nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2014‒01‒17
twenty papers chosen by
Erik Thomson
University of Manitoba

  1. EEthics, Equity and the Economics of Climate Change. Paper 1: Science and Philosophy By Nicholas Stern
  2. La imagen económica de la España del siglo XVII: La mirada extranjera frente a la visión de los arbitristas By Luis Perdices de Blas; José Luis Ramos Gorostiza
  3. Dutch Corporate Finance, 1602-1850 By de Jong, A.; Jonker, J.; Roëll, A.
  4. Religious beliefs and entrepreneurship among Dutch protestants By Rietveld, C.A.; van Burg, E.
  5. Economic ideas regarding the urban water supply service in The nineteenth century britain By José Luis Ramos Gorostiza; Ana Rosado Cubero
  6. Schumpeter's Theological Roots? Harnack and the origins of creative destruction By Paul Nightingale
  7. Game-theoretic foundations of monetary equilibrium By Camera, Gabriele; Gioffré, Alessandro
  8. The Problem of Methodological Pluralism in Ecological Economics By Lo, Alex
  9. Approaches to well-being, use of psychology and paternalism in economics By Collewet, Marion
  10. When best-replies are not in equilibrium: understanding cooperative behaviour By Irenaeus Wolff
  11. Episodes from the Early History of Experimentation in Economics By Andreas Ortman
  12. Leadership and conditional cooperation in public good games: What difference does the game make? By Edward J Cartwright; Denise Lovett
  13. The Triple Helix as a Highly Charged Intellectual Enterprise By Todeva, Emanuela; Etzkiwitz, Henry
  14. The new stage of the state’s concept evolution: example of Russia By Alexander Rakviashvili
  15. New Survey Methods By de Jong, M.G.
  16. Economic Prospects for the Long Run : a speech at Bard College at Simon's Rock, Great Barrington, Massachusetts, May 18, 2013 By Bernanke, Ben S.
  17. Money, Well-being and Loss Aversion: Does an Income Loss Have a Greater Effect on Well-being than an Equivalent Income Gain? By James Banks; Christopher J. Boyce; Gordon D.A. Brown; Andrew E. Clark; Alex M. Wood
  18. Scope and Flaws of the New Neoclassical Synthesis By Ronny Mazzocchi
  19. Trust in the monetary authority By Bursian, Dirk; Faia, Ester
  20. Some Conceptual and Methodological Issues on Happiness: Lessons from Evolutionary Biology By Yew-Kwang NG

  1. By: Nicholas Stern
    Abstract: This paper examines a broad range of ethical perspectives and principles relevant to the analysis of issues raised by the science of climate change and explores their implications. A second and companion paper extends this analysis to the contribution of ethics, economics and politics in understanding policy towards climate change. These tasks must start with the science which tells us that this is a problem of risk management on an immense scale. Risks on this scale take us far outside the familiar policy questions and standard, largely marginal, techniques commonly used by economists; this is a subject that requires the full breadth and depth of what economics has to offer and a much more thoughtful view of ethics than economists usually bring to bear. Different philosophical approaches bring different perspectives on understanding and policy, yet they generally point to the case for strong action to manage climate change.
    Date: 2013–10
  2. By: Luis Perdices de Blas (Departamento de Historia e Instituciones Económicas I. Facultad de Ciencias Económicas y Empresariales. Universidad Complutense de Madrid, Campus de Somosaguas,s/n. 28223 Pozuelo de Alarcón (Madrid) - SPAIN); José Luis Ramos Gorostiza (Departamento de Historia e Instituciones Económicas I. Facultad de Ciencias Económicas y Empresariales. Universidad Complutense de Madrid, Campus de Somosaguas,s/n. 28223 Pozuelo de Alarcón (Madrid) - SPAIN)
    Abstract: The economic image of the seventeenth century Spain: The foreign look versus the viwof the Arbitristas This paper compares the economic image of the seventeenth century Spain we received from the foreign travelers with that offered by the arbitristas, examining the main similarities and differences. Specifically, it analyses the following issues: the consideration of natural resources base, the vision of national character and its relation to productive activities, and the perception of economic situation and the causes of backwardness. The aim is to contrast the view of those who were thinking "from the inside" about the causes of the striking decline of the country, with the free and uncensored look of foreign visitors, which –despite its constraints and limitations– tended to focus on the most striking and different aspects compared to the reality of their own countries.
