simple metric to assess quality of decision-making. The notion of quality here derives from “not declining (not accepting) a project that is of high (poor) intrinsic value”. As Fibonacci series establish the mathematical basis of our proposed metric, metric is simply named a Fibonacci metric.
    Keywords: Decision making chains; Innovation; Fairness metric; Fibonacci series
    JEL: Z1 C00 A1
    Date: 2010–02–25
  8. By: Gauti Eggertsson
    Abstract: This paper proposes a new paradox: the paradox of toil. Suppose everyone wakes up one day and decides they want to work more. What happens to aggregate employment? This paper shows that, under certain conditions, aggregate employment falls; that is, there is less work in the aggregate because everyone wants to work more. The conditions for the paradox to apply are that the short-term nominal interest rate is zero and there are deflationary pressures and output contraction, much as during the Great Depression in the United States and, perhaps, the 2008 financial crisis in large parts of the world. The paradox of toil is tightly connected to the Keynesian idea of the paradox of thrift. Both are examples of a fallacy of composition.
    Keywords: Employment ; Econometric models ; Interest rates ; Deflation (Finance) ; Productivity
    Date: 2010
  9. By: Lambrecht, Marc; Creemers, Stefan; Boute, Robert; Leus, Roel
    Abstract: The production dice game is a powerful learning exercise focusing on the impact of variability and dependency on throughput and work-in-process inventory of flow lines. In this paper we will extend the basic dice game along the following lines. First, we allow that the operations take place concurrently as opposed to the more traditional way of playing the game sequentially. Second, we allow both starvation and blocking of the line. Third, we consider balanced lines with work stations characterized by different degrees of variability. Fourth, we use different sets of dice in order to represent a wide range of coefficients of variation of the production line. The game can be played manually in a classroom setting, but it is also modelled as an easy-to-use simulation tool.
    Date: 2010–02
  10. By: Hens, Pieter; Snoeck, Monique; Poels, Geert; De Backer, Manu
    Abstract: The concept of event is used in a lot of meanings. It can be the possible outcome of doing something (probability theory), it can be a business transaction (accounting), or just a plain happening. In software engineering, the concept of event is also used a lot. It is used to accomplish loose coupling between software components or to realise interaction between different services. There is however not a consensus on the meaning of `an event'. In enterprise ontologies, an event is defined as a happening at one point in time, or as an activity which takes time to complete. In requirement engineering, the same different uses can be found, together with an event as a request for something that needs to be done. These differences can also be found in implementation. All these distinct purposes of the word event make it difficult to integrate and use different requirement engineering techniques. Comparison or transformations between models drawn in different grammars is impossible because of the ambiguity of the concept of event. We define three meanings for an event that are used by enterprise ontologies and requirement engineering techniques: an achievement (happening at one point in time), an activity (happening over time) and a request (a demand for something that needs to be done). We also identify a missing link between real economic events, the events defined in the requirements model and the events used in implementation.
    Keywords: Requirements modelling; Enterprise ontology; Process modelling; Dynamic; Event;
    Date: 2009–10

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