nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2015‒05‒02
twelve papers chosen by
Erik Thomson
University of Manitoba

  1. Essentials of Constructive Heterodoxy: Institutions By Kakarot-Handtke, Egmont
  2. Eyes wide shut: John Rawls's silence on racial justice By Ai-Thu Dang
  3. Equality of Opportunity: Theory and Evidence By Ferreira, Francisco H. G.; Peragine, Vito
  4. The Evolution of a "Kantian Trait": Inferring from the Dictator Game By Lorenzo Cerda Planas
  5. The Meaning of Failed Replications: A Review and Proposal By Clemens, Michael A.
  6. Polyarchies, Competitive Oligarchies, or Inclusive Hegemonies? 23 Global Intergovernmental Organizations Compared By Dawisson Belém Lopes
  7. Of Economics and Statistics: the "Gerschenkron Effect" By Stefano Fenoaltea
  8. Does Exposure to Economics Bring New Majors to the Field? Evidence from a Natural Experiment By Fricke, Hans; Grogger, Jeff; Steinmayr, Andreas
  9. Institutional Constraints on Modern Economic Growth By Konstantin Yanovskiy; Sergey Zhavoronkov; Ilia Zatcovetsky; Vladimir Lisin; Dmitry Cherny; Sergey Shulgin
  10. What caused Chicago bank failures in the Great Depression? A look at the 1920s. By Natacha Postel-Vinay
  11. On statistical Mapping of Poverty: Social Reality, Concepts and Measurement By Sonia Rocha
  12. "Is Paper Money Just Paper Money? Experimentation and Variation in the Paper Monies Issued by the American Colonies from 1690 to 1775" By Farley Grubb

  1. By: Kakarot-Handtke, Egmont
    Abstract: What do economists understand about the economy if they do not understand the profit phenomenon? Next to nothing. Therefore, the very first task in theoretical economics is to clarify the difference between profit and wage income and their respective determinants. It was Ricardo who tackled the problem first, but neither Orthodoxy nor Heterodoxy solved it until this day. The need for a paradigm shift is indisputable. The new structural axiomatic approach is more comprehensive as it embraces the consistent interaction of real and nominal variables of the monetary economy and the economic consequences of alternative variants of institutions.
    Keywords: new framework of concepts; structure-centric; axiom set; real analysis; nominal analysis; profit; distributed profit; ownership
    JEL: B59 E10 H00
    Date: 2015–04–26
  2. By: Ai-Thu Dang (Centre d'Economie de la Sorbonne)
    Abstract: John Rawls's remarks on race are sparse in his writings. However, three key moments in his conceptual apparatus wherein racial issues appear explicitly can be be highlighted: (1) the status of race as a feature of the veil of ignorance; (2) racial minorities, the least advantaged, and the difference principle; and (3) the role of arguments made by antebellum abolitionist dissidents and Martin Luther King, Jr., in favor of racial equality in his reformulation of his notion of public reason. I show that the introduction of race poses difficulties for Rawls in his theory of justice. I also propose an explanation of why Rawls does not address issues of racial justice more explicitly and in-depth. However, because Rawls himself explained his relative silence on racial justice, I discuss its relevance. I contend that Rawls's conception of justice as fairness as a form of political liberalism is indebted to a strong principle of equal citizenship for all individuals that is blind to race and ethnicity, so his theoretical apparatus addresses the issue of legal racial discrimination or institutional racism. Nevertheless, it fails to address the problem of systemic racial discrimination
    Keywords: John Rawls; justice as fairness; racial (in)justice; public reason; ideal and nonideal theory
    JEL: A12 B41 D63
    Date: 2015–04
  3. By: Ferreira, Francisco H. G. (World Bank); Peragine, Vito (University of Bari)
    Abstract: Building on earlier work by political philosophers, economists have recently sought to define a concept of equity that accommodates the fairness of reward to individual responsibility and effort, while allowing for the existence of some inequalities which are unfair and should be compensated. This paper – commissioned as a chapter for the Oxford Handbook of Well Being and Public Policy – provides a critical review of the economic literature on equality and inequality of opportunity. A simple 'canonical model' of equal opportunity is proposed, and used to explore the two fundamental concepts in this (relatively) new theory of social justice: the principles of compensation and reward. Ex-ante and ex-post versions of the compensation principle are presented, and the tensions between them are discussed. Different approaches to the measurement of inequality of opportunity – and empirical applications – are reviewed, and implications for the measurement of poverty and of the rate of economic development are discussed.
