nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2015‒05‒30
nine papers chosen by
Erik Thomson
University of Manitoba

  1. A tale of paradigm clash: Simon, situated cognition and the interpretation of bounded rationality By Petracca, Enrico
  2. Climate Change and Sustainable Welfare: An Argument for the Centrality of Human Needs By Ian Gough
  3. What happened to heterodox economics in Germany after the 1970s By Heise, Arne; Thieme, Sebastian
  4. Richard Titmuss: Forty years on By Howard Glennerster
  5. The republic of beliefs : a new approach to ?law and economics? By Basu,Kaushik
  6. (English) Well (Italiano) Well By Ilaria Di Tullio
  7. Comment appréhender les temporalités de l’histoire économique ? Plaidoyer pour une cliométrie des événements rares. By Claude Diebolt
  8. Piketty in the long run By Frank A Cowell
  9. Piketty is wrong By Obregon, Carlos

  1. By: Petracca, Enrico
    Abstract: The intellectual figure of Herbert A. Simon is well known for having introduced the influential notion of bounded rationality in economics. Less known, at least from the economists’ point of view, is the figure of Simon as eminent cognitive psychologist, co-founder of so-called cognitivism, a mainstream approach in cognitive psychology until the 80s of the last century. In fact, the two faces of Simon’s intellectual figure, as rationality scholar and as cognitive scientist, are not factorizable at all: according to Simon himself, cognitivism is bounded rationality and bounded rationality is cognitivism. This paper tries to answer a simple research question: has the notion of bounded rationality fully followed the development of cognitive psychology beyond cognitivism in the post-Simonian era? If not, why? To answer such questions, this paper focuses on a very specific historical episode. In 1993, on the pages of the journal Cognitive Science, Simon (with his colleague Alonso Vera) openly confronted the proponents of a new (paradigmatic) view of cognition called situated cognition, a firm challenger of cognitivism, which was going to inspire cognitive psychology from then on. This paper claims that this tough confrontation, typical of a paradigm shift, might have prevented rationality studies in economics from coming fully in touch with the new paradigm in cognitive psychology. A reconstruction of the differences between cognitivism and situated cognition as they emerged in the confrontation is seen here as fundamental in order to assess and explore this hypothesis.
    Keywords: Herbert A. Simon; bounded rationality; situated cognition theory; economics and cognitive psychology
    JEL: B31 B41 D03 D80
    Date: 2015
  2. By: Ian Gough
    Abstract: Since climate change threatens human wellbeing across the globe and into the future, we require a concept of wellbeing that encompasses an equivalent ambit. This paper argues that only a concept of human need can do the work required. It compares need theory with three alternative approaches. Preference satisfaction theory is criticised on the grounds of subjectivity, epistemic irrationality, endogenous and adaptive preferences, the limitlessness of wants, the absence of moral evaluation, and the non-specificity of future preferences. The happiness approach is found equally wanting. The main section shows how these deficiencies can be addressed by a coherent theory of need. Human needs are necessary preconditions to avoid serious harm, are universalisable, objective, empirically grounded, non-substitutable and satiable. They are broader than 'material' needs since a need for personal autonomy figures in all theoretical accounts. While needs are universal, need satisfiers are most often contextual and relative to institutions and cultures. The satiability and non-substitutability of needs is critical for understanding sustainability. The capability approaches of Sen and Nussbaum are compared but argued to be less fundamental. Finally, human needs provide the only concept that can ground moral obligations across global space and intergenerational time and thus operationalise 'sustainable welfare'.
    Keywords: Human needs, welfare theory, wellbeing, global justice, intergenerational justice, sustainability, preferences, capabilities
    JEL: B5 I00 P46 Z13
    Date: 2014–07
  3. By: Heise, Arne; Thieme, Sebastian
    Abstract: In the context of ongoing criticisms of the lack of pluralism in economics, the present article aims to discuss the development of 'heterodox' economics since the 1970s. Following Lakatos's concept of scientific research programs (srp), and concentrating on the situation in Germany, the article will discuss classifications of economics, and will specify the understanding of diversity in the light of 'axiomatic variations' of the economic mainstream. This will form the basis for the subsequent description of the development of heterodoxy in Germany, with special reference to the founding of new universities and the reform movements in the 1970s. It can be shown that the heterodox scene flourished in this period, but that this pluralization remained fragmented and short-lived; by the 1980s at the latest heterodoxy was again on its way to marginalization. The history of heterodoxy in Germany thus presents itself as an unequal 'battle of the paradigms', and can only be told as the story of a failure.
