nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2012‒01‒18
twenty-one papers chosen by
Erik Thomson
University of Manitoba

  1. A history of the histories of econometrics. By Boumans, Marcel; Dupont-Kieffer, Ariane
  2. Goodwin's social philosophy: Continuity and change By Massimo Di Matteo
  3. Utilitarianism and Economic Behavior. Looking for Benthamite Traces By Jimena Hurtado; Johanna Mick
  4. Saint-Simonism and Utilitarianism: the history of a paradox. Bentham's Defence of Usury under Saint-Amand Bazard's Interpretation By Michel Bellet
  5. Pursuing Happiness By Christian Schubert
  6. Why Satisfy Preferences? By Daniel M. Hausman
  7. "Employment precariousness" in a European cross-national perspective. A sociological review of thirty years of research By Jean-Claude Barbier
  8. The Independence Axiom and the Bipolar Behaviorist By Glenn W. Harrison; J. Todd Swarthout
  9. 9/11's Legacy: How Abstract Fear and Collective Memory Lead to Real Economic Costs By Tim Krieger
  10. Status Quo Effects in Fairness Games: Acts of Commission vs. Acts of Omission By James C. Cox; Maroš Servátka; Radovan Vadovič
  11. Kaldor et la théorie keynésienne de la répartition By Alain Béraud
  12. A Discounted Stochastic Game with No Stationary Nash Equilibrium By Yehuda Levy
  13. Uncertainty in the Traveler's Dilemma By Gilad Bavly
  14. Prizes Versus Wages with Envy and Pride By Pradeep K. Dubey; John Geanakoplos; Ori Haimanko
  15. Financial Stability Reports:What Are They Good For? By Martin Cihák; Shakira Teh Sharifuddin; Kalin Tintchev; Sònia Muñoz
  16. Overvalued: Swedish monetary policy in the 1930s By Alexander Rathke; Tobias Straumann; Ulrich Woitek
  17. La réforme monétaire française de 1577 : les difficultés d'une expérience radicale By Jérôme Blanc
  18. Billionaires By Leeson, Peter; Sanandaji, Tino
  19. Robust Predictions in Games with Incomplete Information By Dirk Bergemann; Stephen Morris
  20. Leading by Words in Privileged Groups By Johannes Weisser
  21. The Geography of Financial Literacy By Christopher B. Bumcrot; Judy Lin; Annamaria Lusardi

  1. By: Boumans, Marcel; Dupont-Kieffer, Ariane
    Abstract: Understanding the history of econometrics as a modern science also asks for understanding of the development of the image of science, which includes the history of philosophy of science and the history of economic methodology. Beside that philosophers of science need to be historically informed, historians of science need to be philosophical informed, which mean more precisely here that they need to be informed about the developments of the philosophical ideas about science. Corry's distinction between the body and image of knowledge does not only provide a framework to write histories of econometrics, but also to write a history of these histories. From its beginnings, econometricians have considered historical knowledge as reflexive knowledge useful to delineate their discipline.
    Keywords: econometrics; philosophy of science; discipline
    JEL: B23
    Date: 2011–12
  2. By: Massimo Di Matteo
    Abstract: In the paper I present and discuss an unpublished essay of Richard Goodwin found in the Goodwin’s Archive at the University of Siena on the theme of social philosophy. I will illustrate the main points of his text, briefly compare these late views with those entertained at the beginning of his scientific life (namely his Harvard dissertation on Marxism also kept in the Archive) and add a few remarks in connection with the implications for economics suggested by his analysis.
    Keywords: history of economics, social philosophy.
    JEL: B20 B30
    Date: 2011–10
  3. By: Jimena Hurtado; Johanna Mick
    Abstract: In spite of the use of a utilitarian language in Rational Choice Theory, economists do not acknowledge any link to this current of moral philosophy, and have made great efforts to rid economics from its legacy. In this document we aim at assessing these efforts retracing their history from Pareto to Samuelson in order to determine how close they came to their ideal of formulating a positive science rid of what they called any metaphysical traces.
    Date: 2011–10–04
  4. By: Michel Bellet (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon)
    Abstract: This article reveals and studies the connections between Bentham's Defence of Usury (1787) and Saint-Amand Bazard (1791-1832), a founder of Saint-Simonianism. We first traces Bazard's exposure to Bentham through his unknown friendship with Bentham's publisher Etienne Dumont. After introducing in details the Saint-Simonian views on interest and money, we examines the significance of Bazard's translation of Defence of Usury and his shared opposition against usure laws. We explain why the puzzling reference to Benthamite utilitarianism is not fortuitous but appears to justify a common ground between Bentham's utilitarism and Saint-Simonianism. This connection did not survive the July Revolution.
