nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2022‒03‒14
eight papers chosen by
Erik Thomson
University of Manitoba

  1. Georges d'Avenel: an economic historian ahead of its time By Alain Alcouffe; David Le Bris
  2. Anti-Meritocratic Economics in the Contemporary Era: The Issues with the Neoclassical Theory By Maxfield, Sean Alexander
  3. A Personal View from the Wrong Side of the Subsequent Fifty Years By David Laidler
  4. Causality and Econometrics By Heckman, James J.; Pinto, Rodrigo
  5. Decision under Uncertainty By Brian Hill
  6. Theorizing varieties of capitalism: economics and the fallacy that "There is no alternative (TINA)" By Thomas I. Palley
  7. Shallow Meritocracy: An Experiment on Fairness Views By Peter Andre
  8. Trust, the Pandemic, and Public Policies By James Alm

  1. By: Alain Alcouffe (UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées); David Le Bris (TBS - Toulouse Business School)
    Abstract: At the end of the 19th, Georges d'Avenel produced a highly original work in various fields. Unsatisfied with the usual way to write history, he turned his attention to quantitative data to understand the past. In particular, he built series of prices of multiples goods and services from 1200 onwards. He proposed a documented analysis of long-term changes in prices as a result of the technical progress, in income and wealth inequalities as captured by the top 1%, as well as in the evolution of mentalities. His approaches were criticized both by both new professional "Republican" historians than by Conservative analysts. However, his data used by Pareto, Fisher, Frisch or Marshall are still used in current economic history and his analysis fertilized various fields in particular the Ecole des Annales.
    Keywords: economic history,distribution of wealth,history of prices,d'Avenel
    Date: 2021–10–08
  2. By: Maxfield, Sean Alexander
    Abstract: No longer does society consider the full extent of the argument and consequences or benefits of a system change. All the record-breaking economic success of the last few decades simply furthers a divide between people/organizations that have money and people/organizations that need money. However, those that can view this divide assign the capitalistic system as the culprit when in fact it is the modern mutation of capitalism that is at fault. Within modern neoclassical economies, there is no form of value-based meritocracy between people and organizations.
    Date: 2021–12–18
  3. By: David Laidler (University of Western Ontario)
    Abstract: Lucas (1972) was a paper that permanently changed the course of macroeconomics, even though its “money supply surprise†model lost its central place in the area within a decade because of empirical difficulties. However, Lucas’s novel methodology, based on clearing markets and rational expectations, still dominates orthodox macroeconomic theorising. An unfortunate side effect of this has been that, because mainstream models have no analytic room for money to play a key role in economic activity, the theoretical case for taking that role seriously was undermined just at the time when traditional monetarist macro-models were facing empirical problems. The consequences of all this for today’s monetary policy environment are briefly discussed.
    Keywords: Lucas; neutral money, monetarism, Keynesianism; micro-foundations; clearing-markets; inflation; recession
    JEL: E13 E31 E40 E52 N01
    Date: 2021
  4. By: Heckman, James J. (University of Chicago); Pinto, Rodrigo (University of California, Los Angeles)
    Abstract: This paper examines the econometric causal model for policy analysis developed by the seminal ideas of Ragnar Frisch and Trygve Haavelmo. We compare the econometric causal model with two popular causal frameworks: Neyman-Holland causal model and the do-calculus. The Neyman-Holland causal model is based on the language of potential outcomes and was largely developed by statisticians. The do-calculus, developed by Judea Pearl and co-authors, relies on Directed Acyclic Graphs (DAGs) and is a popular causal framework in computer science. We make the case that economists who uncritically use these approximating frameworks often discard the substantial benefits of the econometric causal model to the detriment of more informative economic policy analyses. We illustrate the versatility and capabilities of the econometric framework using causal models that are frequently studied by economists.
    Keywords: policy analysis, econometric models, causality, identification, causal calculus, directed acyclic graphs, simultaneous treatment effects
    JEL: C10 C18
    Date: 2022–02