    Keywords: equality of opportunity, inequality of opportunity, compensation, reward
    JEL: D63 I32
    Date: 2015–04
  4. By: Lorenzo Cerda Planas (Paris School of Economics - Centre d'Economie de la Sorbonne)
    Abstract: The aim of this paper is twofold. Starting from the population dynamics literature, which usually finds the resulting distribution of a trait in a population, according to some parents' preferences, I answer the inverted question: Which preference function would yield into a given trait distribution? I solve this using a continuous trait, instead of finite types of agents. Using this result, I connect this transmission theory of social traits with the well-known results of Dictator Game (DG) experiments. I use a specific definition of a Kantian trait applied to DG results, and determine the distribution of this trait that is commonly found in these experiments. With these two ingredients, I show that homo-oeconomicus parents have a greater' dislike' or disutility of having offspring with different traits from them compared to their Kantian counterparts. This could be a result of myopic empathy being stronger in homo-oeconomicus parents, driving this dislike of difference
    Keywords: Population dynamics; Kantian morale; evolutionary equilibrium
    JEL: C62 C63 C73 C61 D64
    Date: 2015–03
  5. By: Clemens, Michael A. (Center for Global Development)
    Abstract: The welcome rise of replication tests in economics has not been accompanied by a single, clear definition of replication. A discrepant replication, in current usage of the term, can signal anything from an unremarkable disagreement over methods to scientific incompetence or misconduct. This paper proposes an unambiguous definition of replication, one that reflects currently common but unstandardized use. It contrasts this definition with decades of unsuccessful attempts to standardize terminology, and argues that many prominent results described as replication tests – in labor, development, and other fields of economics – should not be described as such. Adopting this definition can improve incentives for researchers, encouraging more and better replication tests.
    Keywords: replication, robustness, transparency, open data, ethics, reproducible, replicate, misconduct, fraud, error, code, registry
    JEL: B40 C18 C80
    Date: 2015–04
  6. By: Dawisson Belém Lopes (Universidade Federal de Minas Gerais)
    Abstract: In this paper, I assume that global intergovernmental organizations (GIGOs) function as “enablers” of interstate liberal politics by way of their multilateral institutional frame-works. To support this view, I recall and adapt the classical concept of “polyarchy,” coined in the early 1950s by Robert A. Dahl. It consists of a two-dimensional theoretical construct applicable for measuring the level of liberalization in modern political societies. It follows that the more actors who take part in politics, and the more that institutions allow political opposition, the more open a society (of states) is likely to be. I thus wish to assess and rate the level of “polyarchization” of 23 GIGOs that cover various issue areas and fit some specific criteria (for example, more than one hundred member states from at least three different continents). The methodology section includes a scorecard that I have specially developed to help achieve these research objectives.
    Keywords: Robert A. Dahl, polyarchy, international organizations, democracy, political theory, international relations
    Date: 2015–02
  7. By: Stefano Fenoaltea
    Abstract: The "Gerschenkron effect" refers to the purported biases of early-weighted and late-weighted indices of production. If production is properly measured in what economists mean by "real" terms, the "Gerschenkron effect" does not exist at all.
    Keywords: Gerschenkron effect; index-number problem
    JEL: C43
    Date: 2015
  8. By: Fricke, Hans (University of St. Gallen); Grogger, Jeff (University of Chicago); Steinmayr, Andreas (Harris School, University of Chicago)
    Abstract: This study investigates how being exposed to a field of study influences students' major choices. We exploit a natural experiment at a Swiss university where all first-year students face largely the same curriculum before they choose a major. An important component of the first-year curriculum that varies between students involves a multi-term research paper in business, economics, or law. Due to oversubscription of business, the university assigns the field of the paper in a standardized way that is unrelated to student characteristics. We find that being assigned to write in economics raises the probability of majoring in economics by 2.7 percentage points, which amounts to 18 percent of the share of students who major in economics.
