nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2018‒01‒22
seven papers chosen by
Erik Thomson
University of Manitoba

  1. Market and state in socio-economic order: a brief review of theories By Anna E. Jurczuk; Piotr Pysz
  2. Unhappiness and Pain in Modern America: A Review Essay, and Further Evidence, on Carol Graham's Happiness for All? By Blanchflower, David G.; Oswald, Andrew J.
  3. Poverty's Deconstruction: Beyond the Visible By Bhaumik, Sumon K.; Gang, Ira N.; Yun, Myeong-Su
  4. Equality of opportunity, moral hazard and the timing of luck By Arnaud Lefranc; Alain Trannoy
  5. Is Economics Useful for Public Policy? By Alm, James
  6. Experiment-inspired comments on John Roemer's theory of cooperation By Antoni Bosch-Domènech; Joaquin Silvestre
  7. Short-Run and Long-Run Effects of Milton Friedman's Presidential Address By Robert E. Hall; Thomas J. Sargent

  1. By: Anna E. Jurczuk (University of Bialystok, Poland); Piotr Pysz (University of Finance and Management in Bia³ystok, Poland)
    Abstract: The purpose of this paper is to present the views of various schools of economic thought on the sources of the institutional order of economies. The premises of the theories of constituted and spontaneous economic orders are taken as the criteria on the basis of which the sources of an institutional order are identified. In order to meet the research objectives, the paper present, on the basis of the theoretical notions of constituted and spontaneous economic orders, the views on the sources of institutional order in capitalism within the last 250 years, i.e. from the times of Adam Smith until the present day. Main results indicate that, the classical/neoclassical model of economic order, interpreted here as the ideal one, is arise by itself as a result of market interaction. In contradistinction to the above ultraliberal model of economic order is the consistently centralised model deriving from the Marxist tradition. A synthesis of the strictly liberal and the centralised models is the ordoliberal model of economic order. As regards the course of market interactions and the auto-formation of spontaneous rules of an economic order resulting from the market operations, it is a par exellence liberal concept. On the other hand, from the consistently centralised model it borrows the idea of top-down dictation of economic order principles by the political government. This synthesis constitutes ordoliberalism and implies a feedback between the constituted and spontaneous rules of economic order.
    Keywords: classical economics, Marxism, ordoliberalism, economic order, institutional analysis
    JEL: B1 B5
    Date: 2018–01
  2. By: Blanchflower, David G. (Dartmouth College); Oswald, Andrew J. (University of Warwick)
    Abstract: In Happiness for All?, Carol Graham raises disquieting ideas about today's United States. The challenge she puts forward is an important one. Here we review the intellectual case and offer additional evidence. We conclude broadly on the author's side. Strikingly, Americans appear to be in greater pain than citizens of other countries, and most sub-groups of citizens have downwardly trended happiness levels. There is, however, one bright side to an otherwise dark story. The happiness of black Americans has risen strongly since the 1970s. It is now almost equal to that of white Americans.
    Keywords: depression, mental-health, GHQ, well-being, happiness, life-course
    JEL: I3 I31
    Date: 2017–11
  3. By: Bhaumik, Sumon K. (University of Sheffield); Gang, Ira N. (Rutgers University); Yun, Myeong-Su (Inha University)
    Abstract: In contrast to his contribution to other areas, Shubhashis Gangopadhyay's contributions to our understanding of poverty are often thought of as indirect consequences of the main themes of his work. Yet in more than 15 published papers Gangopadhyay directly takes on poverty, including its estimate and understanding its sources. Our contribution honours Gangopadhyay's work in this area by outlining an approach useful in deconstructing the changes and differences in the likelihood of poverty incidence. We highlight how far it can take us, and how it still leaves us far short of understanding much of what drives poverty.
    Keywords: poverty incidence, headcount ratio, capability approach, probit decomposition
    JEL: C20 I30
    Date: 2017–11
  4. By: Arnaud Lefranc (THEMA - Théorie économique, modélisation et applications - Université de Cergy Pontoise - CNRS - Centre National de la Recherche Scientifique); Alain Trannoy (EHESS - École des hautes études en sciences sociales)
    Abstract: Equality of opportunity is usually defined as a situation where the effect of circumstances on outcome is nullified (compensation principle) and effort is rewarded (reward principle). We propose a new version of the reward principle based on the idea that effort deserves reward for it is costly. We show that luck can be introduced in two ways in the definition of these principles, depending on whether the correlation between luck and circumstances should be nullified and whether the correlation between luck and effort should be rewarded. In this regard, the timing of luck with respect to effort decisions is crucial, as is exemplified by moral hazard where effort choice influences the lottery of future uncertain events.
    Keywords: equality of opportunity,effort,luck,timeline,moral hazard,reward
    Date: 2017–12
  5. By: Alm, James
    Abstract: Economists have always played an important role in major public policy debates. Even so, I believe that the role of economists in these public policy discussions has often been misguided because it has typically relied upon “best practices,†stated in the form of “general guidelines†or even “universal principles.†However, “best practices†are not best if the specific situation does not conform with the assumptions that underlie the advice. So my first conclusion is a cautionary, and negative, one: Specific circumstances differ so profoundly across individuals, firms, markets, countries, and time that most any attempt to define “best practices†that apply in all circumstances will lead to profoundly misleading public policy recommendations. However, even if economics cannot identify “the†truth, it can often identify “a†truth. So my second conclusion is a more positive one: Economists should continue to develop multiple theories that inform public policies, but we should also focus our efforts on identifying and testing the critical assumptions that drive the results of these theories, recognizing that the validity of any assumptions will depend intimately on specific circumstances. I illustrate these two main conclusions with specific examples from my own work. I conclude with some “best practices†recommendations of my own, recognizing the obvious irony of such an effort.
    Keywords: Public policy, Economics, Income tax,
    Date: 2018
  6. By: Antoni Bosch-Domènech; Joaquin Silvestre
    Abstract: Motivated by Roemer’s Kantian equilibrium (John Roemer, 2010, 2015, In Press) we performed some experiments on cooperation in extremely simple treatments (Bosch-Domènech and Silvestre, 2017, and Appendix below). Here we comment on some lessons that we have learned from them, and offer some thoughts on Roemer’s theory of cooperation based on social situations that can be easily compared to those in our experiments.
    Date: 2017–12
  7. By: Robert E. Hall; Thomas J. Sargent
    Abstract: The immediate effect of Friedman's 1968 AEA presidential address on the economics profession was the introduction of an adaptive term in the Phillips curve that shifted the curve, as Friedman proposed, based on expected inflation. Initial formulations suggested that the shift was less than point-for-point, but later thinking, based on the emerging idea of rational expectations, together with the experience of the 1970s, came to agree with Friedman that the shift was by the full amount. The profession also recognized that Friedman's point was deeper---real outcomes are invariant to the monetary policy rule, not just to the trend in inflation. The presidential address made an important contribution to the conduct of monetary policy around the world. It ushered in low and stable inflation rates in all advanced countries, and in many less advanced ones.
    JEL: E31 E52 E61
    Date: 2017–12

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