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on History and Philosophy of Economics |
| By: | Yi Wen |
| Abstract: | Quantitative macroeconomics is often portrayed as a science—because of its intensive use of high-powered mathematics—with the possible limitation of being unable to conduct controlled experiments. To qualify as a science, however, theories in that discipline must meet a minimum number of criteria: (i) It has explanatory power to explain phenomena; (ii) it has predictive power to yield quantifiable and falsifiable statements about new phenomenon; and (iii) it has operational power to change the world. A scientific theory consists of axioms and working hypotheses that facilitate the derivation of contestable statements from the axioms.2 Hence, simply laying out a list of contradictions between a theory’s implications and the data is often insufficient to disqualify a theory as science; it may have just challenged its working hypotheses, not its axioms. But, challenging a theory’s working hypotheses is a crucial step to improve or falsify a theory. This is why Isaac Newton spent so much effort in his Principia Mathematica to deal with the law of motion under air friction. This article discusses one of the working hypotheses of the Arrow-Debreu paradigm and its dynamic stochastic general equilibrium reincarnation in quantitative macroeconomics—the supply curve and its embodiment in the neoclassical production function. The supply curve is a much stronger pillar than the demand curve in holding up the Arrow-Debreu paradigm, but we argue in this article that the neoclassical production function embodying the supply curve is full of cracks. More specifically, we show that the neoclassical production function is not quantifiable as a working hypothesis to support the Arrow-Debreu DSGE model, unlike the chemical reaction equations based on Lavoisier’s oxygen theory of combustion. The neoclassical production function relies on the unobservable and unmeasurable Solow residual to explain the quantity of output produced at the firm, industry, or national level, and the hypothetical factors of production (capital and labor) are much like “fire, air, water, and earth” in the ancient Greek theory of the universe. Because the working hypotheses of quantitative macroeconomics are not themselves quantifiable, the neoclassical theory is not yet a science. And this explains the lack of power for DSGE models to predict the 2008 Financial Crisis and the inability of economic theory to change the world by engineering or recreating economic prosperity in developing countries. |
| Keywords: | Production Function; DSGE Models; Methodology |
| JEL: | A1 B0 B4 E1 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:89756&r=all |
| By: | Heap, Shaun Hargreaves; Ismail, Mehmet |
| Abstract: | Rational players in game theory are neoliberal in the sense that they can choose any available action so as to maximize their payoffs. It is well known that this can result in Pareto inferior outcomes (e.g. the Prisoner's Dilemma). Classical liberalism, in contrast, argues that people should be constrained by a no-harm principle (NHP) when they act. We show, for the first time to the best of our knowledge, that rational players constrained by the NHP will produce Pareto efficient outcomes in n-person non-cooperative games. We also show that both rationality and the NHP are required for this result. |
| Date: | 2021–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:mgqh7&r=all |
| By: | Abhinash Borah (Ashoka University) |
| Abstract: | We propose and axiomatize a decision model of social preferences under risk that highlights moral hypocrisy, which we think of as the motivation to appear moral while avoiding the cost of acting morally to the extent possible (Batson et al., 1997). Our model considers a setup with a decision maker (DM) and one other individual. It highlights how the presence of risk enables the DM to exploit the distinction between the other individual's ex post outcome and his ex-ante opportunity in a self-serving manner and perceive herself as more moral than what her choices warrant. In turn, this allows her to behave more selfishly in the presence of risk than under certainty and, further, be more risk loving over the other individual's risks than her own. Our axiomatization highlights that the DM acts like a motivated Bayesian when assessing risk faced by the other individual, specifically, she underweights the probabilities of unfavorable outcomes that the other individual may receive in her assessments. We show that our model can explain a wide array of experimental evidence on generous behavior under risk. |
| Keywords: | social preferences under risk, moral hypocrisy, motivated Bayesian reasoning, ex post outcomes and ex ante opportunities |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:ash:wpaper:53&r=all |
