nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2018‒10‒29
fourteen papers chosen by
Erik Thomson
University of Manitoba

  1. Daniel Ellsberg on J.M. Keynes and F.H. Knight:Risk, Ambiguity and Uncertainty By Yasuhiro Sakai
  2. "Two Harvard Economists on Monetary Economics: Lauchlin Currie and Hyman Minsky on Financial Systems and Crises" By Ivan D. Velasquez
  3. Happiness, Behavioral Economics, and Public Policy By Arik Levinson
  4. On totalitarianism and its levers : the study of Sismondi as a user’s manual By Florent Pirot
  5. Mapping Moral Pluralism in Behavioural Spillovers: A cross-disciplinary account of the multiple ways in which we engage in moral valuing By Vincent, Michael; Koessler, Ann-Kathrin
  6. The theory of exploitation as the unequal exchange of labour By Roberto Veneziani; Naoki Yoshihara
  7. Textbooks in the historiography of recent economics By Yann Giraud
  8. Animal Spirits - Die Verhaltensökonomischen Grundlagen der Keynesschen Theorie By Ronald Schettkat
  9. Well-being and self-determination: an empirical study in Japan (Japanese) By NISHIMURA Kazuo; YAGI Tadashi
  10. The dynamics of exploitation and inequality in economies with heterogeneous agents By Giorgos Galanis; Roberto Veneziani; Naoki Yoshihara
  11. Central banking through the centuries By Ivo Maes
  12. Culture cumulative, apprentissage social et réseaux sociaux By Claude Meidinger
  13. The cognitive foundations of cooperation By Carlos Alós-Ferrer; Michele Garagnani
  14. Publishing and Promotion in Economics: The Tyranny of the Top Five By Heckman, James J.; Moktan, Sidharth

  1. By: Yasuhiro Sakai (Faculty of Economics, Shiga University)
    Abstract: This paper aims to focus on the life and work of Daniel Ellsberg, with an intensive discussion on its relation to J.M. Keynes and F.H. Knight, the two great pioneers of the economics of uncertainty. Ellsberg seems to be a man in paradox. When he was young, he was an outstanding researcher at Harvard University and the RAND Corporation; at the December Meting of the Econometric Society in 1960, he presented his remarkable paper in which he successfully demonstrated what we may now call Ellsberg's paradox against the traditional expected theory a la Daniel Bernoulli and von Neumann. Although it was published with the title "Risk, ambiguity and decision" in the November issue of the Quarterly Journal of Economics, it was not paid due attention for a long time. It was partly because he was so preoccupied in the 1960s and onward by letting the general public know the Pentagon papers that he could virtually have no time left to engage in purely academic activities. In the 21st century, however, the times have changed in favor of Ellsberg: we can see the dramatic return of interest in decision making under ambiguity. Chapter ‡U will deal with uncertainties that are not risks. A focal point of discussion will be the similarity and difference between Keynes and Knight. Kenneth Arrow's skepticism about Knight on uncertainty will also be paid due attention. Chapter ‡V, the main part of this paper, will turn to the concept of ambiguity that was first introduced by Ellsberg. The two-color problem and the three color problem will systematically be examined by help of numerical representations. Chapter ‡W will tell us many alternative ways to solve the so-called Ellsberg paradox. Presumably, the Keynesian approach by means of interval-valued probabilities will be shown to be very simple and highly effective. In our opinion, the most amazing Ellsberg paradox lies in the fact that an accomplished economist specialized in the aversion of risk and uncertainty dared to make a personal choice to risk everything such as degrading his social status and putting him in prison for a long period. Surely, the intellectual legacy of Ellsberg seems to be an intriguing research in paradox.
    Keywords: Ellsberg, Keynes, Knight, risk, ambiguity, uncertainty
    JEL: B21 B22 D81 E12
    Date: 2018–06
  2. By: Ivan D. Velasquez
    Abstract: In November 1987, Hyman Minsky visited Bogota, Colombia, after being invited by a group of professors who at that time were interested in post-Keynesian economics. There, Minsky delivered some lectures, and Lauchlin Currie attended two of those lectures at the National University of Colombia. Although Currie is not as well-known as Minsky in the American academy, both are outstanding figures in the development of non-orthodox approaches to monetary economics. Both alumni of the economics Ph.D. program at Harvard had a debate in Bogota. Unfortunately, there are no formal records of this, so here a question arises: What could have been their respective positions? The aim of this paper is to discuss Currie's and Minsky's perspectives on monetary economics and to speculate on what might have been said during their debate.
