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on History and Philosophy of Economics |
| By: | Andrés Álvarez; Jimena Hurtado |
| Abstract: | Shorter undergraduate studies, increasing specialization and the priority of applied research in Economics represent threats for the History of Economic Thought (HET) as an integral part of the training of young economists. There are mostly sociological arguments to reduce or eliminate HET courses and contents to which we try to respond in this text. We advance that HET allows developing valuable skills that might help overcome the criticisms against Economics due to its alleged incapacity to offer solutions in times of crisis and to its fascination with quantification and technique. In this context, HET appears as a space for thought, self-criticism and introspection in which new economists may understand that Economics is a process and not a product giving them the abilities necessary to participate in the extended present of their discipline. |
| Date: | 2010–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:007712&r=hpe |
| By: | Ajit Sinha (Indira Gandhi Institute of Development Research) |
| Abstract: | This paper is a critical examination of the notion of equilibrium in the classical theory of value. It highlights the theoretical importance as well as the problems associated with the notion of equilibrium in the classical theory and goes on to argue that Sraffa presents a theory of value within the classical tradition that does not require a notion of equilibrium of demand and supply, which succeeds in dissolving the problems associated with the classical theory of value. It also discusses the importance of the notion of equilibrium in the modern general equilibrium theory for the sake of continuity and completeness of the story. |
| Keywords: | Equilibrium, Centre of Gravitation, Price Theory, Theory of Value, Classical Economics, Neoclassical Economics, Sraffa |
| JEL: | B1 B2 B3 B4 B5 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:eab:microe:2367&r=hpe |
| By: | Angelo Melino (University of Toronto; The Rimini Centre for Economic Analysis (RCEA)) |
| Abstract: | The following is a report from a panel of the same title held at the Rimini Conference in Economics and Finance, Rimini, Italy, 10-13 June 2010, and organized by the Rimini Conference for Economic Analysis (RCEA). Panel Chair: Angelo Melino (University of Toronto and RCEA). Panelists: David Andolfatto (Vice President and Economist, Federal Reserve Bank of St. Louis; Professor of Economics, Simon Fraser University; RCEA), David E.W. Laidler (Professor Emeritus, University of Western Ontario; Fellow-in-Residence, C.D. Howe Institute; FRSC; Honorary Senior Fellow RCEA), John Murray (Deputy Governor, Bank of Canada). |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimpre:04_10&r=hpe |
| By: | James E. Anderson |
| Abstract: | The gravity model in economics was until relatively recently an intellectual orphan, unconnected to the rich family of economic theory. This review is a tale of the orphan's reunion with its heritage and the benefits that have flowed from it. Gravity has long been one of the most successful empirical models in economics. Incorporating the theoretical foundations of gravity into recent practice has led to a richer and more accurate estimation and interpretation of the spatial relations described by gravity. Recent developments are reviewed here and suggestions are made for promising future research. |
| JEL: | F10 R1 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16576&r=hpe |
| By: | Pedro Bordado; Nicola Gennaioli; Andrei Shleifer |
| Abstract: | We present a theory of choice among lotteries in which the decision maker's attention is drawn to (precisely defined) salient payoffs. This leads the decision maker to a context-dependent representation of lotteries in which true probabilities are replaced by decision weights distorted in favor of salient payoffs. By endogenizing decision weights as a function of payoffs, our model provides a novel and unified account of many empirical phenomena, including frequent risk-seeking behavior, invariance failures such as the Allais paradox, and preference reversals. It also yields new predictions, including some that distinguish it from Prospect Theory, which we test. |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1252&r=hpe |
| By: | John M. Gowdy (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA) |
| Abstract: | In spite of the increasing scientific certainty that the earth's climate is warming and that human activity is partially responsible, public willingness to take steps to reduce greenhouse gas emissions seems to be decreasing. How can the scientific consensus as to the urgency of the climate change problem be conveyed to the general public in such a way as to support greenhouse gas abatement policies and to actually change behavior? This essay explores the standard economic approach to environmental pollution and discusses findings from behavioral economics and neuroscience that could lead to a more fruitful understanding of the relationship between economic policy and human psychology. This essay is a background paper prepared for the Garrison Institute's "Climate, Mind and Behavior" initiative. |
| JEL: | A10 A11 P48 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:rpi:rpiwpe:10&r=hpe |
| By: | Peter Howells (University of the West of England, Bristol); Iris Biefang Frisancho-Mariscal (University of the West of England, Bristol) |
| Abstract: | In the fifteen years leading up to the financial crisis in 2008, there emerged a great deal of agreement on the optimal design of monetary policy. This policy ‘consensus’ was accompanied also by a widely-shared view of how macroeconomies worked as the ‘Keynesian’ versus ‘monetarist’ debates slipped into the past. This paper charts the emergence of this consensus and then looks at the way in which the apparently settled ideas of monetary policy have been disrupted by recent events. In particular, it looks at the way in which the crisis has forced a revision of both the targets and instruments of monetary policy. |
| Keywords: | Monetary policy, quantity theory, Phillips curve |
| JEL: | E4 E5 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:uwe:wpaper:1017&r=hpe |
| By: | Raul V. Fabella (School of Economics, University of the Philippines Diliman) |
| Abstract: | The Great Recession has called into question many tenets of Neo-classical Microeconomics. Neo-classical theory allows each agent only one fixed type, homo economicus, while not denying other possible types as in adverse selection.We propose that economic agents not only choose their market basket but also their types. Agents are members of groups and each group has social norms to which the agent more or less conforms. His/her market behavior trades off private well being which responds to prices but also social well being which responds to norms. We show how deviation from norms are determined. We also discuss other anomalies in the light of this model. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:phs:dpaper:201012&r=hpe |
