nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2010‒09‒25
seventeen papers chosen by
Erik Thomson
University of Manitoba

  1. Marxian Economics Today By Joan Robinson
  2. The Methodological Promise of Experimental Economics By Glenn W. Harrison
  3. Neuroeconomics: Constructing Identity By John B. Davis
  4. Reasonable people did disagree : optimism and pessimism about the U.S. housing market before the crash By Kristopher S. Gerardi; Christopher L. Foote; Paul S. Willen
  5. Love in companies By Argandoña, Antonio
  6. Two stories about toleration By Rainer Forst
  7. The Mysteries of Trend By Peter C. B. Phillips
  8. The Economiic Growth Quest By Koumparoulis, Dimitrios
  9. Two Kinds of Adaptation, Two Kinds of Relativity By Kontek, Krzysztof
  10. Causation, Economic Efficiency and the Law of Torts By Ram Singh
  11. On the nature of leverage By Yaroslav Ivanenko
  12. Does Consistency Predict Accuracy of Beliefs?: Economists Surveyed About PSA By Berg, Nathan; Biele, Guido; Gigerenzer, Gerd
  13. Emergence of the Women's Question in India and the Role of Women's Studies By Vina Mazumdar
  14. Do groups fall prey to the winner’s curse? By Marco Casari; Jingjing Zhang; Christine Jackson
  15. Frugality By Argandoña, Antonio
  16. Rebordering the borders created by multidisciplinary sciences: A study By Kannan, Srinivasan
  17. The Physiological Foundations of the Wealth of Nations By Dalgaard, Carl-Johan; Strulik, Holger

  1. By: Joan Robinson
    Abstract: Marx himself certainly thought that political economy was a subject of most urgent importance for a "theoretician of the revolutionary proletariat". Marx took over the orthodox theory of his day according to which an explanation of the relative prices of particular commodities was to be found in their relative costs in terms of labour time. [Working Paper No. 010]
    Keywords: political economy, revolutionary, proletariat, commodities,
    Date: 2010
  2. By: Glenn W. Harrison
    Abstract: null
    Date: 2010–09
  3. By: John B. Davis (Department of Economics, Marquette University, and Amsterdam School of Economics, University of Amsterdam)
    Abstract: This paper asks whether neuroeconomics will make instrumental use of neuroscience to adjudicate existing disputes in economics or be more seriously informed by neuroscience in ways that might transform economics. The paper pursues the question by asking how neuroscience constructs an understanding of individuals as whole persons. The body of the paper is devoted to examining two approaches: Don Ross’s neurocellular approach to neuroeconomics and Joseph Dumit’s cultural anthropological science organization approach. The accounts are used to identify boundaries on single individual explanations. With that space Andy Clark’s external scaffolding view and Nathaniel Wilcox’s socially distributed cognition view are employed.
    Keywords: neuroeconomics, behavioral economics, neurocellular economics
    JEL: A12 B41
    Date: 2010
  4. By: Kristopher S. Gerardi; Christopher L. Foote; Paul S. Willen
    Abstract: Understanding the evolution of real-time beliefs about house price appreciation is central to understanding the U.S. housing crisis. At the peak of the recent housing cycle, both borrowers and lenders appealed to optimistic house price forecasts to justify undertaking increasingly risky loans. Many observers have argued that these rosy forecasts ignored basic theoretical and empirical evidence that pointed to a massive overvaluation of housing and thus to an inevitable and severe price decline. We revisit the boom years and show that the economics profession provided little such countervailing evidence at the time. Many economists, skeptical that a bubble existed, attempted to justify the historic run-up in housing prices based on housing fundamentals. Other economists were more uncertain, pointing to some evidence of bubble-like behavior in certain regional housing markets. Even these more skeptical economists, however, refused to take a conclusive position on whether a bubble existed. The small number of economists who argued forcefully for a bubble often did so years before the housing market peak, and thus lost a fair amount of credibility, or they make arguments fundamentally at odds with the data even ex post. For example, some economists suggested that cities where new construction was limited by zoning regulations or geography were particularly "bubble-prone," yet the data shows that the cities with the biggest gyrations in house prices were often those at the epicenter of the new construction boom. We conclude by arguing that economic theory provides little guidance as to what should be the "correct" level of asset prices -- including housing prices. Thus, while optimistic forecasts held by many market participants in 2005 turned out to be inaccurate, they were not ex ante unreasonable.
