nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2019‒02‒25
thirteen papers chosen by
Erik Thomson
University of Manitoba

  1. A missing touch of Adam Smith in Amartya Sen’s account of Public Reasoning: the Man Within for the Man Without By Laurie Bréban; Muriel Gilardone
  2. Does Marginal Productivity Mean Anything in Real Economic Life ? By Jael, Paul
  3. Kalman filter demystified: from intuition to probabilistic graphical model to real case in financial markets By Eric Benhamou
  4. Behavioral Players in a Game By Suehyun Kwon
  5. It's not my Fault! Self-Confidence and Experimentation By Nina Hestermann; Yves Le Yaouanq
  6. The Economics of Parenting By Doepke, Matthias; Sorrenti, Giuseppe; Zilibotti, Fabrizio
  7. Have Econometric Analyses of Happiness Data Been Futile? A Simple Truth About Happiness Scales By Le-Yu Chen; Ekaterina Oparina; Nattavudh Powdthavee; Sorawoot Srisuma
  8. Les voies de la recherche cliométrique ouvertes par le Capital au XXIè siècle By Antoine Parent
  9. The end of the consensus ? The economic crisis and the crisis of macroeconomics By Francesco Saraceno
  10. Social entrepreneurship before neoliberalism?: The life and work of Akhtar Hameed Khan By Lewis, David
  11. Wechselwirkungen zwischen orthodoxer Wirtschaftswissenschaft und Neoliberalismus By Hübenbecker, Ulf
  12. Martínez de Hoz: ¿neoliberal o desarrollista? La clase dominante argentina frente al programa económico implementado durante la última dictadura argentina, 1976-1981 By Gonzalo Sebastián Sanz Cerbino; Héctor Eduardo Sartelli
  13. Criação de valor para o acionista: o caso da Rede Globo, uma companhia fechada By Sanvicente, Antonio Zoratto

  1. By: Laurie Bréban (PHARE, Université Paris 1 Panthéon Sorbonne, France); Muriel Gilardone (Condorcet Center for Political Economy, Normandie Univ, UNICAEN, CNRS, CREM, F-14000 Caen, France)
    Abstract: Sen claims that his 2009 theory of justice is based in part upon Smith’s idea of the “impartial spectator”. His claim has received criticism: some authors have responded that his interpretation of Smith’s concept is unfaithful to the original (e.g., Ege, Igersheim and Le Chapelain 2012); others, focusing on internal features of Sen’s analysis, critique his use of the Smithian impartial spectator, arguing that it is a weak point in his comparative theory of justice (e.g., Shapiro 2011). In this paper we address both sets of criticisms. While agreeing with commentators that Sen’s reading of Smith is somewhat unfaithful, we reiterate that his aim in The Idea of Justice is not to provide an exegesis of Smith but rather to build his own comparative theory of justice by “extending Adam Smith’s idea of the impartial spectator” (IJ: 134) to his own project. After clarifying their distinct approaches to the concept of the impartial spectator, we draw upon our account of these differences to evaluate Sen’s own use of the concept. Despite significant divergences, we show that Sen’s version of the impartial spectator is not inconsistent with Smith’s analysis. Though it does not correspond to Smith’s concept, i.e. to what the Scottish philosopher sometimes calls the “man within”, it is reminiscent of another figure from Smith’s moral philosophy: the “man without”. Beyond this analogy, there are further connections between Smith’s imaginary figure of the “man within” and Sen’s account of “common beliefs”—both notions are ways of representing our beliefs regarding what is moral or just. But whereas Smith’s moral philosophy offers an analysis of the process by which the “man without” influences the “man within”, nothing of that kind is to be found in Sen’s conception of public reasoning. And it is here that Smith’s famous concept of “sympathy” can supplement Sen’s theory, in a way which furnishes an answer to Shapiro’s (2011) criticism regarding the possibility of the spontaneous change of beliefs toward greater impartiality.