  5. By: Brian Hill (HEC Paris - Recherche - Hors Laboratoire - HEC Paris - Ecole des Hautes Etudes Commerciales, CNRS - Centre National de la Recherche Scientifique, GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)
    Abstract: A series of famous examples casts doubt on the standard, Bayesian account of belief and decision in situations of considerable uncertainty. They have spawned a significant literature in economics, and to a lesser extent philosophy. This chapter some of this literature, with an emphasis on the normative issue of rational decision. [Pre-print version: please see the book for the final version, and cite it.]
    Date: 2021–12–14
  6. By: Thomas I. Palley
    Abstract: The VoCs approach to capitalism has the potential to transform economics. It tacitly emphasizes the plasticity of economies, whereby their character and outcomes are significantly a matter of choice. This paper augments VoCs theory to include a distinction between varieties and varietals of capitalism. Drawing on biology, varieties correspond to species and varietals correspond to sub-species. The paper proposes an analytical framework that unifies VoCs theory. It adds a mesoeconomics that links macroeconomics and microeconomics. That mesoeconomics concerns the institutions, behavioral norms, rules and regulations, and policies that characterize the economy and influence its performance. The mesoeconomic structure is described using the metaphor of a box, the six sides of which correspond to the major dimensions of capitalist economies. The design of the box is the product of societal and political choices, which places politics at the center of VoCs analysis. Policy space and policy lock-in are important concerns as they impact the choice set. The fact that economies inevitably involve choice means there is an inescapable normative question regarding what type of capitalism society will have.
    Keywords: Varieties of capitalism, varietals of capitalism, mesoeconomics, globalization, policy space, policy lock-in
    JEL: P0 P1 D2
    Date: 2022
  7. By: Peter Andre
    Abstract: Meritocracies aspire to reward effort and hard work but promise not to judge individuals by the circumstances they were born into. The choice to work hard is, however, often shaped by circumstances. This study investigates whether people’s merit judgments are sensitive to this endogeneity of choice. In a series of incentivized experiments with a large, representative US sample, study participants judge how much money two workers deserve for the effort they exerted. In the treatment condition, unequal circumstances strongly discourage one of the workers from working hard. Nonetheless, I find that individuals hold the disadvantaged worker fully responsible for his choice. They do so, even though they understand that choices are strongly influenced by circumstances. Additional experiments identify the cause of this neglect. In light of an uncertain counterfactual state – what would have happened on a level playing field – participants base their merit judgments on the only reliable evidence they possess - observed effort levels. I confirm these patterns in a structural model of merit views and a vignette study with real-world scenarios.
    Keywords: Meritocracy, attitudes toward inequality, redistribution, fairness, responsibility, social preferences, inference, uncertain counterfactual
    JEL: C91 D63 D91 H23
    Date: 2021–09
  8. By: James Alm (Tulane University)
    Abstract: What is the role of trust in designing public policies, especially during the current pandemic? In this paper I examine recent research that demonstrates the crucial effects of trust. This research suggests, I believe, two main conclusions. First, there is much emerging evidence that trust – and especially trust in government – is a major factor in shaping the effectiveness of public policies. In particular, when trust in government is weak, many government policies do not achieve their goals because people simply do not follow the government’s laws, regulations, and directives. Second, there is also much emerging evidence that trust is not fixed and given and immutable, mainly determined by a country’s history and culture and institutions, as was once believed. Instead, recent evidence indicates that trust can vary significantly, even over short periods of time. Indeed, there is growing research that trust in government can be affected in systematic ways by systematic policy interventions. These conclusions suggest that there are ways out of our current wilderness, even if these strategies will be neither easy nor quick.
    Keywords: Trust; public policy; tax compliance; experiments; pandemic.
    JEL: A13 H50 H70
    Date: 2022–02

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