    Keywords: heterodox economics,pluralization,philosophy of science,sociology of science
    JEL: A11 B20 B50 Z13
    Date: 2015
  4. By: Howard Glennerster
    Abstract: Richard Titmuss was one of the world's leading public analysts and philosophers. He was highly influential in shaping the post-war welfare state and created the subject we now call social policy. What would he make of the present state of welfare? This lecture reflects on the man and the times which shaped his ideas. What is his legacy forty years on from his death? Which of his ideas have lasted and which have proved less durable? What gaps were there in his world view?
    Keywords: social policy, Titmuss, well-being
    JEL: I38
    Date: 2014–02
  5. By: Basu,Kaushik
    Abstract: The discipline of law and economics deals with wide-ranging topics, from competition and environmental policy to crime control, and has been instrumental in determining how an economy performs. Yet its success has fallen short of its potential. The discipline?s shortcomings are nowhere as visible as in developing economies, where a common refrain is how the law looks good on paper but does not get implemented. This paper articulates a methodological flaw that underlies much of contemporary law and economics, and argues that there is an intimate connection between human beliefs and expectations, on the one hand, and the effectiveness of the law, on the other. I propose a new approach to law and economics that is rooted in game theory and rectifies the flaw. It is argued that this approach can open up new areas of research and be marshalled to address some of the more pressing policy challenges of our time.
    Keywords: Gender and Law,Labor Policies,Public Sector Corruption&Anticorruption Measures,Parliamentary Government,Legal Products
    Date: 2015–05–07
  6. By: Ilaria Di Tullio
    Abstract: (English) Economic crisis has changed the political, economic and social scenario of the world as we know it. Economic liberalism, which theorizes freedom of movement synonymously with prosperity and happiness has failed. The Nobel Prize winner Joseph Stiglitz has recently announced a theorem which declares “When social inequality between people increases, GDP tends to decrease and to become negative”. His thesis confirmed the extraordinary connection between social disparity increases, measured with Gini’s coefficient, these heavy economic catastrophes mirror the U.S. Great depression of 1929. This contribute take advantage of statistical instruments, sociology’s faithful supporters to highlight the economic transformation. There are analysis like Gini’s coefficient trend with relation a historic series which shows data from 1983 to 2013, a Principal Componet Analysis and a Cluster Analysis from the well-being indicators Matrix (source: OCSE) and a partition of the OCSE member-states. Economic financialization, smaller income resources, extreme freedom of movements, flexibility in productive cycles in job, the decrease in action collective spaces, contribution to increases in social inequality and removal of conceptions such as integrity and proximity. There is a narrow correlation between economic liberalism and social inequality with a high insecurity consequence. The aim of this work is to highlight these dimensions about economic crisis beyond common sense. (Italiano) La crisi economica ha cambiato radicalmente lo scenario politico, economico e sociale dell’intero pianeta e il liberismo economico, secondo cui il meccanismo della libera concorrenza porterebbe al benessere per tutti, ha raccolto smentite crescenti. Il premio Nobel, Joseph Stiglitz ha recentemente enunciato un teorema, per il quale: “quando la disuguaglianza tra gli individui aumenta, il PIL tende a diminuire fino a diventare negativo”. Questa teoria trova sostegno nella straordinaria corrispondenza tra l’aumento delle disuguaglianze sociali, misurato dall’indice di Gini, e i periodi di gravi crisi economiche, in particolare quelli del ‘29 e quello attuale. Questo lavoro si è servito di strumenti statistici, fidi alleati della sociologia, attraverso i quali sono stati messi in luce i cambiamenti dell’attuale crisi economica. Sono quindi state reperite dagli archivi dell’OCSE, matrici di dati sulle quali è stato possibile effettuare le analisi. La determinazione dell’andamento dell’Indice di Disuguaglianza di Gini effettuata su una serie storica che va dal 1983 ad oggi, l’Analisi in Componenti Principali e la Cluster Analysis, effettuate su matrici di dati costituiti dagli indicatori di Benessere, così come rilevati e definiti dall’dall’OCSE, hanno permesso di giungere a una partizione e quindi ad un raggruppamento dell’insieme degli Stati-membri dell’Organizzazione. La finanziarizzazione dell’economia, la minore disponibilità di reddito, l’estrema libertà di scambio, la flessibilità nei cicli produttivi in termini di lavoro e di movimento di capitali, la riduzione degli spazi di azione collettivi, concorrono ad aumentare la disuguaglianza prendendo il posto di concetti quali solidarietà e vicinanza. Esiste stretta correlazione tra neoliberismo e crescita della disuguaglianza socio-economica con conseguente alto grado di insicurezza tout court: mettere in luce questo, oltre il senso comune, ha come obiettivo questo lavoro.