    Abstract: Este trabajo compara la imagen económica de la España del siglo XVII que nos transmitieron los viajeros extranjeros con la ofrecida por los arbitristas, examinando las principales similitudes y diferencias. En concreto, se detiene en las siguientes cuestiones: la consideración del medio natural, la visión del carácter nacional y de su relación con las actividades productivas, y la percepción de la situación económica y de las causas del atraso. Se trata de contrastar la opinión de aquellos que estaban reflexionando “desde dentro” sobre las causas de la llamativa decadencia del país, con la mirada libre y sin censuras del visitante extranjero, que –pese a sus condicionantes y limitaciones– tendía a fijarse en los aspectos más llamativos y diferentes respecto a la realidad de su propio país de origen.
    Keywords: Travelers, Arbitristas, Economy, Spain, Seventeenth century, History of economic thought, Viajeros, Arbitristas, Economía, España, siglo XVII, Historia del pensamiento económico.
    JEL: B00 B10
    Date: 2013–05
  3. By: de Jong, A.; Jonker, J.; Roëll, A.
    Abstract: Early Modern Dutch corporate finance had two notable features, a remarkable ease of raising large amounts of capital and a flexible legal framework. Having pioneered new corporate forms with two intercontinental trading companies, Dutch business adopted such forms on a wider scale only during the 18th century, when economic concentration and consolidation led to the appearance of business units large enough to need them. The financial intermediation and legal institutions available also facilitated early industrialization during the 19th century, up to and including the railways. The large export of capital throughout the period under consideration failed to harm economic development at any point or in any way.
    Keywords: corporate finance
    JEL: G3 M00
    Date: 2013–06–04
  4. By: Rietveld, C.A.; van Burg, E.
    Abstract: Religious beliefs affect the economic behavior of individuals. The aim of this study is to investigate the relation between religious beliefs and entrepreneurship. Empirical evidence that entrepreneurship rates differ among religions suggests that religious beliefs influence the pursuit of entrepreneurship. However, how and which specific religious beliefs play a role in this relationship remains unknown. Therefore, we study the relation between two key religious beliefs and entrepreneurship within one specific branch of Christianity, namely, Protestantism. Using a unique sample of 756 Christian protestant entrepreneurs and employees from the Netherlands, we show that protestant entrepreneurs have a stronger belief than comparable protestant employees that their work is a calling from God and that protestant entrepreneurs are more likely to perceive a duty to add value to society through their occupational work. These results indicate that research on the relation between religion and entrepreneurship is instrumental in explaining the engagement of people in entrepreneurship.
    Keywords: Christianity, beliefs, entrepreneurship, protestantism, religion
    JEL: D21 L20 L26 Z12 Z13
    Date: 2013–10–10
  5. By: José Luis Ramos Gorostiza (Departamento de Historia e Instituciones Económicas I. Facultad de Ciencias Económicas y Empresariales. Universidad Complutense de Madrid, Campus de Somosaguas,s/n. 28223 Pozuelo de Alarcón (Madrid) - SPAIN); Ana Rosado Cubero (Departamento de Historia e Instituciones Económicas I. Facultad de Ciencias Económicas y Empresariales. Universidad Complutense, Campus de Somosaguas. 28223 Pozuelo de Alarcón (Madrid), Spain.)
