nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2014‒02‒08
nine papers chosen by
Erik Thomson
University of Manitoba

  1. In memoriam of Professor Ronald Coase By Ana Lourenço
  2. In Search of the Banking Regulator amid U.S. Financial Reforms of the 1930s By Dominique Lacoue-Labarthe
  3. Short‐Run Macro After the Crisis: The End of the “New” Neoclassical Synthesis? By Oliver Landmann
  4. Between efficiency and effectiveness By Sergey V. Tretyakov
  5. Income growth and happiness: Reassessment of the Easterlin Paradox By Beja Jr., Edsel
  6. Personnel Economics essay: Issues in Human Capital Theory, training and earnings of workers By Josheski, Dushko
  7. Economic Growth Evens-Out Happiness: Evidence from Six Surveys By Andrew E. Clark; Sarah Flèche; Claudia Senik
  8. Institutionen und historische Grenzen By Jürgen Jerger
  9. Does Money Make People Right-Wing and Inegalitarian? A Longitudinal Study of Lottery Winners By Powdthavee, Nattavudh; Oswald, Andrew J.

  1. By: Ana Lourenço (Faculdade de Economia e Gestão - Universidade Católica Portuguesa, Porto)
    Abstract: This article was written as a tribute to Professor Ronald Coase. It acknowledges his scholarly contributions to understanding the existence and boundaries of the firm, and the role of legal rules in organizing economic activity. It also recognizes the reflexivity, realism, simplicity and wit inherent to the work of Professor Ronald Coase.
    Date: 2013–12
  2. By: Dominique Lacoue-Labarthe (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - Université Montesquieu - Bordeaux IV : EA2954)
    Abstract: Some bank reforms of the 1930s in the United States may have been overvalued. The Glass-Steagall Act of 1933 actually created new endogenous risks involving potential systemic effects. Deposit insurance failed to address the main cause of banking panics, and rather strengthened inefficient unit banks, while the prohibition of interstate bank branching continued to hinder banks to diversify idiosyncratic risks. The separation of commercial and investment banking put an end to certain conflicts of interest but it created an opportunity cost by preventing universal banking from developing effectively. Finally, an untimely intervention in a duopolistic conflict made the regulator a captive figure. By contrast, major innovations covering bailout processes and prudential regulation appear to have been underestimated. The Reconstruction Finance Corporation of 1932 established the foundations of an investor of last resort, giving the Treasury the authority to recapitalize insolvent financial institutions deemed too big to fail. The newly established banking regulator, the Federal Deposit Insurance Corporation of 1933, was given a special bank-closure rule, separate from the usual bankruptcy proceedings, which opened a way towards orderly resolution of failing banks in order to protect the economy from the spread of systemic risk.
    Keywords: bank reform, United States, Regulation, Economic history
    Date: 2014–01–15
  3. By: Oliver Landmann (Institut für allgemeine Wirtschaftsforschung, Universität Freiburg)
    Abstract: The Financial Crisis of 2008, and the Great Recession in its wake, have shaken up macroeconomics. The paradigm of the “New” Neoclassical Synthesis, which seemed to provide a robust framework of analysis for short‐run macro not long ago, fails to capture key elements of the recent crisis. This paper reviews the current reappraisal of the paradigm in the light of the history of macroeconomic thought. Twice in the past 80 years, a major macroeconomic crisis led to the breakthrough of a new paradigm that was to capture the imagination of an entire generation of macroeconomists. This time is different. Whereas the pre‐crisis consensus in the profession is broken, a sweeping transition to a single new paradigm is not in sight. Instead, macroeconomics is in the process of loosening the methodological straightjacket of the “New” Neoclassical Synthesis, thereby opening a door for a return to its original purpose: the study of information and coordination in a market economy.
    Keywords: Financial Crisis, Great Recession, Macroeconomics, New Neoclassical Synthesis, Keynesian Economics, New Classical Economics, Great Moderation
    JEL: B22 B40 E10 E12 E13
    Date: 2014–01
  4. By: Sergey V. Tretyakov (National Research University Higher School of Economics)
    Abstract: The main idea of this paper is that some sort of legal theory dealing with the law’s social impact is an indispensable element of the legal profession in the time of late modernity. Can legal theory pro-vide an adequate understanding of the social context of the application of law, relying solely on in-ternal resources? If not, which interdisiplinary discourse is the best and why?