    Keywords: utilitarianism; saint-simonism; interest rate; usury
    Date: 2011–12–23
  5. By: Christian Schubert
    Abstract: While research on subjective well-being abounds, comparatively little thought has been given to its practical policy implications. Two approaches to derive policy advice have emerged in the literature: One is organized in terms of the idea to maximize a hedonic social welfare function, the other focuses on the design of constitutional rules to facilitate the individuals' self-determined 'pursuit' of happiness. We suggest to substantiate what it means to 'pursue' happiness, in particular by drawing upon a psychologically informed account of preference learning. If extended in this direction, a notion of the pursuit of happiness has interesting practical policy implications.
    Keywords: subjective well-being, happiness, welfare economics, preference learning
    JEL: D03 D11 D60
    Date: 2012–01–06
  6. By: Daniel M. Hausman
    Abstract: Contemporary mainstream normative economists assess policies in terms of their capacities to satisfy preferences, though most would concede that other factors such as freedom, rights, and justice are also relevant. Why should policy be responsive to preferences? This essay argues that the best reason is that people's preferences are in some circumstances good evidence of what will benefit them. When those circumstances do not obtain and preferences are not good evidence of welfare, there is little reason to satisfy preferences.
    Date: 2012–01–05
  7. By: Jean-Claude Barbier (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne)
    Abstract: What has been analysed in France mainly under the term "précarité de l'emploi" over the past 30 years was mostly dealt with differently in other countries (atypical, non-standard employment). Research on these issues dates back to the 1970s in sociology and institutional economics. More recently some political scientists have endeavoured to link up the labour market theme with developments in systems of social protection and they are talking about "dualism" and "dualization". Despite the constant intellectual investment put into the topic, it is striking that indicators for comparative measurement of the phenomenon have remained rather unsophisticated, as the basic opposition between what Eurostat names "temporary contracts" and "open-ended contracts". On the other hand, because of the spreading of the effects of work and employment flexibilisation into new countries, new categories are appearing since the early 2000s (Prekariat, vulnerable workers, and even "precarity").
    Keywords: Precariousness, non-standard work, internal labour markets, a-typical employment, dualization, Europeanization.
    Date: 2011–12
  8. By: Glenn W. Harrison; J. Todd Swarthout
    Abstract: Developments in the theory of risk require yet another evaluation of the behavioral validity of the independence axiom. This axiom plays a central role in most formal statements of expected utility theory, as well as popular alternative models of decision-making under risk, such as rank-dependent utility theory. It also plays a central role in experiments used to characterize the way in which risk preferences deviate from expected utility theory. If someone claims that individuals behave as if they "probability weight" outcomes, and hence violate the independence axiom, it is invariably on the basis of experiments that must assume the independence axiom. We refer to this as the Bipolar Behavioral Hypothesis: behavioral economists are pessimistic about the axiom when it comes to characterizing how individuals directly evaluate two lotteries in a binary choice task, but are optimistic about the axiom when it comes to characterizing how individuals evaluate multiple lotteries that make up the incentive structure for a multiple-task experiment. Building on designs that have a long tradition in experimental economics, we offer direct tests of the axiom and the evidence for probability weighting. We reject the Bipolar Behavioral Hypothesis: we find that nonparametric preferences estimated for the rank-dependent utility model are significantly affected when one elicits choices with procedures that require the independence assumption, as compared to choices with procedures that do not require that assumption. We also demonstrate this result with familiar parametric preference specifications, and draw general implications for the empirical evaluation of theories about risk.
    Date: 2012–01
  9. By: Tim Krieger (University of Paderborn)
    Date: 2011–12
  10. By: James C. Cox; Maroš Servátka (University of Canterbury); Radovan Vadovič
    Abstract: Intent to help or harm is revealed more clearly by acts of commission that overturn the status quo than by acts of omission that uphold it. Both the law and culture make a central distinction between the two types of acts. Acts of commission elicit stronger reciprocal responses than do acts of omission. In this paper we compare reciprocal responses to both types of acts and ask whether behavior of subjects in two experiments is consistent with existing theory. The design of the experiments focuses on the axioms of revealed altruism theory (Cox, Friedman, and Sadiraj, 2008) that make it observationally distinct from other theories, Axiom R (for reciprocity) and Axiom S (for status quo). We find support for this theory in both experiments.