    Keywords: Lauchlin Currie; Hyman Minsky; Monetary Economics; Monetary Policies; Fiscal Policies
    JEL: B22 B31 B50 E12 E50
    Date: 2018–10
  3. By: Arik Levinson (Department of Economics, Georgetown University)
    Abstract: The economics of "happiness" shares a feature with behavioral economics that raises questions about its usefulness in public policy analysis. What happiness economists call "habituation" refers to the fact that people's reported well-being reverts to a base level, even after major life events such as a disabling injury or winning the lottery. What behavioral economists call "projection bias" refers to the fact that people systematically mistake current circumstances for permanence, buying too much food if shopping while hungry for example. Habituation means happiness does not react to long-term changes, and projection bias means happiness over-reacts to temporary changes. I demonstrate this outcome by combining responses to happiness questions with information about air quality and weather on the day and in the place where those questions were asked. The current day's air quality affects happiness while the local annual average does not. Interpreted literally, either the value of air quality is not measurable using the happiness approach or air quality has no value. Interpreted more generously, projection bias saves happiness economics from habituation, enabling its use in public policy.
    Keywords: stated well-being, habituation, pollution, environmental economics
    JEL: D03 H41 Q51
    Date: 2018–10–22
  4. By: Florent Pirot (Chercheur indépendant)
    Abstract: Jean de Sismondi is a perfect test case for identifying the tenets of totalitarianism : irrefutability, good reasons to hate scapegoats, to obey the State and let it intervene in markets as defender of the new order. Ludwig von Mises was first to claim that Sismondi was one of the main fathers of Nazi economic thought. His point can be demonstrated by showing the interrelatedness of nationalism and economic thought, as well as racist conceptions of mankind, in Sismondi's thought. Sismondi aimed at developing a military Republic, where a work guarantee for the peasantry through compulsory sharecropping on latifundiary tenancy would be imposed on proprietors, ensuring quick development of future recruits for the Republic's militia (with the argument that sharecropping would increase proprietary gains, hence prefacing fascist demagoguery about « class cooperation »). Sometimes Sismondi openly pressured for colonial expansion for economic purposes, contradicting his own views on Say's Law. He especially campaigned for the conquest of Algiers, mixing economic arguments with a humanistic discussion about the fate of the Arabs under Turkish rule and with piratry issues. Sismondi also contradicted himself on slavery, suggesting in a comment that slaves must work a few years to pay for their freedom, thus acknowledging implicitly owners' economic rights on them. Sismondi was in fact close to Rousseau. Fascism has usually been defined as a nationalistic, pragmatic reconstruction of idealistic Socialism, and this reconstruction can be traced to the Rousseau-Sismondi line, even though they in fact intermerge.
    Keywords: imperialism,romanticism,fascism,state intervention,racism,antisemitism,masculinism,Machiavellism,holism,demand-side economics,Counter-Enlightenment
    Date: 2018–09–06
  5. By: Vincent, Michael; Koessler, Ann-Kathrin
    Abstract: In this article, we reflect critically on how moral actions are categorised in some recent studies on moral spillovers. Based on classic concepts from moral philosophy, we present a framework to categorise moral actions. We argue that with such finer gradation of the moral values, associated behaviour is better understood, and this understanding helps to identify the conditions under which moral licensing takes place. We illustrate our argument with examples from the literature on pro-environmental behaviours. Moral spillovers are frequently observed in this behavioural domain and to understand what causes their occurrence is highly (policy) relevant if we wish to promote sustainable behaviour.
    Keywords: moral licensing,spillover effects,moral values,moral cleansing,pro-environmental behavior,behavioral change
    Date: 2018
  6. By: Roberto Veneziani (Queen Mary University of London); Naoki Yoshihara (School of Economics and Management, Kochi University of Technology)
    Abstract: This paper explores the foundations of the theory of exploitation as the unequal exchange of labour (UEL). The key intuitions behind all of the main approaches to UEL exploitation are explicitly analysed as a series of formal axioms in a general economic environment. Then, a single domain condition called Labour Exploitation is formulated, which summarises the foundations of UEL exploitation theory, defines the basic domain of all UEL exploitation forms, and identifies the formal and theoretical framework for the analysis of the appropriate definition of exploitation.
