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on History and Philosophy of Economics |
| By: | Luigi Guiso; Paola Sapienza; Luigi Zingales |
| Abstract: | This chapter reviews the recent debate about the role of social capital in economics. We argue that all the difficulties this concept has encountered in economics are due to a vague and excessively broad definition. For this reason, we restrict social capital to the set of values and beliefs that help cooperation—which for clarity we label civic capital. We argue that this definition differentiates social capital from human capital and satisfies the properties of the standard notion of capital. We then argue that civic capital can explain why differences in economic performance persist over centuries and discuss how the effect of civic capital can be distinguished empirically from other variables that affect economic performance and its persistence, including institutions and geography. |
| JEL: | O43 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15845&r=hpe |
| By: | Estrada, Fernando |
| Abstract: | In their recent work Thomas S. Schelling (2007, 2010), reiterating original arguments about game theory and its applications to social sciences. In particular, game theory helps to explore situations in which agents make decisions interdependent (strategic communication). Schelling's originality is to extend economic theory to social sciences. When a player can anticipate the options and influence the decisions of others. The strategy, indirect communication plays a crucial role. To illustrate, we investigate how to perform the payoff matrix in cases of bribery and threat |
| Keywords: | Social Science; Schelling; game theory; strategic communications; bribes; threats. |
| JEL: | B0 D81 A1 D82 C70 C7 B00 D84 D7 D8 D80 C72 |
| Date: | 2010–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21772&r=hpe |
| By: | Stutzer, Alois (University of Basel); Frey, Bruno S. (University of Zurich) |
| Abstract: | Over the last decades, empirical research on subjective well-being in the social sciences has provided a major new stimulus to the discourse on individual happiness. Recently this research has also been linked to economics where reported subjective wellbeing is often taken as a proxy measure for individual welfare. In our review, we intend to provide an evaluation of where the economic research on happiness stands and of three directions it might develop. First, it offers new ways for testing the basic assumptions of the economic approach and for going about a new understanding of utility. Second, it provides a new possibility for the complementary testing of theories across fields in economics. Third, we inquire how the insights gained from the study of individual happiness in economics affect public policy. |
| Keywords: | economics, happiness, life satisfaction, survey data, income, public goods, unemployment |
| JEL: | A10 D60 H41 I31 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4850&r=hpe |
| By: | McCloskey, Deirdre Nansen |
| Abstract: | North, with many other Samuelsonian economists, thinks of “institutions” as budget constraints in a maximization problem. But as Clifford Geertz put it, an institution such as a toll for safe passage is “rather more than a mere payment,” that is, a mere monetary constraint. “It was part of a whole complex of moral rituals, customs with the force of law and the weight of sanctity.” The Geertzian metaphor of negotiation and ritual makes more sense than the metaphor of a mere budget constraint. Meaning matters. North in particular thinks that the budget line of anti-property violence was shifted in the late 17th century. It was not: on the contrary, England was a land of property rights from the beginning. So “institutional change” does not explain the Industrial Revolution. The timing is wrong. Incentive (Prudence Only) is not the main story, and cannot be the main story without contradiction: if it was Prudence Only the Industrial Revolution would have happened earlier, or elsewhere. Other virtues and vices mattered—not only prudence, beloved of the Samuelsonians; but temperance, courage, justice, faith, hope, and love, which changed radically in their disposition in the seventeenth and eighteenth centuries. Sheer commercial expansion is routine and predictable and ill-suited therefore to explaining the greatest surprise in economic history. The Glorious Revolution of 1689, which North and Weingast have cast in a central role, merely made the British state effective. It did not change property rights, as economists such as Darin Acemoglou have supposed, on the basis of North’s tale. North praises patents and incorporation laws, neither of which had much impact in the Industrial Revolution. The 18th century, in other words, was not a century of “institutional change.” Nor is the entire absence of property relevant to the place or period. Richard Pipes argued it was relevant, on the basis of the Russian case. Yet only in society’s dominated by Steppe nomads was property weak---in Europe in the 16th and 17th centuries, as in China then, it had been strong for centuries past. The Stuarts were not princes of Muscovy. And indeed private property characterizes all settled human societies. |
| Keywords: | Douglass North; Industrial Revolution; institutions; Clifford Geertz; institutional change; virtues |
| JEL: | N00 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21768&r=hpe |
| By: | Rowena Pecchenino (Economics,Finance and Accounting,National University of Ireland, Maynooth); |
| Abstract: | We make choices to achieve an objective. The objective is defined by an individual’s preferences. Subject to constraints, the objective is approached or achieved. Is this a good characterization of life? To answer this question we weaken one of the most basic assumptions of economics: individuals know their preferences. Instead we assume that an individual’s preferences are shaped and reshaped by his environment, experiences, expectations, and by exogenous events. In this model of individual self-discovery, preferences emerge, evolve, and change. These redefinitions change the future course of the individual’s life and reinterpret his past. They characterize a life lived. |
| Keywords: | Identity, Preferences, Choice, Life |
| JEL: | D01 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n205-10.pdf&r=hpe |
| By: | Carlos Scartascini; Mariano Tommasi; Ernesto Stein |
| Abstract: | The capacity to sustain policies over time and the capacity to adjust policies in the face of changing circumstances are two desirable properties of policymaking systems. The veto player approach has suggested that polities with more veto players will have the capacity to sustain policies at the expense of the ability to change policy when necessary. This paper disputes that assertion from an intertemporal perspective, drawing from transaction cost economics and repeated game theory and showing that some countries might have both more credibility and more adaptability than others. More generally, the paper argues that, when studying the effects of political institutions on policy outcomes, a perspective of intertemporal politics might lead to predictions different from those emanating from more a-temporal approaches. |
| Keywords: | Political institutions, Public policies, Veto players, Policy adaptability, Policy stability, Intertemporal, Credibility, Repeated games |
| JEL: | D72 D78 H10 H50 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:4660&r=hpe |
| By: | Alberto F. Alesina; Andrea Stella |
| Abstract: | In this paper we critically review the literature on the political economy of monetary policy, with an eye on the questions raised by the recent financial crisis. We begin with a discussion of rules versus discretion. We then examine the issue of Central Banks independence both in normal times and in times of crisis. Then we review the literature of electoral manipulation of policies. Finally we address international institutional issues concerning the feasibility, optimality and political sustainability of currency unions in which more than one country share the same currency. A brief review of the Euro experience concludes the paper. |
| JEL: | E52 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15856&r=hpe |