    Keywords: Housing - Prices
    Date: 2010
  5. By: Argandoña, Antonio (IESE Business School)
    Abstract: The traditional theories of the firm leave no room for love in business organizations, perhaps because it is thought that love is only an emotion or feeling, not a virtue, or because economic efficiency and profit making are considered to be incompatible with the practice of charity or love. In this paper we show, based on a theory of the firm, that love can and must be lived in companies for companies to operate efficiently, be attractive to those who take part in them and act consistently in the long run. (Also available in Spanish)
    Keywords: Charity; Firm; Organization; Theory of action; Theory of the firm; Virtues;
    Date: 2010–04–03
  6. By: Rainer Forst
    Abstract: In current social conflicts in European societies such as the ones concerning the crucifix in classrooms or the foulard or the burka worn in public, toleration is a concept claimed by all involved. The paper uncovers the historical and conceptual reasons for such ambivalence about the notion of toleration. It starts from a conceptual analysis and then reconstructs two stories about toleration which lead to two different conceptions of it – the hierarchical permission conception and the democratic respect conception. The paper applies these to current conflicts and argues for an understanding of toleration based on a certain form of mutual respect despite deep ethical disagreement.
    Keywords: democracy; diversity/homogeneity; normative political theory
    Date: 2010–08–15
  7. By: Peter C. B. Phillips (Cowles Foundation, Yale University)
    Abstract: Trends are ubiquitous in economic discourse, play a role in much economic theory, and have been intensively studied in econometrics over the last three decades. Yet the empirical economist, forecaster, and policy maker have little guidance from theory about the source and nature of trend behavior, even less guidance about practical formulations, and are heavily reliant on a limited class of stochastic trend, deterministic drift, and structural break models to use in applications. A vast econometric literature has emerged but the nature of trend remains elusive. In spite of being the dominant characteristic in much economic data, having a role in policy assessment that is often vital, and attracting intense academic and popular interest that extends well beyond the subject of economics, trends are little understood. This essay discusses some implications of these limitations, mentions some research opportunities, and briefly illustrates the extent of the difficulties in learning about trend phenomena even when the time series are far longer than those that are available in economics.
    Keywords: Climate change, Etymology of trend, Paleoclimatology, Policy, Stochastic trend
    JEL: C22
    Date: 2010–09
  8. By: Koumparoulis, Dimitrios
    Abstract: Modern growth theory, which built on the Harrod-Domar model, was born in 1956 with Robert Solow's famous papers and will turn 50 this year. Even the "new" growth theory, born with Paul Romer's papers, is now in its 20s. Why is it that with aptness, if poetic ineptness, many economists feel they could replace "words" with "growth research" in T. S. Eliot's refrain above about his "middle way?" This article is a brief retrospective and prospective on growth research in three parts: growth theory (old and new), empirical growth research (short and long), and the way forward. The theme that runs through all three parts is the tension between the logics of academic interest and the needs of the policy practitioner. The typical policymaker or advisor—whether politico or technocrat—wants to know the likely consequences of concrete public sector actions (not necessarily limited to policies) over their relevant time horizon. If growth research is a quest to satisfy this need, the journey is far from over.
    Keywords: growth theory; empirical growth research
    JEL: O40
    Date: 2010
  9. By: Kontek, Krzysztof
    Abstract: This paper presents a review of adaptation concepts at the evolutionary, environmental, neural, sensory, mental and mathematical levels, including Helson’s and Parducci’s theories of perception and category judgments. Two kinds of adaptation can be clearly distinguished. The first, known as level adaptation, refers to the shift of the neutral perception level to the average stimulus value. It results in a single reference point and stimuli changes represented in absolute terms. This concept is employed by Prospect Theory, which assumes that gains and losses are perceived as monetary amounts. The second kind of adaptation refers to the adjustment of perception sensitivity to stimuli range. It results in two reference points (minimum and maximum stimulus) and stimuli changes perceived in relative terms. Both range adaptation and range relativity are well documented phenomena and have even been confirmed by the creators of Prospect Theory. This makes room for another decision making theory based on the range relativity approach. As shown by Kontek (2009), such a theory would not require the concept of probability weighting to describe lottery experiments or behavioral paradoxes.
    Keywords: Adaptation-Level Theory; Range-Frequency Theory; Prospect Theory
    JEL: D81 C91 D87
    Date: 2010–09–19
  10. By: Ram Singh
    Abstract: In standard models dealing with liability rules, generally, the proportion of accident loss a party is required to bear does not depend upon the 'causation' - the extent to which the care or lack of care on the part of the party contributed to the loss. As a matter of legal doctrine, this specification of the liability rules is said to be incorrect. The efficiency analysis incorporating the causation requirement of law of Torts, whenever undertaken, is largely restricted only to the rule of negligence. One of the aims of this paper is to provide an efficiency characterization of the entire class of liability rules when the `causation' requirement of the law is taken into account. We demonstrate that the contradiction between causation doctrine of the law, on the one hand, and economic efficiency, on the other, is not as wide and intense as it is believed to be. [Working Paper No. 102]
    Keywords: Causation in law, liability rules, total social costs, efficient liability rules, causation-liability, Nash equilibrium.
    Date: 2010
  11. By: Yaroslav Ivanenko
    Abstract: Financial leverage can be regarded as an object of choice or a decision. We show how this optics allows perceiving the recently introduced metrics of see-through-leverage, which proved to be very useful in understanding the phenomenology of the recent economic crisis.
