nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2020‒02‒03
nine papers chosen by
Erik Thomson
University of Manitoba

  1. Journal of the History of Economic Thought Preprints – The Pleasure of Exchange: Adam Smith's Third Kind of Self-Love By Bee, Michele
  2. Political implications of economic inequality: A literature survey By Baric, Laura-Kristin; Geiger, Niels
  3. The relation between degrees of belief and binary beliefs: A general impossibility theorem By Franz Dietrich; Christian List
  4. Are groups really more dishonest than individuals? By Castillo, Geoffrey; Choo, Lawrence; Grimm, Veronika
  5. Uncertain futures: imaginaries, narratives and calculative technologies By Bronk, Richard; Beckert, Jens
  6. What is Socialism Today? Conceptions of a Cooperative Economy By John E. Roemer
  7. Beyond Belief: Logic In Multiple Attitudes By Franz Dietrich; Antonios Staras; Robert Sugden
  9. Is Happiness U-shaped Everywhere? Age and Subjective Well-being in 132 Countries By David G. Blanchflower

  1. By: Bee, Michele
    Abstract: This article argues that the self-love that motivates exchange in The Wealth of Nations (WN) can be seen as the desire for deserved approval discussed by Smith in The Theory of Moral Sentiments (TMS). This often overlooked desire appears in TMS as the most representative kind of self-love. Exchange motivated by this desire emerges as the way to find confirmation through others’ appraisal of one’s own self-assessment, and thus to find an agreed measure for respective deserved praise. The target in this economic relationship is the equivalence which signals mutual recognition of deserved esteem. Equivalence here is the aim and not the result of exchange, unlike a tug-of-war, where both parties try to give as little and gain as much as possible regardless of the recognition each deserves.
    Date: 2020–01–29
  2. By: Baric, Laura-Kristin; Geiger, Niels
    Abstract: This survey documents the different arguments discussed in the academic literature on whether and how economic inequality and the emergence and stability of democratic political systems are connected. While early research in this domain has often focused on new and emerging democracies, this paper also provides an overview of the more recent literature in economics and neighboring fields that discusses democratization as well as established democracies' stability and other institutional traits. In doing so, the survey contains a critical review of both theoretical and empirical contributions on the topic. The different arguments are systematically evaluated and their core hypotheses are distilled in order to document the main lines of argumentation prevalent in the literature. Together with a summary of the theoretical arguments, the main findings of related empirical research are also documented and shortly discussed. Whereas taken together, research so far generally does not suggest any conclusive results concerning economic inequality and the emergence of democracies, the survey indicates that the stability and institutional quality of established democracies can be negatively affected by economic inequality, and it outlines the conditions for this to occur. However, additional research especially on some of the more tentative hypotheses is required to allow for a more profound understanding of the different channels and relationships. Therefore, points of departure for further research, e. g. on how to operationalize specific theoretical constructs of interest and thereby on how to get a better understanding of the relations, are also suggested.
    Keywords: economic inequality,institutions,democracy,political stability
    JEL: D63 D72
    Date: 2019
  3. By: Franz Dietrich (CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Christian List (LSE - London School of Economics and Political Science)
    Abstract: Agents are often assumed to have degrees of belief ("credences") and also binary beliefs ("beliefs simpliciter"). How are these related to each other? A much-discussed answer asserts that it is rational to believe a proposition if and only if one has a high enough degree of belief in it. But this answer runs into the "lottery paradox": the set of believed propositions may violate the key rationality conditions of consistency and deductive closure. In earlier work, we showed that this problem generalizes: there exists no local function from degrees of belief to binary beliefs that satisfies some minimal conditions of rationality and non-triviality. "Locality" means that the binary belief in each proposition depends only on the degree of belief in that proposition, not on the degrees of belief in others. One might think that the impossibility can be avoided by dropping the assumption that binary beliefs are a function of degrees of belief. We prove that, even if we drop the "functionality" restriction, there still exists no local relation between degrees of belief and binary beliefs that satisfies some minimal conditions. Thus functionality is not the source of the impossibility; its source is the condition of locality. If there is any non-trivial relation between degrees of belief and binary beliefs at all, it must be a "holistic" one. We explore several concrete forms this "holistic" relation could take.
    Date: 2020–01–08
  4. By: Castillo, Geoffrey; Choo, Lawrence; Grimm, Veronika
    Abstract: Groups are often found to be more rational than individuals. In lying games, this implies that groups are more dishonest. We scrutinise this conclusion in a setup where there are true moral concerns associated with dishonest behaviour. In contrast to prior studies, we do not find groups to be more dishonest than individuals when a passive third party, such as a charity, is harmed by the dishonest behaviour. Instead, we find that groups can help to moderate the extent of dishonest behaviour.
    Keywords: dishonesty,group decisions,communication,social norms
    JEL: C91 C92 D71
    Date: 2020
  5. By: Bronk, Richard; Beckert, Jens