    Keywords: efficiency, effectiveness, social context of law, neoclassical economics, behav-ioral law and economics, Hart, Kelsen, Sunstein, Glaeser
    JEL: K10
    Date: 2014
  5. By: Beja Jr., Edsel
    Abstract: This paper presents evidence of a positive but very small long run relationship between income growth and happiness, evidence that can disprove the Easterlin Paradox. However, the paper argues that there is actually reason to sustain the paradox because it finds the magnitude of the estimated relationship too small to suggest that income growth has substantial consequence in improving happiness over the long-term. Certainly, the evidence suggests that happiness is more than about raising incomes. This paper argues that a rejection of the paradox is acceptable if and only if the empirical findings indicate economic significance.
    Keywords: Easterlin Paradox; income growth; happiness; dynamics
    JEL: A20 C53 I30 O40
    Date: 2014–02–01
  6. By: Josheski, Dushko
    Abstract: In this paper the issues from the personnel economics has been investigated. The issues such as training of workers from Becker’s human capital theory and their association with the workers’ productivity. In the second part of the paper the issue of grooming has been investigated in relation with earnings for which there exist and it is presented empirical evidence. In the equation as regressors are also present Mincerian variables: age, marital status and others. Also the four puzzles in the empirical literature about the determinants of earnings has been investigated. And how the empirical literature helps in resolving them.
    Keywords: Personnel economics, training, earnings, grooming
    JEL: M50 M52 M53
    Date: 2014–01–31
  7. By: Andrew E. Clark (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA)); Sarah Flèche (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA)); Claudia Senik (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), UP4 - Université Paris 4, Paris-Sorbonne - Université Paris IV - Paris Sorbonne - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique)
    Abstract: In spite of the great U-turn that saw income inequality rise in Western countries in the 1980s, happiness inequality has dropped in countries that have experienced income growth (but not in those that did not). Modern growth has reduced the share of both the "very unhappy" and the "perfectly happy". The extension of public amenities has certainly contributed to this greater happiness homogeneity. This new stylized fact comes as an addition to the Easterlin paradox, offering a somewhat brighter perspective for developing countries.
    Keywords: Happiness ; Inequality ; Economic growth ; Development ; Easterlin paradox
    Date: 2014–01
  8. By: Jürgen Jerger (IOS Regensburg)
    Abstract: The relevance of (political) borders on the one hand and of historical conditions on the other hand for some of today’s aspects of ec onomic and social reality is well established in both theoretical and empirical research in economics as wel as in other disciplines. More surprising are empirical results that point to a long-lasting relevance of historical borders that may still exert causal on effects on present conditions and observations. This paper argues that the explanation of these effects is a demanding, albeit potentially very rewarding challenge for institutional economics in particular and an interdisciplinary research program in general.
    Date: 2013–12
  9. By: Powdthavee, Nattavudh (London School of Economics); Oswald, Andrew J. (University of Warwick)
    Abstract: The causes of people's political attitudes are largely unknown. We study this issue by exploiting longitudinal data on lottery winners. Comparing people before and after a lottery windfall, we show that winners tend to switch towards support for a right-wing political party and to become less egalitarian. The larger the win, the more people tilt to the right. This relationship is robust to (i) different ways of defining right-wing, (ii) a variety of estimation methods, and (iii) methods that condition on the person previously having voted left. It is strongest for males. Our findings are consistent with the view that voting is driven partly by human self-interest. Money apparently makes people more right-wing.
    Keywords: voting, gender, lottery wins, political preferences, income, attitudes
    JEL: D1 D72 H1 J7
    Date: 2014–01

This nep-hpe issue is ©2014 by Erik Thomson. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.