    Keywords: higher education, law, economics, major choice, gender differences
    JEL: I20 I23
    Date: 2015–04
  9. By: Konstantin Yanovskiy (Gaidar Institute for Economic Policy); Sergey Zhavoronkov (Gaidar Institute for Economic Policy); Ilia Zatcovetsky (Samuel Neaman Institute for Advanced Studies in Science and Technology); Vladimir Lisin (Chairman of the board of directors of Novolipetsk Steel Company); Dmitry Cherny (Ministry of Economic Development of the Russian Federation Department for Innovative Development); Sergey Shulgin (The Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: How to import modern Western Institutions to suppress economic growth in underdeveloped countries? Russian experience and some warnings for newcoming reformers The monograph «Institutional Constraints on Modern Economic Growth" deals with the most dangerous obstacles standing in the way of long term economic growth. Some of these obstacles have been studied extensively, while others are well known but have been largely forgotten over time; finally, there are some that for various reasons are normally ignored. "I believe that the United States today is not an appropriate model for Mexico or other low-income countries…. There have been no summits about how you privatize governmental activities. You have seen summits about how to raise taxes, about spending more of the taxpayers' money, about how to impose more controls on the people. That is the sense in which I say, take as your model the U.S. in its first 150 years. We can afford our nonsense now because we had so long a period during which to build a base. You can't." wrote Milton Friedman[1] in 1994. The book contains specification of the principal cases of "nonsense". The authors are searching for historic records of "damaged" institutions their roots and causes of the damages, tracking them to universal suffrage rising and to the earlier, pre-capitalist institutions, so that to develop the policy advice for new democracies how to escape all these traps.
    Keywords: private property safeguards, import of institutions; Economic Growth; Government failures; political institutions
    JEL: D72 D73 H41 N40 P16 P51
    Date: 2015
  10. By: Natacha Postel-Vinay (University of Warwick)
    Abstract: This paper reassesses the causes of Chicago bank failures during the Great Depression by tracking the evolution of their balance sheets in the 1920s. I find that all Chicago banks suffered tremendous deposit withdrawals; however banks that failed earlier in the 1930s had invested more in mortgages in the 1920s. The main problem with mortgages was their lack of liquidity, not their quality. Banks heavily engaged in mortgages did not have enough liquid assets to face the withdrawals and failed. This paper thus reasserts the importance of pre-crisis liquidity risk management in preventing bank failures. While not excluding an important role for lenders of last resort as a within-crisis solution, emphasis on banks' long-term investments in illiquid assets implies a role for regulatory authorities in crisis prevention.
    Keywords: Great Depression, Commercial Banks, Portfolio Choice and Mortgage
    JEL: G11 G21 N22
    Date: 2015–04–18
  11. By: Sonia Rocha
    Abstract: This article concerns the need to define poverty in a way to be relevant to the context it is to refer, to be compatible with data availability and to be useful for policy purposes. It discusses the adequacy of concepts to different socioeconomic situations and analyses the two approaches to poverty — basic needs and income (or poverty line) — in what concerns their advantages and shortcomings. It highlights how perverse the generalization of the use of the poverty line approach can be, specially when applied to socioeconomic settings where income is an inadequate parameter of well-being and the data base is insufficient for its adequate operacionalisation. Este artigo trata da necessidade de definir pobreza de modo que o conceito seja relevante no contexto ao qual se pretende aplicá-lo, compatível com a disponibilidade de dados estatísticos e útil para o desenho de políticas públicas. Discute a adequação do conceito a diferentes situações socioeconômicas e analisa as duas abordagens de pobreza — a dos basic need e a da renda ( ou da linha de pobreza) — no que concerne a suas vantagens e desvantagens. O artigo destaca quão perversa pode ser a generalização do uso da abordagem da linha de pobreza, especialmente quando aplicada a contextos socioeconômicos em que a renda não é um parâmetro adequado de bem-estar e os dados estatísticos disponíveis são insuficientes para a sua operacionalização.
    Date: 2015–01
  12. By: Farley Grubb (Department of Economics, University of Delaware)
    Abstract: The British North American colonies were the first western economies to rely on legislature-issued paper monies as an important internal media of exchange. This system arose piecemeal. In the absence of banks and treasuries that exchanged paper monies at face value for specie monies on demand, colonial governments experimented with other ways to anchor their paper monies to real values in the economy. These mechanisms included tax-redemption, land-backed loans, sinking funds, interest-bearing notes, and legal tender laws. The structure and performance of these mechanisms are explained and assessed. This was monetary experimentation on a grand scale.
    Keywords: Adam Smith, Benjamin Franklin, bills of credit, fiat currency, interest-bearing money, land banks, legal tender laws, paper money, sinking funds, tax redemption, zero-coupon bonds
    JEL: E42 E50 F31 G10 H60 K29 N11 N21 N41
    Date: 2015

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