    Abstract: By the mid-nineteenth century, along with other network infrastructurestypical of the Second Industrial Revolution, began to take shape the modern system of water supply. The purpose of this paper is to examine the major economic ideas surrounding the beginnings of this new urban service in Britain during the second half of the nineteenth century, which marked a starting point for future analytical developments. First, the socioeconomic importance of improvement of public health through an intensive use of running water. Second, the emergence of the concept of natural monopoly. And finally, the debate about the organization of service management. This interesting case gives us the opportunity to observe the interaction, in both directions, between facts and economic ideas.
    Abstract: Hacia mediados del siglo XIX, junto a otras infraestructuras en red propias de la segunda revolución industrial, empezó a configurarse el sistema moderno de abastecimiento de agua potable. El propósito de este trabajo es examinar las principales ideas económicas que rodearon los inicios de este novedoso servicio urbano en Gran Bretaña durante la segunda mitad del siglo XIX, y que marcaron un punto de arranque para futuros desarrollos analíticos. Primero, la importancia socioeconómica de la mejora de la salubridad pública a través de un uso intensivo de agua corriente. Segundo, el surgimiento de la noción de monopolio natural. Y tercero, el debate en torno a la mejor forma de organizar la gestión del servicio. Lo interesante del caso es que nos ofrece la posibilidad de observar la interacción, en ambos sentidos, entre hechos e ideas económicas.
    Keywords: Urban water supply, Great Britain, Public health, Natural monopoly, History of economic thought, Abastecimiento urbano de agua, Gran Bretaña, Salud pública, Monopolio natural, Historia del pensamiento económico.
    JEL: B00 B10
    Date: 2013
  6. By: Paul Nightingale (SPRU, University of Sussex, UK)
    Keywords: Schumpeter, Harnack, Qutb, Creative destruction
    Date: 2013–12
  7. By: Camera, Gabriele; Gioffré, Alessandro
    Abstract: Monetary theorists have advanced an intriguing notion: we exchange money to make up for a lack of enforcement, when it is difficult to monitor and sanction opportunistic behaviors. We demonstrate that, in fact, monetary equilibrium cannot generally be sustained when monitoring and punishment limitations preclude enforcement - external or not. Simply put, monetary systems cannot operate independently of institutions - formal or informal - designed to monitor behaviors and sanction undesirable ones. This fundamental result is derived by integrating monetary theory with the theory of repeated games, studying monetary equilibrium as the outcome of a matching game with private monitoring. --
    Keywords: Social norms,repeated games,cooperation,payment systems
    JEL: E4 E5 C7
    Date: 2013
  8. By: Lo, Alex
    Abstract: Methodological pluralism advocates balanced consideration of multiple research methods. The concept rests upon the necessity of choice in the absence of conclusive principles to guide the preference of method. Ecological economics, however, appears to be engaging in a different conception creating confusion as to the scope for intellectual openness. This paper offers clarifications for this concept and a critique. Ecological economics advances a coherent theory crafted along its biophysical worldview and moral commitments. These imperatives guide the choice of method and favour a reduced range of methodological possibilities to the exclusion of neoclassical economic options. If ecological economics is seen as an ideological opposite of neoclassical economics, it would need a selective methodological strategy rather than maintaining methodological diversity. Maintaining diversity may erode the basis of its heterodox criticisms by requiring openness to the orthodox alternatives. Ecological economics has shown difficulty in sustaining its long-standing pluralist commitments while increasingly seeking clear differentiation from its monolithic “enemy”.
    Keywords: Methodological pluralism; methodological diversity; value pluralism; ecological economics; neoclassical economics.