    Keywords: Exploitation, Unequal Exchange of Labour, axiomatic analysis
    Date: 2018–10
  7. By: Yann Giraud (THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Textbooks are both neglected and at times overused as objects in the history of economics. They are neglected because most historians, borrowing from Kuhn, tend to regard them as passive receptacles of past knowledge, yet they are also overused as shortcuts to study the state of economic doctrine at a certain point in time. Looking at the existing historical literature that studies or uses textbooks, this chapter shows how a better understanding of the specific pedagogical and institutional environments in which textbooks operate can help build thicker and more accurate histories of the role they have played, not just in disseminating, but also in creating and transforming economic knowledge.
    Date: 2018
  8. By: Ronald Schettkat
    Abstract: Keynes' General Theory (GT) ist in zweierlei Hinsicht umfassender als das (neo-) klassische Modell - (1) sie schließt das Vollbeschäftigungsgleichgewicht als Sonderfall ein und (2) sie basiert auf realistischem mikroökonomischem Verhalten, dessen sozial isolierter, den Eigennutz maximierender homo oeconomicus der neoklassischen Ökonomie allenfalls ein ganz spezieller Fall ist. Keynes' Mikro basiert auf verhaltensökonomischen Grundlagen, die durch die Neurowissenschaften und die Experimente der Behavioral Economics eindrucksvoll bestätigt werden.
    Date: 2018–10
  9. By: NISHIMURA Kazuo; YAGI Tadashi
    Abstract: According to the United Nations World Happiness Report, Japan's happiness level is not very high, and its "freedom of choice in life" tends to be low. Since the 1970s, one of the important themes in studying happiness has been that the sense of happiness does not necessarily correlate with income level. In this research, we surveyed 20,000 Japanese people and asked various questions to analyze income, educational background, health, human relations, and self-determination as explanatory variables. As a result, in terms of age, we found a U-shaped curve in which happiness falls in middle age, and in relation to income, the subjective feeling of well-being does not increase as income increases. In addition, self-determination has a stronger influence than income and education as a factor that determines happiness, following health and human relations. It appears that deciding by oneself will enhance the motivation and satisfaction of action that one has chosen, which will lead also to a higher degree of well-being. It is worth noting that people with high self-determination have a high degree of happiness in Japanese society where freedom of choice in life is considered to be lower.
    Date: 2018–09
  10. By: Giorgos Galanis (University of London); Roberto Veneziani (Queen Mary University of London); Naoki Yoshihara (School of Economics and Management, Kochi University of Technology)
    Abstract: This paper analyses the relation between growth, inequalities, and exploitation as the unequal exchange of labour (UE exploitation). An economy with heterogeneous, intertemporally optimising agents is considered which generalises John Roemer's [52, 53] seminal models. First, a correspondence between pro ts and the existence (and intensity) of UE exploitation is proved in the dynamic context. This result is important, positively, because the pro t rate is one of the key determinants of investment decisions, and, normatively, because it provides a link between UE exploitation and the functional distribution of income. Second, it is shown that asset inequalities are fundamental for the emergence of UE exploitation, but they are not sufficient for its persistence, both in equilibria with accumulation and growth, and, perhaps more surprisingly, in stationary intertemporal equilibrium paths. Labour-saving technical progress, however, may yield sustained growth with persistent UE exploitation by keeping labour abundant relative to capital. Persistent inequalities in income and labour exchanged arise from the interaction between labour market conditions and differential ownership of productive assets.
    Keywords: Dynamics, accumulation, exploitation, inequalities
    JEL: D51 D63 C61 E11
    Date: 2018–10
  11. By: Ivo Maes (National Bank of Belgium and Robert Triffin Chair, Université catholique de Louvain and ICHEC Brussels Management School)
    Abstract: Anniversaries are occasions for remembrance and reflections on one’s history. Many central banks take the occasion of an anniversary to publish books on their history. In this essay we discuss five recent books on the history of central banking and monetary policy. In these volumes, the Great Financial Crisis and the way which it obliged central banks to reinvent themselves occupies an important place. Although this was certainly not the first time in the history of central banking, the magnitude of the modern episode is remarkable. As comes clearly to the fore in these volumes, there is now, also in the historiography of central banking, much more attention to the (shifting) balance between price stability and financial stability. The history of central banking is more perceived as one of an institution whose predominant concern varied between “normal” times and “extraordinary” times. So, central banks will have to remain vigilant, as one should expect financial crises to return. Moreover, the new world of central banking, with a greater responsibility of central banks for financial stability, will make life more complicated for central banks. It may have also consequences for central bank independence, as the modalities of the two mandates, price and financial stability, are not the same. Another aspect which comes to the fore in these volumes is the relationship between central banking and state formation. Historically, central banks have been embedded in processes of nation-building. By extending their network of branches across the country, or by being at a center of a system of liquidity provision, ultimately tied to the national currency, they played a key role in the shaping of “national economies”.
