nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2010‒03‒28
twelve papers chosen by
Erik Thomson
University of Manitoba

  1. A Neo-Darwinian Foundation of Evolutionary Economics. With an Application to the Theory of the Firm. By Fritz Rahmeyer
  2. What good is happiness? By FLEURBAEY, Marc; SCHOKKAERT, Erik; DECANCQ, Koen
  3. Economic ideas and economists in the Parliament in the liberal age: The attempt to implement a tax on incomes in Spain in 1868-1869 By Javier San Julian Arrupe
  4. The Problem of Financial Accounting Measurement in Italian Accounting Thought between the 19th and the 20th Century From “Exchange Value” to “Historical Cost” By Enrico Gonella
  5. The Inheritance of Gregory Clark By McCloskey, Deirdre Nansen
  6. Analytic narrative By Mongin, Philippe
  7. WARNING: Physics Envy May Be Hazardous To Your Wealth! By Andrew W. Lo; Mark T. Mueller
  8. Research standards for the Italian young academics: what has changed over the last thirty years? By Birolo, Adriano; Rosselli, Annalisa
  9. A Managerial Rationality? Scientific Management and the Organization of Knowledge, 1880-1915 By Thibault Le Texier
  10. Ethnic Diversity and Ethnic Strife: An Interdisciplinary Perspective By Kanbur, Ravi; Rajaram, Prem Kumar; Varshney, Ashutosh
  11. Academic Rankings and Research Governance By Margit Osterloh; Bruno S. Frey
  12. "But Can't we Get the Same Thing with a Standard Model?" Rationalizing Bounded-Rationality Models By Spiegler, Ran

  1. By: Fritz Rahmeyer (University of Augsburg, Department of Economics)
    Abstract: The focus of evolutionary economics is a process of continuous economic and organizational change. Currently there is no agreement on the explanation of economic evolution. Rather there are competing interpretations. To achieve a common understanding of economic evolution, from the perspective of the history of economic thought, at first the theoretical approaches of Schumpeter and Marshall with regard to economic development or evolution are dealt with. After that, a concept of socio-economic evolution in broad agreement with evolution in nature is elaborated. It is summed up in the version of a generalized Darwinism. In this, evolution is seen as a process of change that leads to the adaptation of complex systems, the result of the causal interaction among variation, selection and retention of variety. As a (slightly) different interpretation the presently predominating approach of neo-Schumpeterian evolutionary economics is presented. It has gained wide application to the theory of innovation and later - based on Penrose - to resource-based theories of the firm. In this the dynamic process of the creation and exploitation of resources, mainly knowledge, turns out to be the centre of attention of an evolutionary theory of the firm.
    Keywords: Economic evolution, Schumpeter and Marshall, Generalized Darwinism, Evolutionary theory of the firm
    JEL: A12 B15 B52 D21
    Date: 2010–02
    Keywords: happiness, satisfaction, preferences, welfare economics, psychology
    JEL: D60 D71
    Date: 2009–03–01
  3. By: Javier San Julian Arrupe (Universitat de Barcelona)
    Abstract: The presence of economic ideas in parliamentary debates is a field of study that has increasingly gained attention within the wider subject of the institutionalisation of political economy in the so called liberal age in Western world. Within this general framework, this paper focuses on a particular case: It studies the relevance of economic ideas and the role of economists in the debates which took place in the Spanish Parliament following the bill issued by the Minister of Finances Laureano Figuerola in order to establish a tax on personal incomes in 1868. The article attempts to show, first, that economic ideas played a significant role in the design and the subsequent discussions about the income tax, and that the presence and influence of economists in the Parliament at that time was remarkable. Secondly, that this was a serious attempt to modernise the structure of taxation in Spain after the liberal revolution of 1868, seeking to devise a fiscal system capable to foster economic development.