    Keywords: Sen, Smith, Impartial Spectator, Man Without, Public Reasoning, Man Within, Sympathy, Deliberation, Justice, Agreement, Non-Prudential Morality
    JEL: A13 B12 B31 B41 B54 D63 D71
    Date: 2019–02
  2. By: Jael, Paul
    Abstract: The equality between factor pay and marginal product is a major component of the neoclassical paradigm. The paper begins with a brief historical review of this principle. Follows a questioning about the relevance of this law as an argument in the social debates: does marginal product represent the very contribution of the agent and if so, is it a legitimate reference for the setting of remuneration? Our answer to the first part of the question is irresolute; to the second, it is negative. But most of the article is devoted to analysing the economic realism of the said law, both empirically and theoretically. We review some statistical studies present in the literature, with particular attention for the debate regarding the regressions of Cobb and Douglas. Evidence does not strengthen the neoclassical law of retribution. The paper analyses the factors that hinder either the determinateness of marginal product or the equalisation between it and factor's remuneration. Are analysed: - the restrictions inherent in the law of marginal productivity: constant returns to scale and perfect competition - an alternative explanation of interest: the Austrian theory - incentive wage theories: efficiency wage and tournament theory. The article then considers the particular case of the CEO's remuneration.
    Keywords: marginal productivity; income distribution; wage; interest; profit; production function
    JEL: B21 D33
    Date: 2019–02–18
  3. By: Eric Benhamou (MILES - LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique, LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Affiliated researcher to LAMSADE (UMR CNRS 7243) and QMI (Quantitative Management Initiative) chair, Abstract: In this paper, we revisit the Kalman filter theory. After giving the intuition on a simplified financial markets example, we revisit the maths underlying it. We then show that Kalman filter can be presented in a very different fashion using graphical models. This enables us to establish the connection between Kalman filter and Hidden Markov Models. We then look at their application in financial markets and provide various intuitions in terms of their applicability for complex systems such as financial markets. Although this paper has been written more like a self contained work connecting Kalman filter to Hidden Markov Models and hence revisiting well known and establish results, it contains new results and brings additional contributions to the field. First, leveraging on the link between Kalman filter and HMM, it gives new algorithms for inference for extended Kalman filters. Second, it presents an alternative to the traditional estimation of parameters using EM algorithm thanks to the usage of CMA-ES optimization. Third, it examines the application of Kalman filter and its Hidden Markov models version to financial markets, providing various dynamics assumptions and tests. We conclude by connecting Kalman filter approach to trend following technical analysis system and showing their superior performances for trend following detection.
    Keywords: and phrases: kalman filter,hidden markov models,graphical model,CMA ES,trend detection,systematic trading,LAMSADE,MILES
    Date: 2019–02–08
  4. By: Suehyun Kwon
    Abstract: This paper points out issues with having behavioral players together with fully rational players in a game. One example of behavioral players is naive or sophisticated players; one can study higher-order beliefs when sophistication is the first-order belief, but the paper also considers alternative ways of modelling the type space and non-Bayesian updating. The paper shows that players must have heterogeneous priors and this type of heterogeneous priors cannot be justified by acquiring private information from the common prior. Furthermore, equilibrium definitions need to be modified for games with behavioral players.
    Keywords: naivete, misspecified beliefs, heterogeneous priors, higher-order beliefs, equilibrium definition, Harsanyi doctrine
    Date: 2019
  5. By: Nina Hestermann; Yves Le Yaouanq
    Abstract: We study the inference and experimentation problem of an agent in a situation where the outcomes depend on the individual’s intrinsic ability and on an external variable. We analyze the mistakes made by decision-makers who hold inaccurate prior beliefs about their ability. Overconfident individuals take too much credit for their successes and excessively blame external factors if they fail. They are too easily dissatisfied with their environment, which leads them to experiment in variable environments and revise their self-confidence over time. In contrast, underconfident decision-makers might be trapped in low-quality environments and incur perpetual utility losses.