| By: | John M. Gowdy (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA); Richard Howarth (Dartmouth College); Clem Tisdell (University of Queensland) |
| Abstract: | This chapter presents the economic logic behind the concept of discounting the future and discusses how it applies to biodiversity conservation. How should economists account for the effects of biodiversity and ecosystem losses in the immediate and distant future? We discuss how to integrate traditional cost-benefit analysis with other approaches to understand and measure, where possible, environmental values. We conclude that losses of biodiversity and ecosystems have properties that make it difficult to apply standard welfare analysis including discounting the future. Difficulties include: (1) it is a phenomenon having global as well as local consequences, (2) its impacts are long-term and irreversible, (3) pure uncertainty is pervasive, (4) changes are non-marginal and non-linear. And (5) questions of inter- and intra-generational equity are central. This paper will be published as Chapter Six in Pushpam Kumar (ed.). An output of TEEB: The Economics of Ecosystems and Biodiversity. London: Earthscan. 2010. |
| JEL: | A10 A11 P48 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:rpi:rpiwpe:1008&r=hpe |
| By: | Carol Graham |
| Abstract: | The literature on the economics of happiness in the developed economies finds discrepancies between reported measures of wellbeing and income measures. The ‘Easterlin paradox’, for example, shows that average happiness levels do not increase as countries grow wealthier. This article explores how the economics of happiness can help explain gaps between standard measures of poverty and inequality and reported assessments of welfare in countries in the process of integrating into the global economy. [Research Paper No. 2005/33] |
| Keywords: | welfare, wellbeing, happiness |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:3239&r=hpe |
| By: | Keith Hart |
| Abstract: | The following essay has three parts. The first is a story about fluctuations in the balance of the relationship between impersonal and personal principles of social organization. This draws heavily on Max Weber’s interpretation of western history. The second part reviews the concept of an ‘informal economy/sector’ from its origin in discussions of the Third World urban poor to its present status as a universal feature of economy. The third part asks how we might conceive of combining the formal/informal pair with a view to promoting development. In conclusion it is suggested how partnerships between bureaucracy and the people might be made more equal. [Research Paper No. 2005/11] |
| Keywords: | social organization, development, bureaucracy, democracy |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:3247&r=hpe |
| By: | Gustavo Adolfo Caballero Orozco |
| Abstract: | Until now, the dominant belief concerning the relationship between poverty and risk aversion is that the poor are more risk averse. If the poor are more risk averse, then they will choose “low risk–low return” activities that trap them in poverty. However, both empirical and experimental evidence show no clear pattern such as would suggest that the poor are somehowmore averse to risk than others; at times, they even seem to embrace risk, while at other times, there seems to be no difference. Focus has tended to be on extreme behaviors, as these are related to sub-optimal decisions such as have even raised questions whether an individual can be simultaneously both poor and rational. Amongst all the available empirical evidence, there is one bit of evidence of special interest—changes in behavior whenever subsistence is at risk. This paper emerges from the fact that recent experimental evidence in both psychology and economics suggests that certain decisions made under risk respond to reference points.We develop a theory within the traditional streamof rational choices, whereby the references are set by only observable variables, such as prices and family size. According to this theory, extremely poor individuals respond to the income reference that guarantees the consumption of the necessary calories so as to ensure a healthy and longer life. Being in the neighborhood of this reference can incentivize both the seeking of high risk, whenever below the reference, and an aversion to high risk, when above. An experimental exercise was conducted involving 92 individuals from households living in poverty and extreme poverty wherein they participated in a baseline risk experiment that was the one we analyzed. Inasmuch as the treatment was not randomly assigned, but instead was determined based on households’ per-capita incomes, a quasi-experimental approach was used to analyze the results. We use a regression discontinuity design, andfind evidence suggesting that being presented with the opportunity of avoiding undernourishmentsignificantly decreases a household’s risk aversion. |
| Date: | 2010–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:007717&r=hpe |
| By: | Jan-Erik Lönnqvist (Faculty of Behavioural Sciences, University of Helsinki, Finland); Markku Verkasalo (Faculty of Behavioural Sciences, University of Helsinki, Finland); Gari Walkowitz (Department of Management, University of Cologne, Germany) |
| Abstract: | The authors investigated how the presence or absence of monetary incentives in a prisoner's dilemma game may influence research outcomes. Specifically, the predictive power of the Big Five personality traits on decisions in an incentivized (N = 60) or hypothetical (N = 60) prisoner's dilemma game was investigated. Participants were less generous in the incentivized game. More importantly, personality predicted decisions only in the incentivized game, with low Neuroticism and high Openness to Experience predicting more cooperative transfers. The influence of Neuroticism on behaviour in the incentivized game was mediated by risk attitude. The results are consistent with other results suggesting that the Big Five are relevant predictors of moral behaviour, and with results suggesting that the determinants of hypothetical decisions are different from the determinants of real decisions, with the latter being more revealing of one's true preferences. The authors argue that psychologists, contrary to prevailing praxis, should consider making their participants' decisions more real. This could allow psychologists to more convincingly generalize laboratory findings into contexts outside of the laboratory. |
| Keywords: | Big Five, Prisoner's dilemma, Social dilemma, Moral behaviour, Incentives, Stake size |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:01-05&r=hpe |