    Date: 2012–01–01
  11. By: Alain Béraud (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise)
    Abstract: Kaldor présente l'analyse qu'il fait de la répartition comme une théorie keynésienne. Son travail s'inspire, nous dit-il, des contributions de Keynes, dans le Traité de la Monnaie, et de Kalecki. Cependant, alors que Keynes et Kalecki développent des analyses de courte période, Kaldor décrit les caractéristiques d'un équilibre de longue période si bien que le mécanisme d'ajustement sur lequel il s'appuie, la flexibilité des taux de marge, est inapproprié. Pasinetti, en suggérant que l'article de Kaldor repose sur une erreur logique et que la correction de cette erreur permet de montrer que le taux de profit — en équilibre de longue période — ne dépend que du taux de croissance naturel de l'économie et de la propension à épargner des capitalistes, relança le débat. Cependant, sa thèse paraît discutable. D'une part, l'équilibre qu'il décrit n'est pas unique et il se peut que, dans certaines circonstances, l'économie tende vers un autre équilibre dont les caractéristiques sont déterminées par la propension à épargner des salariés. D'autre part, l'idée que la fonction d'épargne proposée par Kaldor est logiquement incohérente est sans fondement. Enfin, l'hypothèse cruciale sur laquelle repose le raisonnement de Pasinetti, l'existence d'une classe d'individus qui tirent des profits la totalité de leurs revenus ne paraît guère caractériser de façon pertinente les systèmes économiques qui prédominent dans les économies développées.
    Keywords: Kaldor, Keynes, Kalecki, Pasinetti, repartition des revenus
    Date: 2012–01–06
  12. By: Yehuda Levy
    Abstract: We present an example of a discounted stochastic game with a continuum of states, finitely many players and actions, and deterministic transitions, that possesses no measurable stationary equilibria, or even stationary approximate equilibria. The example is robust to perturbations of the payoffs, the transitions, and the discount factor, and hence gives a strong nonexistence result for stationary equilibria. The example is a game of perfect information, and hence it also does not possess stationary extensive-form correlated equilibrium. Markovian equilibria are also shown not to exist in appropriate perturbations of our example.
    Keywords: Stochastic Game, Discounting, Stationary Equilibrium
    Date: 2012–01–11
  13. By: Gilad Bavly
    Abstract: The paper analyzes a perturbation on the players’ knowledge of the game in the traveler’s dilemma, by introducing some uncertainty about the range of admissible actions. The ratio between changes in the outcomes and the size of perturbation is shown to grow exponentially in the range of the given game. This is consistent with the intuition that a wider range makes the outcome of the traveler’s dilemma more paradoxical. We compare this with the growth of the elasticity index (Bavly (2011)) of this game.
    Date: 2012–01–10
  14. By: Pradeep K. Dubey; John Geanakoplos; Ori Haimanko
    Date: 2012–01–09
  15. By: Martin Cihák; Shakira Teh Sharifuddin; Kalin Tintchev; Sònia Muñoz
    Abstract: The global financial crisis has renewed policymakers' interest in improving the policy framework for financial stability, and an open question is to what extent and in what form should financial stability reports be part of it. We examine the recent experience with central banks’ financial stability reports, and find—despite some progress in recent years—that forward-looking perspective and analysis of financial interconnectedness are often lacking. We also find that higher-quality reports tend to be associated with more stable financial environments. However, there is only a weak empirical link between financial stability report publication per se and financial stability. This suggests room for improvement in terms of the quality of financial stability reports.
    Date: 2012–01–04
  16. By: Alexander Rathke; Tobias Straumann; Ulrich Woitek
    Abstract: This paper reconsiders the role of monetary policy in Sweden’s strong recovery from the Great Depression. The Riksbank in the 1930s is sometimes seen as an example of a central bank that was relatively innovative in terms of the conduct of monetary policy. To consider this analytically, we estimate a small-scale, structural general equilibrium model of a small open economy using Bayesian methods. We find that the model captures the key dynamics of the period surprisingly well. Importantly, our findings suggest that Sweden avoided the worst excesses of the depression by conducting conservative rather than innovative monetary policy. We find that, by keeping the Swedish krona undervalued to replenish foreign reserves, Sweden’s exchange rate policy unintentionally contributed to the Swedish growth miracle of the 1930s, avoiding a major slump in 1932 and enabling the country to benefit quickly from the eventual recovery of world demand.