    Date: 2010–09
  12. By: Berg, Nathan; Biele, Guido; Gigerenzer, Gerd
    Abstract: Subjective beliefs and behavior regarding the Prostate Specific Antigen (PSA) test for prostate cancer were surveyed among attendees of the 2006 meeting of the American Economic Association. Logical inconsistency was measured in percentage deviations from a restriction imposed by Bayes’ Rule on pairs of conditional beliefs. Economists with inconsistent beliefs tended to be more accurate than average, and consistent Bayesians were substantially less accurate. Within a loss function framework, we look for and cannot find evidence that inconsistent beliefs cause economic losses. Subjective beliefs about cancer risks do not predict PSA testing decisions, but social influences do.
    Keywords: logical consistency; predictive accuracy; elicitation; non-Bayesian; ecological rationality
    JEL: D6 D8
    Date: 2010–08–11
  13. By: Vina Mazumdar
    Abstract: The women’s question, like the untouchability question or the communal question, emerged during the national movement as a political question that had to be solved to give shape to the vision of a free Indian nation. It is my contention that this political aspect of women’s equality or inequality has never received adequate attention from historians or other social scientists - a neglect which has helped to perpetuate many ambiguities, mis-conceptions and under-valuation of this issue. The primary role of women’s studies in the contemporary period is to rectify this neglect and to generate both empirical data and theoretical perspectives to place the issue in its proper context.
    Keywords: untouchability, communal question, national movement, historians, ambiguities, theoretical perspectives
    Date: 2010
  14. By: Marco Casari; Jingjing Zhang; Christine Jackson
    Abstract: In a company takeover experiment, groups placed better bids than individuals and substantially reduced the winner’s curse. This improvement was mostly due to peer pressure over the minority opinion and to group learning. Learning took place from interacting and negotiating consensus with others, not simply from observing their bids. When there was disagreement within a group, what prevailed was not the best proposal but the one of the majority. Groups underperformed with respect to a “truth wins” benchmark although they outperformed individuals deciding in isolation. We draw general lessons about when to employ groups instead of individuals in intellectual tasks.
    Keywords: Winner’s curse, takeover game, group decision making, communication, experiments
    JEL: C91 C92 D81
    Date: 2010–09
  15. By: Argandoña, Antonio (IESE Business School)
    Abstract: Frugality is a little studied virtue, but one that is important to the lives of individuals and families, communities and broader societies. In this article we consider what we mean by frugality and discuss its role in the decision-making process, within action theory. This leads us to a normative explanation of why frugality is needed and what it signifies. (Also available in Spanish)
    Keywords: Action theory; Frugality; Lifestyle; Prudence; Saving; Sobriety; Temperance; Virtue;
    Date: 2010–07–21
  16. By: Kannan, Srinivasan
    Abstract: Emergence of “Glass ceiling” like phenomena in the minds of professionals doing research in a multidisciplinary subject needs to be studied. For an example, computational neurosciences(CNS) comprises of neurology, cognitive science, psychology, computer science, physics, mathematics, information technology, radiology, anthropology, sociology, and biology. When a specialist doing research in a multidisciplinary science like computational neuroscience, know less about other disciplines. This at times leads to tension among the members of the multidisciplinary group. This may create an environment where some members feel excluded. This may also lead to a power structure among different professionals. In case of CNS, the biological scientists feel the computational and engineering sciences may use their mathematical power to control them. On the other hand the engineering scientists feel they need to learn more about biology to understand CNS. The highly technical medical specialist such as Electro physiologists were also feeling like the biologists. As computational neurosciences gaining more importance, it is important to understand the interaction among the scientists from different disciplines and its effect on the development of discipline. The present paper is an attempt to study the dynamics of the members of the multidisciplinary group, who have done their short course on CNS.
    Keywords: Multidisciplinary Research; Computational Neuroscience; interaction; education; research
    JEL: A3 I23 D89 A29 D40 J24
    Date: 2010–06
  17. By: Dalgaard, Carl-Johan; Strulik, Holger
    Abstract: Evidence from economics, anthropology and biology testifies to a fundamental household trade-off between the number of offspring (quantity) and amount of nutrition per child (quality). This leads to a theory of pre-industrial growth where body size as well as population size is endogenous. But when productive quality investments are undertaken the historical constancy of income per capita seems puzzling. Why didn't episodes of rising income instigate a virtuous circle of rising body size and productivity? To address this question we propose that societies are subject to a \physiological check: if human body size rises, metabolic needs - our conceptualization of \subsistence requirements - rise. This mechanism turns out to be instrumental in explaining why income growth does not take hold and societies remain near an endogenously determined subsistence boundary. When we use the theory to shed light on pre-industrial cross-country income differences we find that 60-70% of the income differences in 1500 can plausibly be accounted for by variations in subsistence requirements. --
    Keywords: Malthusian stagnation,Subsistence,Nutrition,Body size,Population growth
    JEL: O11 I12 J13
    Date: 2010

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