    Abstract: Dynamic capitalist economies are characterised by relentless innovation and novelty and hence exhibit an indeterminacy that cannot be reduced to measurable risk. How then do economic actors form expectations and decide how to act despite this uncertainty? This paper focuses on the role played by imaginaries, narratives, and calculative technologies, and argues that the market impact of shared calculation devices, social narratives, and contingent imaginaries underlines the rationale for a new form of ‘narrative economics’ and a theory of fictional (rather than rational) expectations. When expectations cannot be anchored in objective probability functions, the future belongs to those with the market, political, or rhetorical power to make their models or stories count. The paper also explores the dangers of analytical monocultures and the discourse of best practice in conditions of uncertainty, and considers the link between uncertainty and some aspects of populism.
    Keywords: calculation; fictional expectations; future; imaginaries; innovation; narrative economics; uncertainty
    JEL: J1
    Date: 2019
  6. By: John E. Roemer (Dept. of Political Science & Cowles Foundation, Yale University)
    Abstract: Socialism is back on the political agenda in the United States. Politicians and some economists who identify as socialists, however, do not discuss property relations, a topic that was central in the intellectual history of socialism, but rather limit themselves to advocacy of economic reforms, funded through taxation, that would tilt the income distribution in favor of the disadvantaged in society. In the absence of a more precise discussion of property relations, the presumption must be that ownership of ï¬ rms would remain private or corporate with privately owned shares. This formula is identiï¬ ed with the Nordic and other western European social democracies. In this article, I propose several variants of socialism, which are characterized by different kinds of property relation in the ownership of society’s ï¬ rms. In addition to varying property relations, I include as part of socialism a conception of what it means for a socialist society to possess a cooperative ethos, in place of the individualistic ethos of capitalist society. Differences in ethea are modeled as differences in the manner in which economic agents optimize. With an individualistic ethos, economic agents optimize in the manner of John Nash, while under a cooperative ethos, many optimize in the manner of Immanuel Kant. It is shown that Kantian optimization can decentralize resource allocation in ways that neatly separate issues of income distribution from those of efficiency. In particular, remuneration of labor and capital contributions to production need no longer be linked to marginal-product pricing of these factors, as is the key to efficiency with capitalist property relations. I present simulations of socialist income distributions, and offer some tentative conclusions concerning how we should conceive of socialism today.
    Keywords: Market socialism, General equilibrium, Cooperation, Kantian optimization, First theorem of welfare economics
    JEL: D3 D6 P2 P5 H4
    Date: 2020–01
  7. By: Franz Dietrich (CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Antonios Staras (Cardiff University); Robert Sugden (UEA - University of East Anglia [Norwich])
    Abstract: Logical models of the mind focus on beliefs, and how one reasons with beliefs. But we also have desires, intentions, preferences, and other attitudes-and arguably we reason with them, particularly when making decisions. To enable a logical analysis of someone's psychology and decision-making, we generalize three classic logical desiderata on beliefs -- consistency, completeness, and implication-closedness -- towards multiple attitudes. The three resulting 'logical' desiderata on our psychology contrast with the classic notion of 'rationality requirements': requirements of having transitive preferences, non-contradictory beliefs, non-acratic intentions, intentions consistent with preferences, and so on. We prove a theorem that connects the logical desiderata to rationality requirements: each of the three logical desiderata (generalized to multiple attitudes) is equivalent to the satisfaction of a certain class of rationality requirements. This result connects logic with choice theory and psychology, and has implications for whether reasoning can make our attitudes consistent, complete, and closed.
    Date: 2020–01–08
  8. By: Kates, Steven
    Abstract: The fundamental problem discussed is the shifts in the conceptual base of economic theory that followed the publication of The General Theory, along with various technical terms being given different meanings, which have made it almost impossible for modern economists to comprehend classical theory. Yet it is in the classical theory of the cycle where the most profound understanding of the nature of recession and cyclical unemployment is found.
    Date: 2018–01–18
  9. By: David G. Blanchflower
    Abstract: I draw systematic comparisons across 109 data files and 132 countries of the relationship between well-being, variously defined, and age. I produce 444 significant country estimates with controls, so these are ceteris paribus effects, and find evidence of a well-being U-shape in age in one hundred and thirty-two countries, including ninety-five developing countries, controlling for education, marital and labor force status. I also frequently find it without any controls at all. There is additional evidence from an array of attitudinal questions that were worded slightly differently than standard happiness or life satisfaction questions such as satisfaction with an individual's financial situation. Averaging across the 257 individual country estimates from developing countries gives an age minimum of 48.2 for well-being and doing the same across the 187 country estimates for advanced countries gives a similar minimum of 47.2. The happiness curve is everywhere.
    JEL: I31 J01
    Date: 2020–01

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