    Keywords: learning, experimentation, overconfidence, attribution bias
    JEL: D83
    Date: 2019
  6. By: Doepke, Matthias (Northwestern University); Sorrenti, Giuseppe (University of Zurich); Zilibotti, Fabrizio (University of Zurich)
    Abstract: Parenting decisions are among the most consequential choices people make throughout their lives. Starting with the work of pioneers such as Gary Becker, economists have used the toolset of their discipline to understand what parents do and how parents' actions affect their children. In recent years, the literature on parenting within economics has increasingly leveraged findings and concepts from related disciplines that also deal with parent-child interactions. For example, economists have developed models to understand the choice between various parenting styles that were first explored in the developmental psychology literature, and have estimated detailed empirical models of children's accumulation of cognitive and noncognitive skills in response to parental and other inputs. In this paper, we survey the economic literature on parenting and point out promising directions for future research.
    Keywords: parenting, parenting style, skill acquisition, peer effects, altruism, paternalism
    JEL: J13 J24 R20
    Date: 2019–01
  7. By: Le-Yu Chen; Ekaterina Oparina; Nattavudh Powdthavee; Sorawoot Srisuma
    Abstract: Econometric analyses in the happiness literature typically use subjective well-being (SWB) data to compare the mean of observed or latent happiness across samples. Recent critiques show that comparing the mean of ordinal data is only valid under strong assumptions that are usually rejected by SWB data. This leads to an open question whether much of the empirical studies in the economics of happiness literature have been futile. In order to salvage some of the prior results and avoid future issues, we suggest regression analysis of SWB (and other ordinal data) should focus on the median rather than the mean. Median comparisons using parametric models such as the ordered probit and logit can be readily carried out using familiar statistical softwares like STATA. We also show a previously assumed impractical task of estimating a semiparametric median ordered-response model is also possible by using a novel constrained mixed integer optimization technique. We use GSS data to show the famous Easterlin Paradox from the happiness literature holds for the US independent of any parametric assumption.
    Date: 2019–02
  8. By: Antoine Parent (Observatoire français des conjonctures économiques)
    Abstract: Thomas Piketty dans Le Capital au XXIe siècle établit un premier principe de divergence fondamentale entre la rémunération du capital et du travail qui serait la source des inégalités dans l'Histoire. En même temps, l'accumulation du capital est le facteur qui historiquement a tiré la croissance. L'auteur aborde successivement ces deux aspects mais n'étudie pas les liens qui unissent ces deux propositions : les inégalités sont-elles un moteur ou un frein de la croissance dans l'Histoire ? Tel est le fil conducteur de notre analyse de l'ouvrage qui prend appui sur deux interrogations majeures : comment passer de l'énoncé d'une « loi historique » à un modèle de croissance dynamique ? L'épargne peut-elle être un frein à la croissance ? Nous suggérons dans une dernière partie que le recours à la cliométrie peut être un moyen d'éclairer sinon de trancher ces débats.
    Keywords: Capitalisme; Modèles de croissance économique; Inégalités; Loi historique
    Date: 2018–12
  9. By: Francesco Saraceno (Observatoire français des conjonctures économiques)
    Abstract: The New Consensus that has dominated macroeconomics since the 1980s was based on a fundamentally neoclassical structure: efficient markets that on their own converged on a natural equilibrium with a very limited role for macroeconomic (mostly monetary) policy to smooth fluctuations. The crisis shattered this consensus and saw the return of monetary and fiscal activism, at least in academic debate. The profession is reconsidering the pillars of the Consensus, from the size of the multipliers to the implementation of reform, including the links between business cycles and trends. It is still too soon to know what macroeconomics will look like tomorrow, but hopefully it will be more eclectic and open.
