nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2008‒11‒25
six papers chosen by
Karl Petrick
University of the West Indies

  1. Happiness, Economic Well-being, Social Capital and the Quality of Institutions By Gabriel Leite Mota; Paulo Trigo Pereira
  2. Socioeconomic Complexity and the Sociological Tradition: New Wine in Old Bottles By João Carlos Graça; João Carlos Lopes
  3. Are Geological Indications a way to "decommodify" the coffee market? By Galtier, F.; Belletti, G.; Marescotti, A.
  4. Job Insecurity and Wages By David Campbell; Alan Carruth; Andrew Dickerson; Francis Green
  5. The Human Development Index as a Criterion for Optimal Planning By Merwan Engineer; Ian King; Nilanjana Roy
  6. An International Rule System to Avoid Financial Instability By Horst Siebert

  1. By: Gabriel Leite Mota; Paulo Trigo Pereira
    Abstract: Since Jeremy Bentham, utilitarians have argued that happiness, not just income or wealth, is the maximand of individual and social welfare. By contrast, Rawls and followers argue that to share a common perception of living in a just society is the “ultimate good” and that individuals have a moral ability to evaluate just institutions. In this paper we argue that just institutions, apart from their intrinsic value, also have an instrumental value, both in economic performance and in happiness. Thus happiness -- or subjective well being -- is analyzed as being a function of economic well-being, the quality of public institutions and social ties. Cross section individual data from citizens in OECD countries show that income, education and the perceived quality of institutions have the highest impact on life satisfaction, followed by social capital. Country analysis shows a non linear but positive influence of per capita GDP on life satisfaction, but also that unemployment and inflation reduce average happiness, the former effect being stronger. Finally, better quality public institutions and having more social capital also bring more happiness. We conclude with some policy implications.
    Keywords: Happiness; Democracy; Social Capital; Quality of Institutions
    JEL: D63 D69 D78 J10 Z13
    Date: 2008–07
  2. By: João Carlos Graça; João Carlos Lopes
    Abstract: Complexity is a purposeful integrating framework for interdisciplinary dialogue, namely between sociologists and economists. After presenting some properties of complex (social) systems, we consider the crucial role of the economic complexity research agenda in challenging the mainstream economic paradigm. This endeavor, we suggest, can greatly benefit from a neglected but relevant aspect, the concern regarding social complexity implicit in the sociological tradition, particularly the emphasis given by Durkheim to the idea of interdependence, a keystone of complexity studies nowadays. As we underline, instead of assuming interdependence/complexity and autonomy/simplicity in a tradeoff relationship, the French sociologist takes interdependence and autonomy as fundamentally complementary and positively correlated characteristics of modern societies. This fact suggests the convenience to conceptualize complexity as a broad socioeconomic, and not just a strict economic, phenomenon. Such a purpose is certainly more damaged than benefited by the existence of the economics/sociology academic divide.
    Keywords: Socioeconomic complexity; interdependence; autonomy; sociological tradition; Durkheim
    Date: 2008–10
  3. By: Galtier, F.; Belletti, G.; Marescotti, A.
    Abstract: The commodity nature of green coffee is the main cause of €ܴhe coffee paradox€ݠ(decreasing prices at production level and rising prices at consumption level). So, a requirement to reach a less unfair distribution of the added value between the supply chain would be to €ܤecommodify€ݠthe coffee market not only at the final consumer level, but also at the production level. Certifications (like Fair Trade, Organic, Rainforest Alliance, Utz Kapeh, or Birdfriend) are often presented as a way to reach this result, but according to some authors these schemes seem to be rather an extension of the standardization wave to new quality attributes (linked to social and/or environmental characteristics of the production process). Geographical indications (GIs) seems to be very different in this respect. GIs€٠Codes of practices (which include the delimitation of the production area and a description of the production norms and product quality) are normally elaborated by the local actors themselves , who are able to define the link to the terroir (physical and anthropic characteristics of the production area ). The aim of this article is to question the ability of GIs to €ܤecommodify€ݠ the coffee market also on the production side, and contribute to a fair distribution of the benefits of decommodification. The paper is based on the analysis of the design process of a GI coffee in the Jarabacoa region (Dominican Republic), which led to a very selective Code of practices but not so specific with regard to the link with the territory. The article evidences the chain of causality that brought to such a result, and debates to what extent the case can be considered as context-specific. Given that it appeared that most of the determinants are generic to the coffee world, the relevance of GIs as a tool to €ܤecommodify€ݠthe coffee market must be qualified.
    Keywords: Coffee, Geographical Indications, Collective action, Marketing,
    Date: 2008
  4. By: David Campbell; Alan Carruth; Andrew Dickerson; Francis Green
    Abstract: This paperexamines whether subjective expectations of unemployment are reliable indicators of the probability of becoming unemployed, and investigates their association with wage growth. We find that workers’ fears of unemployment are increased by their previous unemployment experience and by the unemployment experiences of a close friend, and are associated with other objective indicators of insecure jobs. We then show that unemployment fear predicts future unemployment, above and beyond observed objective variables. High fears of unemployment are found to be associated with significantly lower levels of wage growth for men, but to have no significant link with wage growth for women.
    Keywords: Job Insecurity; Wages; Unemployment; Subjecctive Expectations
    JEL: J60 J30
    Date: 2008–11
  5. By: Merwan Engineer; Ian King; Nilanjana Roy
    Abstract: Planning strategies that maximize the Human Development Index (HDI) tend towards minimizing consumption and maximizing non-investment expenditures on education and health. Interestingly, such strategies also tend towards equitable outcomes, even though inequality aversion is not modelled in the HDI. A problematic feature of strategies that maximize the HDI is that the income component in the index only role is to distort the allocation between health and education expenditure. Because the income component does not play its intended role of securing resources for a decent standard of living, we argue that it is better to drop income from the index in considering optimal plans. Alternatively, we consider net income, income net of education and health expenditures, as indicator of capabilities not already reflected in the education and life expectancy components of the index. When net income is used in a modified HDI index, optimal plans yield a balance between allocations for consumption, education, and health. Finally, we calculate our modified indexes for OECD countries and compare them with the HDI.
    Keywords: Consumption; Human development index; Income; Inequality; Planning
    JEL: O21 O15
    Date: 2008
  6. By: Horst Siebert
    Abstract: In a series of summits, leading countries of the world will meet to draw up an in¬ternational arrangement for financial stability. Such a rule system should prevent a financial crisis as we have seen it in 2007 and 2008. It should include appropriate principles of mone¬tary policy, rules for financial soundness and agreements on the role of prudent regulation. The paper discusses the lessons from the subprime crisis, failures of regulation, crisis man¬agement in the US and in the EU and considers the problems that have to be solved by an in¬ternational rule system
    Keywords: Financial instability, lessons from the subprime crisis, failures of regulation, crisis management, elements of an international rule system, role of the IMF; climate change, financial crises, the world trading system, oil supplies, immigration
    JEL: E2 E3 E5 F02 F33 F37 F4 F5 G2 P00
    Date: 2008–11

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