    Keywords: (English) Well (Italiano) Well
    Date: 2015
  7. By: Claude Diebolt
    Abstract: L’objet de cet article est d’élaborer, par la combinaison de l’approche systémique et de l’idée de régulation, une grille de lecture théorique susceptible de contribuer à un renouveau méthodologique pour une meilleure appréhension des temporalités de l’histoire économique. Le système régulé entraîne des cycles ; il génère des chocs. Ce sont les reflets de la temporalité d’un système économique donné. Ce faisant, nos investigations cliométriques participent d’un vaste programme de recherche visant à réconcilier l’épistémologie du Verstehen (comprendre) avec celle de l’Erklären (expliquer). Elles ambitionnent de favoriser la rencontre du fait avec le fait stylisé ; les modélisations théoriques de la croissance, des cycles et des systèmes économiques avec les interrogations empiriques aux frontières de l’histoire économique.
    Keywords: Cliométrie, approche systémique, idée de régulation, événements rares, histoire économique, temporalités.
    JEL: A12 A20 B41 B52 C18 C22 C81 C82 N1 N3 P1 P5
    Date: 2015
  8. By: Frank A Cowell
    Abstract: I examine the idea of 'the long run' in Piketty (2014) and related works. In contrast to simplistic interpretations of long-run models of income- and wealth-distribution Piketty (2014) draws on a rich economic analysis that models the intra- and inter-generational processes that underlie the development of the wealth distribution. These processes inevitably involve both market and non-market mechanisms. To understand this approach, and to isolate the impact of different social and economic factors on inequality in the long run, we use the concept of an equilibrium distribution. However the long-run analysis of policy should not presume that there is an inherent tendency for the wealth distribution to approach equilibrium.
    Keywords: long run, income distribution, wealth distribution, inequality, inheritance, equilibrium
    JEL: D31
    Date: 2015–02
  9. By: Obregon, Carlos
    Abstract: Piketty argues that there are long-run fundamental laws in capitalism that will necessarily concentrate the income in favor of the privileged 1 or 10% of the population. Piketty's two fundamental laws are really theoretical propositions that presume relative rigidity in the rate of return of capital and in the net savings rate. We show that such propositions are incompatible with seventy-five years of studies estimating the value of the elasticity of substitution between capital and labor, and with the theoretical models of savings optimizing behavior. We argue that Piketty's laws are wrong and that they contradict the essence of market dynamics. Economic agents optimize and neither the rate of return of capital nor the net savings rate can remain relatively stable as Piketty supposes. Using empirical estimates of the long-run elasticity of substitution between capital and labor, and analyzing the relationship between the net savings rate and the real growth rate of the economy, we show that Piketty's forecast for the second half of the twenty-first century is inadequate. We propose alternative forecasts.
    Keywords: Piketty, Capitalism, Rate of return of capital, Savings rate, Economy growth, Elasticity between capital an labor
    JEL: D30 D31 D33 E20 E21 E25 F01 O47 O57
    Date: 2015–05–25

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