    JEL: B40 Q57
    Date: 2014–01–12
  9. By: Collewet, Marion
    Abstract: This paper discusses three approaches to well-being in economics which use insights from psychology to support their position: Scitovsky's Joyless Economy, happiness economics, and the constitutional approach to happiness in economics. It shows that in the way these approaches make use of psychology, normative choice is involved, and there is room for personal judgement. First, an approach to well-being, as an approach to what is worth pursuing, is necessarily normative. The use of psychological theories to support an approach to well-being relies on a normative step, revealed by the choice of a psychological theory by the economist. Second, personal judgement is often needed to translate the findings of psychology to recommendations for practice. Both things have implications for those theories which define well-being as something different than the fulfillment of individual preferences whatever they are, and therefore yield potential for paternalism. The paternalistic recommendations derived by economists are not based on positive science only, but also rely on personal judgement and normative choice. --
    Keywords: paternalism,well-being,Scitovsky,happiness economics,constitutional approach
    JEL: I31 D71 B21
    Date: 2014
  10. By: Irenaeus Wolff
    Abstract: To understand cooperative behaviour in social-dilemma experiments, we need to understand the game participants play not only in monetary but in preference terms. Does a Nash-prediction based on participants' actual preferences describe their behaviour in a public-good experiment well? And if not, where does the observed behaviour diverge from the prediction? This study provides an environment which allows to answer these questions: when making their contribution decision, participants are informed about their co-playersÕ priorly-elicited conditional contribution preferences. This induces common knowledge of preferences and thereby leads to direct experimental control over the game participants play. Results show that most people play best-responses to their beliefs. At the same time, beliefs in a third of the cases do not correspond to an equilibrium prediction that is based on the elicited conditional-cooperation preferences. Moreover, more often than not, beliefs are empirically inaccurate. This holds true even in a treatment that gives participants the option to look up the set of equilibria of their game.
    Keywords: Public good, social dilemma, Nash-equilibrium, rational beliefs, conditional cooperation, social preferences.
    Date: 2013
  11. By: Andreas Ortman (School of Economics, Australian School of Business, the University of New South Wales)
    Keywords: Experimental methods, Early History of Experimentation in Economics
    JEL: B41 C9
    Date: 2013–12
  12. By: Edward J Cartwright; Denise Lovett
    Abstract: We investigate experimentally whether the extent of conditional cooperation in public good games depends on the marginal return to the public good and type of game. The marginal return is varied from 0.2 to 0.4 to 0.8. The 'standard' game, in which three players contribute before a follower, is compared with a leader-follower game, in which one player leads and three follow. We find no strong evidence that the marginal return or type of game makes a difference to the extent of conditional cooperation. We also find no evidence that the type of game makes a difference to unconditional contributions. The level of marginal return does, however, have a strong effect on unconditional contributions. Our results highlight the critical role that can be played by leaders in a public good game.
    Keywords: Public good; conditional cooperation; reciprocity; leadership
    JEL: C72 H41
    Date: 2013–12
  13. By: Todeva, Emanuela; Etzkiwitz, Henry
    Abstract: Reflections on the evolution of the Triple Helix movement and the discussions at its latest conference in 2014.
    Keywords: Triple Helix, Intermediation, Governance, Theory and Practice
    JEL: H10 H42 L5 L51 O32 O38
    Date: 2013–09
  14. By: Alexander Rakviashvili (Department of Economics, Lomonosov Moscow State University)
    Abstract: The article is dedicated to the state’s concept evolution. Here is the author’s vision of the state as an abstract notion that describes specific governmental relations, formatted in a result of a long evolution process. The special attention is attracted to the Russian political system and features of the new stage of the state's evolution.
    Keywords: State, autocracy, democracy, morality.
    JEL: A10 P51 P00
    Date: 2013–11
  15. By: de Jong, M.G.
    Abstract: Surveys are widely used by scholars, companies, and public policymakers to generate invaluable insights. Despite the popularity of surveys, there are several biases that can affect the validity of self-reported data. In his inaugural address, Martijn de Jong discusses how new survey methods can help to extract valid information from surveys. Several examples are presented that showcase the relevance of better research design and careful statistical modeling of the response process. In addition, De Jong addresses some commonly held perceptions about the ability to make causal inferences with survey data.