    Keywords: income tax, tax reform, parliament, public finances, political economy, economic liberalism
    JEL: H24 N43 A11 B12 K34
    Date: 2010
  4. By: Enrico Gonella (università di pisa - Università di Pisa)
    Abstract: The main subject of the paper is the theory of accounting measurement as observed in its historical development. More notably, the research concerns theoretical concepts of such discipline, as developed by the Italian doctrine in a very specific age, that is, between the second half of the nineteenth century and the first half of the twentieth century, i.e. from the theorization of the “exchange value rule” to the theorization of the “historical cost principle”. As it was impossible to examine the thought of the many scholars who gave their contribution, each one in his own way, to the development of this subject, we deemed it appropriate to focus our attention on those scholars who left their mark on the accounting history in the analyzed period. We will mention in particular such scholars as Francesco Villa, Giovanni Rossi, Fabio Besta, Gino Zappa, the latter seen in the early stage of his thinking. The analysis of the different theories devised by the above-mentioned masters, which cannot but be conducted within the limited length of this paper, led us to identify three logical steps in the evolution of the theories that have been developed on the subject in the considered phase. The results of the study can be summarized in the following considerations. In the second half of the nineteenth century, some of the best accounting experts, faced with the need to properly develop the problem of accounting measurement, thought it appropriate to rely on concepts that belonged to similar sciences, such as economics and real estate appraisal discipline, by blindly borrowing the theory of value from the former and the theory of valuation from the latter. During such age, everything hinged around the concept of “exchange value”. At the dawn of the last century, the scholars' attitude tended to become more critical. Doctrine in particular began to wonder about a subject that was crucial to the theory of accounting measurement, notably the informative purposes from which such theory takes inspiration. At the same time, a first principle took shape, which is still the basis of the theory of accounting measurement, which might be called the finalistic principle of value, which lays down that different measurement criteria must be applied to different informative purposes. An alternative criterion to that of the “exchange value” thus makes its appearance on the scene of the accounting measurement, notably, the historical cost principle. With its introduction and above all with the relinquishment of the combination of economic cost that had been initially accepted by the doctrine and the later transition to the combination of manufacturing cost, the accounting world managed to get rid, once and for all, of economic and valuative assumptions, thus becoming independent in its accounting measurements. This is mainly due to the scholars' ability to learn precious lessons from the observation of the accounting scene of the time.
    Keywords: Accounting History, Financial Accounting Measurement, Asset Valuation, Exchange Value, Cost Principle, Combinations of Costs, Italy.
    Date: 2010
  5. By: McCloskey, Deirdre Nansen
    Abstract: An extreme materialist hypothesis explaining the Industrial Revolution would be simply genetic. Gregory Clark asserts such a theory of sociobiological inheritance in his Farewell to Alms (2007). Rich people proliferated in England, Clark argues, and by a social Darwinian struggle the poor and incompetent died out, leaving a master race of Englishmen with the bourgeois values to conquer the world. Clark will have no truck with ideas as causes, adopting a materialist (and as he believes is implied by materialism a quantitative) theory of truth. His method, that is, follows Marx in historical materialism, as many scholars did 1890 to 1980. But he does not follow through on his promise to show his argument quantitatively. The argument fails, on many grounds. For one thing, non-English people succeeded, as for instance the Chinese now are succeeding. And such people have always done fine in a bourgeois country. For another, Clark does not show that his inheritance mechanism has the quantitative oomph to change people generally into bourgeois, nor does he show that bourgeois habits of working hard mattered, or that bourgeois values caused innovation. What made for success in 1500 is not obviously the same as what made for innovation in 1800. And in the modern world of literacy such values are not transmitted down families, but across families. Literal inheritance anyway dissipates in reversion to the mean. What mattered in modern economic growth was not a doubtfully measured change in the inherited abilities of English people. What mattered was a radical change 1600-1776, “measurable” in every play and pamphlet, in what English people wanted, paid for, revalued.
    Keywords: gregory clark; economic history; industrial revolution; sociobiological inheritance
    JEL: N01 N0 N34
    Date: 2009–07
  6. By: Mongin, Philippe
    Abstract: Since Bates, Greif, Levi, Rosenthal and Weingast's 1998 collection Analytic Narratives, historians and political scientists have argued about their method, which essentially amounts to constructing case studies in economic and political history by using game theory. The present article describes their contribution before expanding on the methodological problems of "analytic narratives" more broadly.