| By: | Jacques Fontanel (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - UGA - Université Grenoble Alpes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA - Université Grenoble Alpes) |
| Abstract: | Economic conflicts between states are frequent in the history of mankind. Contemporary economic theories have sought to suppress the notion of economic warfare, in favour of notions of competition or this competition. In fact, economic actions designed to weaken a political and economic decision-making space deemed to be adversary or enemy are common. There are many more or less well-defined strategies ranging from warlike behaviour to persuasion through more or less coercive measures. The economy is both a weapon and a cause of conflicts between States and the major economic players in the contemporary world. |
| Abstract: | Les conflits économiques Des mesures de coercition aux mesures de persuasion Document disponible Conférence ILERI Paris 3 novembre 2020 Résumé : Les conflits économiques entre les Etats sont fréquents dans l'histoire de l'humanité. Les théories économiques contemporaines ont cherché à supprimer la notion de guerre économique, pour lui préférer les notions de concurrence ou ce compétition. De fait, les actions économiques destinées à fragiliser un espace de décision politique et économique jugé adversaire ou ennemi sont courantes. Il existe de nombreuses stratégies plus ou moins bien définies allant de comportements guerriers à la persuasion en passant par des mesures coercitives plus ou moins contraignants. L'économie est à la fois une arme et une cause des conflits entre les Etats et les grands acteurs économiques du monde contemporain. |
| Keywords: | Economic conflict,economic war,States power,Conflit économique,guerre économique,puissance des Etats |
| Date: | 2020–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03112668&r=all |
| By: | María Fernanda Sánchez Tristancho |
| Abstract: | El presente documento analiza la forma como el modelo de equilibrio general walrasiano (MEGW) se ha encargado de ejercer su androcentrismo y masculinización a la hora de definir el campo de las ciencias económicas. Se examina no solo una visión general acerca de las críticas comunes que las economistas feministas han hecho a los axiomas y supuestos del MEGW, sino también la respuesta que los defensores de dicho modelo han dado en un intento por justificar los principios de individualismo, optimización y equilibrio. El MEGW contiene juicios de valor preexistentes que dependen del sujeto a cargo del estudio y el contexto; este último factor resulta esencial al analizar el sesgo de género existente en la concepción de la dinámica del mercado y al momento de estudiar la masculinización que ha venido incorporando trascendental e imperceptiblemente el MEGW dentro de la disciplina económica. Se concluye que la economía feminista busca una comprensión más humana e íntegra de la economía y de los procesos de inclusión y exclusión que en ella se desarrollan. *** This document analyzes how the Walrasian General Equilibrium Model has been in charge of practicing its androcentrism and masculinization when defining the field of economics. It examines not only an overview about the common criticisms that feminist economists have made to the axioms and assumptions of the General Equilibrium Model but also the response that the defenders of this model have given in an attempt to justify the principles of individualism, optimization and balance. The General Equilibrium Model contains pre-existing value judgments that depend on the subject in charge of the study and the context; this last factor is essential when analyzing the existing gender bias in the conception of market dynamics and when studying the masculinization that the General Equilibrium Model has been incorporating in a transcendental and imperceptible way within the economic discipline. It is concluded that feminist economics seeks a more humane and comprehensive understanding of the economy and the processes of inclusion and exclusion that develop in it. |
| Keywords: | economía feminista, androcentrismo, modelo de equilibrio general walrasiano |
| JEL: | B21 B54 D01 |
| Date: | 2020–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:col:000176:018596&r=all |
| By: | Antonio M. Espín (Department of Social Anthropology, University of Granada); Manuel Correa (Department of Applied Economics, University of Granada); Alberto Ruiz-Villaverde (Department of Applied Economics, University of Granada) |