    Keywords: causality, common method bias, common method variance, cross-cultural, item response theory, scale usage, response styles, sensitive questions, social desirability, surveys
    Date: 2013–05–31
  16. By: Bernanke, Ben S. (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2013–05–18
  17. By: James Banks; Christopher J. Boyce; Gordon D.A. Brown; Andrew E. Clark; Alex M. Wood
    Abstract: Higher income is associated with greater well-being, but do income gains and losses impact on well-being differently? Loss aversion, whereby losses loom larger than gains, is typically examined with relation to decisions about anticipated outcomes. Here, using subjective well-being data from Germany (N = 28,723) and the UK (N = 20,570), we find that experienced falls in income have a larger impact on well-being than equivalent income gains. The effect is not explained by the diminishing returns to well-being of income. Our findings show that loss aversion applies to experienced losses, counteracting suggestions that loss aversion is only an affective forecasting error. Longitudinal studies of the income/well-being relationship may, by failing to take account of loss aversion, have overestimated the positive effect of income for well-being. Moreover, societal well-being may be best served by small and stable income increases even if such stability impairs long-term growth.
    Keywords: Loss aversion, money, income, subjective well-being
    JEL: D03 D31 I31
    Date: 2014–01
  18. By: Ronny Mazzocchi
    Abstract: The current consensus in macroeconomics represented by the New Neoclassical Synthesis (NNS) is based on dynamically stochastic general equilibrium (DSGE) modeling with Real Business Cycle (RBC) core to which nominal rigidities are added by way of imperfect competition. The claim is that the NNS model is capable of rigorously reproducing observable phenomena and is able to provide a microeconomically well-founded basis for the design of optimal policy rules, since it is amenable to welfare analysis. Nevertheless these results come at the price of many ad-hocery and other shortcomings which are indispensable for intertemporal equilibrium modelling of the current kind. Moreover the NNS did not let us think about the financial crisis and the macroeconomic imbalances that were forming in the years of the Great Moderation.
    JEL: B22 D50 E21 E22
    Date: 2013
  19. By: Bursian, Dirk; Faia, Ester
    Abstract: Trust in policy makers uctuates signi…cantly over the cycle and a¤ects the transmission mechanism. Despite this it is absent from the literature. We build a monetary model embedding trust cycles; the latter emerge as an equilibrium phenomenon of a game-theoretic interaction between atomistic agents and the monetary authority. Trust a¤ects agentsstochastic discount factors, namely the price of future risk, and through this it interacts with the monetary trans- mission mechanism. Using data from the Eurobarometer surveys we analyze the link between trust and the transmission mechanism of macro and monetary shocks: empirical results are in line with theoretical ones. --
    Keywords: trust evolutionary games,trust driven expectations,monetary transmission mechanism
    JEL: E0 E5
    Date: 2013
  20. By: Yew-Kwang NG (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.)
    Abstract: Despite recent intense interest, happiness studies have been impeded by some conceptual and methodological problems, including viewing happiness (well-being/welfare) as different over different persons, as relative, multi-dimensional, non-cardinally measurable, interpersonally noncomparable and using non-cardinal and interpersonally non-comparable methods of happiness measurement. Using the evolutionary biology of happiness, this paper argues that happiness is absolute, universal, and unidimensional and is also cardinally measurable and interpersonally comparable. This is needed to make choices motivated by reward (pleasure) and punishment (pain) consistent with fitness maximization. However, happiness indices obtained by virtually all existing methods of happiness measurement are largely non-cardinal and non-comparable, making the use of averaging in group happiness indices of dubious philosophical validity. A method of measuring happiness to give cardinal and interpersonally comparable indices is discussed. These may contribute towards the more scientific study of happiness that is based on sounder methodological grounds as well as yielding more useful results.
    Keywords: Evolutionary biology; happiness; interpersonal comparison; measurability; wellbeing; welfare.
    Date: 2013–08

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