    Keywords: Small open economy models, exchange rate policy, structural estimation, Bayesian analysis, Great Depression
    JEL: C11 E58 F41 N14
    Date: 2011–12
  17. By: Jérôme Blanc (TRIANGLE - Triangle : action, discours, pensée politique et économique - CNRS : UMR5206 - Université Lumière - Lyon II - Institut d'Études Politiques de Lyon - École Normale Supérieure de Lyon - Université Jean Monnet - Saint-Etienne)
    Abstract: La France connaît en 1577 le sommet d'une crise monétaire aiguë qu'une réforme monétaire inédite tente de résoudre. Sa principale mesure consiste à supprimer le compte en livres tournois au profit d'une monnaie dite réelle, l'écu d'or. Ce texte vise à éclairer la réforme par son contexte historique et intellectuel et à identifier son rapport aux transformations de la souveraineté sur longue période et à ses soubresauts sur courte période. Après avoir posé le problème (1), il expose l'étendue de la crise monétaire et les caractéristiques de la réforme (2). Il propose alors plusieurs regards successifs sur ce moment de l'histoire monétaire française prenant forme de trois paradoxes. Un premier paradoxe tient à ce que l'on croit généralement que la controverse entre Malestroit et Bodin a servi de matrice à la réforme, alors que c'est la Cour des monnaies, et parmi elle en particulier Thomas Turquam, qui en est à l'origine (3). Un deuxième paradoxe tient au rapport de cette réforme à la souveraineté : elle est lue comme une tentative de recouvrer une souveraineté monétaire perdue alors que, en ancrant la monnaie dans le métal, elle élimine toute capacité de mener une politique monétaire (4). Un troisième paradoxe tient au contexte de la période : la réforme de 1577 vise à stabiliser la monnaie alors que les graves troubles politiques, économiques et financiers semblent vouer une telle tentative à l'échec (5). Tout cela contribue à rendre cette réforme difficilement tenable : bientôt les cours volontaires réapparaissent, la réforme rate son objectif de stabilisation et la souveraineté politique sur la monnaie est contestée dans ses fondements mêmes (6).
    Keywords: Crise monétaire;réforme monétaire;système de compte;souveraineté;France;Ancien régime
    Date: 2011–12–08
  18. By: Leeson, Peter (George Mason University); Sanandaji, Tino (Research Institute of Industrial Economics (IFN))
    Abstract: Existing studies of entrepreneurship focus on entrepreneurs whose individual contribution to wealth creation is typically trivial: self-employed persons. This paper investigates entrepreneurs whose individual contribution to wealth creation is enormous: billionaires. We explore the relationship between economic development, institutions, and these contrasting kinds of entrepreneurs. We find that the institutions consistent with self-employed entrepreneurs di¤er markedly from the ones consistent with billionaires. Further, only the latter are consistent with the institutions that underlie economic prosperity. Where well-protected private property rights and supporting, market-enhancing institutions flourish, so do billionaires. But self-employed entrepreneurs don't. Where private property rights are weakly protected and interventionist institutions flourish, so do self-employed entrepreneurs. But billionaires don't.
    Keywords: Billionaires; Entrepreneurship; Self-employment; Institutions
    JEL: H20 L26 L53 O17
    Date: 2012–01–02
  19. By: Dirk Bergemann; Stephen Morris
    Date: 2012–01–09
  20. By: Johannes Weisser (IMPRS Uncertainty, MPI for Economics, Jena)
    Abstract: Koukoumelis et al. (2010, 2012) have shown that one-way communication enhances contributions to public goods. We investigate the effectiveness of one-way communication, when the benefits from the public good are asymmetric and the sender of a message is the main beneficiary of cooperation. Our results show that, in the absence of communication opportunities, contribution behavior may be inversely related to other group members' marginal benefits from the public good. The effectiveness of one-way communication, however, remains unaffected even though compliance with a sender's suggestion to cooperate generates unfavorable payoff inequalities for message receivers. The results also indicate that one-way messages have to relate to the experimental game to enhance cooperation. Merely "giving someone a voice" is not sufficient.
    Keywords: Public goods, One-way communication, Privileged groups, Asymmetric marginal benefit
    JEL: C72 C91 C92 D74 H41
    Date: 2012–01–06
  21. By: Christopher B. Bumcrot; Judy Lin; Annamaria Lusardi
    Abstract: This report explores how well equipped today's households are to make complex financial decisions in the face of often high-cost and high-risk financial instruments. Specifically it focuses on financial literacy. Most importantly, it describes the geography of financial literacy, i.e., how financial literacy is distributed across the fifty US states. It describes the correlation of financial literacy and some important aggregate variables, such as state-level poverty rates. Finally, it examines how much differences in financial literacy can be explained by states' demographic and economic characteristics. To assess financial literacy, five questions were added to the 2009 Financial Capability Study, covering fundamental concepts of economics and finance encountered in everyday life: simple calculations about interest rates and inflation, the workings of risk diversification, the relationship between bond prices and interest rates, and the relationship between interest payments and maturity in mortgages. An index of financial literacy was constructed based on the number of correct answers provided by each respondent to the five financial literacy questions. The financial literacy index reveals wide variation in financial literacy across states. Much of the variation is attributable to differences in the demographic make-up of the states; however, a handful of states have either higher or lower levels of financial literacy than is explained by demographics alone. Also, there is a significant correlation between the financial literacy of a state and that state's poverty level. The findings indicate directions for policy makers and practitioners interested in targeting areas where financial literacy is low.
    Date: 2011–11

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