| Abstract: | There is much debate as to why economics students display more self-interested behavior than other students: whether homo economicus self-select into economics or students are instead “indoctrinated†by economics learning, and whether these effects impact on preferences or beliefs about others’ behavior. Using a classroom survey (n>500) with novel behavioral questions we show that, compared to students in other majors, econ students report being: (i) more self-interested (in particular, less compassionate or averse to advantageous inequality) already in the first year and the difference remains among more senior students; (ii) more likely to think that people will be unwilling to work if unemployment benefits increase (thus, assuming others are motivated primarily by self-interest), but only among senior students. These results suggest self-selection in preferences and indoctrination in beliefs. |
| Keywords: | self-selection, indoctrination, self-interest, inequality aversion, beliefs |
| JEL: | A11 A13 A22 D31 D63 D9 I22 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:21-03&r=all |
| By: | Radhika Lunawat (University of California, Irvine); Timothy W. Shields (Chapman University and Economic Science Institute); Gregory B. Waymire (Emory University and Economic Science Institute; gregory.waymire@emory.edu) |
| Abstract: | Dating back at least to Adam Smith (1790), philosophers and researchers expect that people will behave differently when they know their actions are observable to others. We hypothesize that financial reporting reveals managers’ actions and leads them to take different actions that are better aligned with investor interests. We posit that the reason why is the activation of our internal mental self-evaluation that Smith refers to as an “Impartial Spectator.†We test this hypothesis with an experiment in which we manipulate the availability of a financial report that makes managerial actions transparent. Our evidence shows that financial reporting leads a manager to choose reinvestment and resource sharing actions that are better aligned with investor interests, even in a sparse experimental setting where the investor can impose no cost or confer no reward on the manager. This same effect holds in a setting where the investor can shut down the firm at any point and take a sizable portion of the assets. Our evidence is important because it suggests that part of financial reporting’s economic value comes from its enabling moral evaluation by the manager in addition to its traditional contracting function |
| Keywords: | Financial reporting, Blameworthy, Praiseworthy, Moral sentiments, Selfregulation |
| JEL: | C92 D82 D91 M40 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:20-40&r=all |
| By: | Mosca, Manuela; Assistant, JHET |
| Abstract: | Robert F. Hébert was the eighteenth President of the History of Economics Society, from 1991 to 1992. He studied at Louisiana State University at Baton Rouge from his undergraduate degree (completed in 1965) to his PhD (obtained in 1970). During his academic career he taught economics in the U.S. at Clemson University (South Carolina; 1970-1974), Auburn University (Alabama; 1974-2000), and the University of Louisiana at Lafayette (2000-2005); and in France at Université de Paris 1 (Sorbonne; 1995) and at the University of Caen (2004). Currently Professor Hébert is Emeritus Russell Foundation Professor of Entrepreneurial Studies at Auburn University, and he resides in Baton Rouge, Louisiana. This interview was done in writing from November 6 to December 18, 2019. |
| Date: | 2021–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:fj3zu&r=all |
| By: | Bragues, George; Assistant, JHET |
| Abstract: | Though now almost entirely forgotten, Herbert Spencer was among the most widely read thinkers during the late 19th century. As part of his system of synthetic philosophy, Herbert Spencer addressed the topics of money and banking. This philosophic system articulates a concept of justice based on the principle of equal freedom. Invoking this principle, Spencer rejected a government superintended regime of money and banking as unjust. Instead, he morally favored a system of free banking. Spencer also defended this system on economic grounds. His argument is that banks could be self-regulating in their management of the money supply, on the condition that the government limit its activities in the financial sphere to the enforcement of contracts. While Spencer’s case is not beyond questioning on philosophic and political grounds, he offers a distinctive and forceful analysis. |
| Date: | 2021–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:w2gqs&r=all |
| By: | Antoinette Baujard (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UL2 - Université Lumière - Lyon 2 - ENS Lyon - École normale supérieure - Lyon); Judith Favereau (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - CNRS - Centre National de la Recherche Scientifique); Charles Girard (IRPhiL - Institut de recherches philosophiques de Lyon - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon) |