    Keywords: central banking, financial stability, price stability, Great Financial Crisis
    JEL: E42 E58 G28 N10
    Date: 2018–10
  12. By: Claude Meidinger (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)
    Abstract: Discussions about the existence of a culture in non-human species is often concerned by the question whether these species could possess a cognitive complexity sufficient to allow them to imitate others. According to many authors, to imitate is a cognitively sohisticated process that depends on a functionally abstract representation of a problem and its solution, something that non human species do not seem to possess. However, the fast evolution of cognitive performances and of complex inventions in human beings could not be explained only by the improvement of the rate of innovation in individual learning and (or) the improvement of the process of imitation. Such a cumulative evolution depends also on a wider social organization characterized by an increase in the size of the social networks. The simulations displayed here show how such an increase, jointly considered with the diversity of learning processes, allow to better understand the major transitions noted in the cultural evolution of primates and human beings.
    Abstract: Les discussions concernant l'existence d'une culture chez les espèces non humaines ont eu tendance à se focaliser sur la question de savoir si, en dehors de l'espèce humaine, les espèces animales disposent d'une complexité cognitive suffisante pour imiter autrui. Imiter, chez beaucoup d'auteurs, est réservé à un processus cognitivement sophistiqué, dépendant d'une représentation fonctionnelle abstraite d'un problème et de sa solution, ce dont les espèces animales non humaines ne semblent pas disposer. Cependant, l'évolution rapide de performances cognitives et d'inventions complexes chez les êtres humains caractérisant une évolution culturelle cumulative ne saurait s'expliquer uniquement par une amélioration du taux d'innovation de l'apprentissage individual et (ou) de l'efficacité d'un processus d'imitation. Une telle évolution cumulative dépend également d'une organisation sociale plus étendue au sein de groupes d'individus se traduisant par une augmentation de la taille des réseaux sociaux. Les simulations présentées ici illustrent en quoi la prise en compte de la taille des réseaux sociaux jointe à celle de la diversité des modes d'apprentissage permettent de mieux comprendre les transitions majeures susceptibles de s'être produites lors de l'évolution culturelle des primates et des humains.
    Keywords: learning processes,cumulative cultural evolution,social networks,simulations,processus d'apprentissage,évolution culturelle cumulative,réseaux sociaux
    Date: 2018–09
  13. By: Carlos Alós-Ferrer; Michele Garagnani
    Abstract: Why do some individuals cooperate with their fellow human beings while others take advantage of them? The human drive for cooperation and altruism is one of the most powerful forces shaping our society, but there is an enormous behavioral variance in individual behavior. At the same time, whether it is intuitive to behave in a cooperative manner or whether such behaviors are calculated deeds remains an unanswered question. Indeed, recent empirical investigations regarding the spontaneity of human cooperation have found mixed evidence, possibly due to a failure to induce compliance in the behavioral manipulations employed. We conducted a laboratory experiment inducing intuitive and deliberative behavior through gradual economic incentives that ensure compliance. To account for individual heterogeneity, we independently measured social value orientation and aversion to interpersonal (strategic) uncertainty. We find that these measures determine the intrinsic predisposition towards cooperation. Subjects with more altruistic social values or a higher tolerance towards interpersonal uncertainty are more cooperative. Crucially, we find causal evidence that there is no universal default mode of behavior. Rather, intuition enhances intrinsic predispositions, while deliberation moderates them towards socially acceptable behavior. That is, subjects with a higher (resp. lower) predisposition towards cooperation became more (resp. less) cooperative under time pressure compared with time delay.
    Keywords: Cooperation, heterogeneity, time manipulations
    JEL: D01 D81 C9
    Date: 2018–10
  14. By: Heckman, James J. (University of Chicago); Moktan, Sidharth (University of Chicago)
    Abstract: This paper examines the relationship between placement of publications in Top Five (T5) journals and receipt of tenure in academic economics departments. Analyzing the job histories of tenure-track economists hired by the top 35 U.S. economics departments, we find that T5 publications have a powerful influence on tenure decisions and rates of transition to tenure. A survey of the perceptions of young economists supports the formal statistical analysis. Pursuit of T5 publications has become the obsession of the next generation of economists. However, the T5 screen is far from reliable. A substantial share of influential publications appear in non-T5 outlets. Reliance on the T5 to screen talent incentivizes careerism over creativity.
    Keywords: tenure and promotion practices, career concerns, economics publishing, citations
    JEL: A14 I23 J44 O31
    Date: 2018–10

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