    Keywords: analytic narrative; game theory and history; rational choice theories
    JEL: B40 N01
    Date: 2009–11–01
  7. By: Andrew W. Lo; Mark T. Mueller
    Abstract: The quantitative aspirations of economists and financial analysts have for many years been based on the belief that it should be possible to build models of economic systems - and financial markets in particular - that are as predictive as those in physics. While this perspective has led to a number of important breakthroughs in economics, "physics envy" has also created a false sense of mathematical precision in some cases. We speculate on the origins of physics envy, and then describe an alternate perspective of economic behavior based on a new taxonomy of uncertainty. We illustrate the relevance of this taxonomy with two concrete examples: the classical harmonic oscillator with some new twists that make physics look more like economics, and a quantitative equity market-neutral strategy. We conclude by offering a new interpretation of tail events, proposing an "uncertainty checklist" with which our taxonomy can be implemented, and considering the role that quants played in the current financial crisis.
    Date: 2010–03
  8. By: Birolo, Adriano; Rosselli, Annalisa
    Abstract: In this paper the authors present the findings of their research on a vast database containing the relevant information on the scientific characteristics of the three cohorts of assistant professors recruited in Italy in the early 1980s, the 1990s and the first few years of the new millennium. Their first objective is to trace out the scientific profile of the assistant professor in the early 1980s and the changes that came about in the following twenty-five years due to general changes in the profession and in the specific conditions of the Italian academic market. The second aim is to see what turn in direction the scientific standard has taken for access to a career as a young professor of economics, the number and typology of publications, the fields of research.
    Keywords: evolution of the scientific standard; research output; “representative” economist; academic market for economists; evaluation
    JEL: B23 A11 A14 B41
    Date: 2009–12–05
  9. By: Thibault Le Texier (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis)
    Abstract: The accumulation, organization and application of knowledge form the core of modern management. This managerial knowledge consists less in the mechanical intelligence of the production processes than in a rationalization of the selection, training, and use of the “human material”. Of course, scientific management did not invent planning, measuring, analyzing, standardizing, or training. Its real breakthrough was the turning of these scattered elements into a coherent system that we propose to call the managerial rationality – rather than a managerial ideology, science or technique. By Taylor's death in 1915, the foundations of this cognitive system were fully laid. The schools of thought which latter invested and exploited this rationality not affect its general pattern and will even reinforce the centrality of its very essence: knowledge.
    Keywords: Taylor, history, management, rationalization
    Date: 2010
  10. By: Kanbur, Ravi; Rajaram, Prem Kumar; Varshney, Ashutosh
    Abstract: The objective of this paper is to present an overview of ethnicity, ethnic strife and its consequences, as seen from the perspective of the disciplines of economics, political science, social anthropology and sociology. What exactly is ethnicity--how is it to be defined, characterized and measured? What exactly are the causal links from ethnicity so defined to its presumed consequences, including tension and violence? What are the feedback loops from the consequences of ethnic divisions back to these divisions themselves? How can policy, if at all, mitigate ethnic divisions and ethnic conflict? Finally, what role does interdisciplinarity have in helping to understand ethnicity and ethnic strife, and how can interdisciplinary collaboration be enhanced? These are the questions which this paper takes up and deals with in sequence.
    Keywords: Ethnicity, Conflict, Interdisciplinary Approaches, International Development, International Relations/Trade,
    Date: 2010–01–28
  11. By: Margit Osterloh; Bruno S. Frey
    Abstract: Academic rankings today are the backbone of research governance, which seem to fit the aims of "new public management" on the one side and the idea of the "republic of science" on the other side. Nevertheless rankings recently came under scrutiny. We discuss advantages and disadvantages of academic rankings, in particular their unintended negative consequences on the research process. To counterbalance these negative consequences we suggest (a) rigorous selection and socialization, and (b) downplaying the impact of rankings in order to reconcile academic self-governance with accountability to the public.
    Keywords: peer reviews; rankings; research governance; psychological economics; new public management; economics of science; control theory
    JEL: H52 H83 I23 J44 L38
    Date: 2010–03
  12. By: Spiegler, Ran
    Abstract: This paper discusses a common criticism of economic models that depart from the standard rational-choice paradigm - namely, that the phenomena addressed by such models can be "rationalized" by some standard model. I criticize this criterion for evaluating bounded-rationality models. Using a market model with boundedly rational consumers due to Spiegler (2006a) as a test case, I show that even when it initially appears that a bounded-rationality model can be rationalized by a standard model, the rationalizing models tend to come with unwarranted "extra baggage". I conclude that we should impose a greater burden of proof on rationalizations that are offered in refutation of such models.
    Keywords: Bounded rationality; methodology; theory selection; rationalizations
    JEL: B49
    Date: 2010–03–15

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