| Abstract: | Cette introduction insiste sur les difficultés et les enjeux de la distinction entre les approches positives et normatives des normes. La vie collective est organisée par des normes, mais qu'elles ordonnent les comportements dans les faits n'impliquent pas qu'elles soient désirables. Une stricte description des normes peut nécessiter de prendre en compte les questions éthiques, lesquelles peuvent être traduites à l'aide de la méthode axiomatique ; choisir les normes en revanche est une activité de nature fondamentalement normative, qui interroge la légitimité des décisions et des évaluations. La possibilité même de démarcation entre positif et normatif ne va pas de soi : en particulier en économie du bien-être, les approches standards qui visent à éviter les jugements de valeur (le welfarisme) ou à les isoler (l'axiomatique) peuvent s'avérer problématiques. Pour conclure, nous présentons les quatre articles du numéro qui illustrent les quatre étapes de cette réflexion sur la normativité. |
| Keywords: | positif,normatif,normes,jugements de valeurs,éthique,régularités,Démarcation |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-02936147&r=all |
| By: | Davis, John B.; Jovanovic, Franck; Assistant, JHET |
| Abstract: | Introduction to Symposium "Economics and its Boundaries" |
| Date: | 2021–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:nh96u&r=all |
| By: | Carrasco, Maria; Assistant, JHET |
| Abstract: | Review of 'Our Great Purpose: Adam Smith on Living a Better Life' by by Ryan Patrick Stanley |
| Date: | 2021–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:a7zcy&r=all |
| By: | Kazuhiro Kurose |
| Abstract: | This study addresses the reconciliation of structural change with Kaldor's facts, which is a new research agenda in this area. The mainstream reconciliation strategy is that the facts are interpreted as a state at which the economy grows along the generalised balanced growth path and multi-sectoral models are transformed into the one-sectoral model that has the uniquely (saddle-path) stable steady state. We argue that the main- stream strategy is far from Kaldor's own thoughts and overlooks structural change in physical capital. The Cambridge Keynesian reconciliation based on Pasinetti's struc- tural dynamics demonstrates that structural change inevitably accompanies changes in socialinstitutionstomaintainfullemployment,whereasthemainstreamreconciliation is achieved entirely through the market mechanism. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:toh:tergaa:443&r=all |
| By: | Kauffman, Howel |
| Abstract: | This study is an introduction to the world's history of urban planning from its beginnings in the mid-19th Century until today. The work looks at significant planning historical issues. Why did town design go the way it did? How did it work and how did it change the goals? What was the prosperity of preparation, and who were its leaders? What were the core concepts and their relation to thought and social progress in the planning process? This essay gives a summary of the vast literature of urban planning and history by addressing certain queries. This work is divided into three phases of history: an initial era of separate but increasingly converging principles of a designated city; a second phase of national organisation, innovation and development; and a third period in which the planning concepts were applied at almost all levels and areas of urban policy. The roots of modern planning are discovered in community care campaigns, civil sculpture, and embellishment, classically resurrected urban architecture, and neighborhood settlements, and the reform of housing. A second portion deals with institutionalizing the profession, the advancement of zoning and comprehensive planning, significant time statistics and the New Deal initiative for new cities. |
| Date: | 2021–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:7zwhv&r=all |
| By: | Nancy Stokey (University of Chicago - Department of Economics) |
| Abstract: | The importance of new technologies derives from the fact that they spread across many different users and uses, as well as different geographic regions. The diffusion of technological improvements, across producers within a country and across international borders, is critical for long run growth. This paper looks at some evidence on adoption patterns in the U.S. for specific innovations, reviews some evidence on the diffusion of new technologies across international boundaries, and looks at two theoretical frameworks for studying the two types of evidence. One focuses on the dynamics of adoption costs, the other on input costs. |
| JEL: | O14 O33 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2020-94&r=all |