    Keywords: Economic crisis; Budget policy; Reform; New consensus
    Date: 2018–09
  10. By: Lewis, David
    Abstract: The life history method can be used to historicise the study of social and public policy. Reviewing the life and work of Pakistani social entrepreneur A.H. Khan provides a useful reminder that what Jyoti Sharma recently termed ‘the neoliberal takeover of social entrepreneurship’ is a relatively recent phenomenon. While Khan’s achievements across the public and non-governmental (NGO) sectors continue to be debated amongst scholars and activists in South Asia, his life and work – which is not well known in the Global North as it perhaps should be – highlights a much broader and more inclusive way of thinking about the social entrepreneur as an organiser of change
    Keywords: social entrepreneurship; non-governmental organisations (NGOs); community development; public administration; rural development; life history
    JEL: N0
    Date: 2019–01–01
  11. By: Hübenbecker, Ulf
    Abstract: Die fehlende Einbettung der Wirtschaftswissenschaft in die Gesellschaft und ihr soziales Umfeld haben schwerwiegende Folgen. Ein tieferliegendes Verständnis ökonomischer Zusammenhänge ist verloren gegangen, was zu einer mangelnden Analysefähigkeit der Zunft geführt hat. Ein Kandidat für die Charakterisierung der aktuellen politischen und gesellschaftlichen Verhältnisse ist der Neoliberalismus. Welche wechselseitigen Beziehungen zwischen orthodoxer Wirtschaftswissenschaft und Neoliberalismus vorherrschen, darauf will diese Arbeit versuchen Antworten zu geben. Insbesondere wird ersichtlich, dass der Neoliberalismus seine Legitimation auf den wissenschaftlichen Erkenntnissen der orthodoxen Wirtschaftswissenschaft aufbaut. Aufgrund dessen wird die orthodoxe Wirtschaftswissenschaft auf ihre ontologischen, epistemologischen und methodologischen Grundlagen hin untersucht. Es wird gezeigt, wie über Kriterien der Ermöglichung und der Demarkation ein Wissenschaftsbild transportiert wird, welches dem Neoliberalismus seine Legitimation verleiht. In Hinsicht darauf, dass Wechselwirkungen auch eine reaktive Wirkrichtung implizieren, wird versucht darzulegen wie der Neoliberalismus die orthodoxe Wirtschaftswissenschaft prägt. Hierbei wird vor allem das Journalsystem und die Drittmittelförderung betrachtet.
    Keywords: neoliberalism,orthodox economics,mainstream economics,epistemology
    JEL: B10 B13 B40 P16
    Date: 2019
  12. By: Gonzalo Sebastián Sanz Cerbino; Héctor Eduardo Sartelli
    Abstract: Resumen A 40 años de su paso por el Ministerio de Economía, durante la última dictadura militar argentina, la gestión de Martínez de Hoz sigue despertando polémicas. ¿Encabezó un programa de reformas neoliberales o más allá de su prédica, mantuvo las barreras proteccionistas de una economía cerrada en beneficio de una burguesía industrial orientada al mercado interno? En este artículo nos proponemos volver sobre un tópico transitado de la historiografía económica con una hipótesis original: Martínez de Hoz llevó adelante un plan coherente con los intereses de la gran burguesía industrial que acumulaba en la Argentina, que no podía ser liberal (como la burguesía agropecuaria), pero tampoco “populista” (como los industriales de menor tamaño). Para corroborar nuestra hipótesis analizaremos las propuestas económicas de estas fracciones de la burguesía y su relación con la política implementada por Martínez de Hoz.
    Date: 2018–12–28
  13. By: Sanvicente, Antonio Zoratto
    Abstract: Desenvolve-se um exercício de mensuração de criação de valor para o acionista, mediante a comparação entre retorno do investimento em ativos e custo médio ponderado de capital, para uma companhia fechada brasileira, a Globo Comunicação e Participações S.A., também conhecida como “Rede Globo”. A análise é feita anualmente, de 2009 a 2017, bem como para a média do período. É uma aplicação especial da teoria básica de finanças corporativas, não apenas por se tratar de uma companhia fechada, mas porque o enfoque adotado recorre a dados correntes de mercado para a estimação tanto do custo de capital próprio quanto do custo de capital de terceiros, sendo assim fiel ao conceito de custo de oportunidade do capital. Destaca-se, como resultado, que a Rede Globo, na média do período, destruiu valor para o acionista, embora tenha havido alguns anos, antes da intensificação da crise econômica brasileira (2010-2014), em que houve criação de valor para o acionista.
    Date: 2019–01

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