Philosophy of Economics

This paper uses the evolutionary frame provided by the Victorian jurist Henry Sumner Maine to describe the process by which trust can be seen as the product of a gradual development that starts with small-scale communities and later allows market exchanges to develop themselves. I also argue, using the work of Elinor Ostrom (1990), that trust emerges first within small-scale communities, where first- and second-degree collective action problems need to be resolved. The development of a social disposition to trust is (...) closely linked with an institutional context that encourages individuals to take the externalities of their actions into account. This is made possible by customary mechanisms, as the development of social trust at this stage cannot rely on a mighty “Leviathan”. Therefore, this paper questions the claim that social trust is the product of market exchanges. Market exchanges might favor the further growth of social trust, hands in hands with the right institutional frame. However, this growth is not just the transposition of a previously acquired disposition to trust. The work of Henry Sumner Maine interestingly underlines the importance of the co-development of institutions and trust, from its origin in small communities to its expansion to market exchanges. Both Ostrom’s and Maine’s perspectives underline the fact that trust and trustworthiness are complementary and question a-rational perspectives on trust. This paper also elaborates on the claim, coming from the literature on contract law, that focusing on sanctioning mechanisms can be highly counterproductive. (shrink)

The lifting of lockdown is a typical case of the tragedy of the commons, and as such should be regulated by public authority, instead of being left to the ethics and responsibility of single individuals. I would therefore argue that we should think about an intermediate phase between the lockdown and the opening of shops (which in the Italian case is the transition from the red zone to the orange zone): diversified access to commercial activities, on an hourly basis, for (...) different population groups. This can be achieved either by creating different opening hours for different commercial activities and offices, or by opening them all at the same time but introducing free entrance hours based on age groups of clients. Both solutions would imply an extension of business and office hours, contrary to what has happened in most countries, where an attempt has been made to shorten the days and in some cases, such as in Italy, a curfew has even been introduced at a certain time of the day (in Italy, at 10 pm). (shrink)

Savage famously contravened his own theory when first confronting the Allais Paradox, but then convinced himself that he had made an error. We examine the formal structure of Savage’s ‘error-correcting’ reasoning in the light of (i) behavioural economists’ claims to identify the latent preferences of individuals who violate conventional rationality requirements and (ii) Broome’s critique of arguments which presuppose that rationality requirements can be achieved through reasoning. We argue that Savage’s reasoning is not vulnerable to Broome’s critique, but does not (...) provide support for the view that behavioural scientists can identify and counteract errors in people’s choices or preferences. (shrink)

This study constitutes an ethical analysis through the lens of distributive justice in the case of the Troubled Asset Relief Program (TARP), which was enacted in the midst of the Great Recession of 2007–2009. It begins by engaging with the visions of justice constructed by John Rawls and Robert Nozick, using their insights to locate the injustices of TARP according to their moral imaginations. However, this study argues that Rawls’ and Nozick’s theories of justice primarily envision the nature of law (...) as being restrictive of vice, not as instructors of virtue. Thus, it resources the legal philosophy of St. Thomas Aquinas to demonstrate how the positive pedagogy of law can enable a more just construction of economic rescue legislation, one that not only prevents future repetitions of economic vices and injustice, but is also formative for a society that prizes economic justice and virtues. In doing so, the study proposes two criteria for a more just consideration of economic rescue legislation that embraces law’s positive pedagogy. (shrink)

Proponents of the public goods argument ('PGA') seek to ground the authority of the state on its putative indispensability as a means of providing public goods. But many of the things we take to be public goods – including many of the goods commonly invoked in support of the PGA – are actually what we might term publicized goods. A publicized good is any whose ‘public’ character results only from a policy decision to make some good freely and universally available. (...) This fact poses complications for the PGA, insofar as the set of possible publicized goods is quite extensive indeed. (shrink)

Everyone has heard of "the invisible hand," the famous metaphor used by Adam Smith (1723-1790) in The Wealth of Nations. Although he uses the expression only once in the book, it has given rise to controversy that has lasted for over two centuries. -/- The famous expression has been understood, in (at least) two very different ways. In one way by most of academia, and in a very different way by Keynes, Noah Chomsky and more lately by Mark Blaug (in (...) the second edition of The New Palgrave, 2008). -/- In the standard textbook interpretation, it is considered a poetical name for "the price mechanism" and presented as an argument in favor of laisser-faire and free trade. In this paper we recall the less well-known interpretation (of Keynes, Blaug and Chomsky), showing that Smith was more reserved towards laisser-faire than is commonly believed and that by "invisible hand" he did not mean the price mechanism. (shrink)

Two interlocutors, Philip Pettit and a student, are exchanging views on liberal political and economic philosophy during lunch at Prospect House, the faculty club of Princeton. The dialogue begins with clarifications of the notion of liberty, and, against objections of the student, Pettit introduces and defends his own conception of freedom as non-domination rather than as non-interference. It proceeds with an exchange of arguments regarding the different kinds of institutional settings that entrench liberty and all the other things valued by (...) humans. The interlocutors reach a preliminary consensus that in order to substantiate the republican ideal of freedom as non-domination in concrete institutional realities, two things are required: the establishment of a mixed constitution – so that no single, unconstrained body can exercise lawmaking and other government functions – as well as eternal vigilance on the part of the citizens. The second part of the dialogue deals with a major challenge to the republican political philosophy expressed by the student: the issue of non-domination in markets, which is diagnosed as an important lacuna in republican thought. (shrink)

How does economics understand the human being? In this article, I present the current dominant conception of the human being in neoclassical theory, which is usually labelled as 'homo oeconomicus' (economic man). I describe the traits of this anthropology, and present the historical context in which it emerged. Then I make its critical evaluation. This is followed by a discussion of two recent alternative conceptions of the human being, which try to go beyond the individualist 'homo economicus' paradigm. I highlight (...) the recent contributions of John B. Davis and Luigino Bruni. Finally I reflect on some elements of Christian anthropology which can contribute to enrich the conception of the person in economics. (shrink)

Given the endowment effect, the role of attention in decision-making, and the framing effect, most behavioral economists agree that it would be a mistake to accept the satisfaction of revealed preferences as the normative criterion of choice. Some have suggested that what makes agents better off is not the satisfaction of revealed preferences, but ‘true’ preferences, which may not always be observed through choice. While such preferences may appear to be an improvement over revealed preferences, some philosophers of economics have (...) argued that they face insurmountable epistemological, normative, and methodological challenges. This article introduces a new kind of true preference – values-based preferences – that blunts these challenges. Agents express values-based preferences when they choose in a manner that is compatible with a consumption plan grounded in a value commitment that is normative, affective, and stable for the agent who has one. Agents who choose according to their plans are resolute choosers. My claim is that while values-based preferences do not apply to every choice situation, this kind of preference provides a rigorous way for thinking about classic choice situations that have long interested behavioral economists and philosophers of economics, such as ‘Joe-in-the-cafeteria.’. (shrink)

In the wake of the global financial crisis of 2008, the greatest economic disaster since the Great Depression, the cover story of the July 18th 2009 issue of The Economist, entitled “What went wrong with economics,” opened with an unequivocally incriminating statement: “Of all the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself.” In the months surrounding this indictment, many influential economists, including several Nobel laureates, were drawn to the same embarrassing (...) conclusion. Despite the existence of a handful of Cassandras, economists, as a group, had failed to foresee the crash. This short essay reviews the criticisms addressed to modern economic theory in the immediate aftermath of the crash. Overall, the main issues raised by critics were that (a) economists versed in the dominant models in macroeconomics and finance have been blinded to the possibility that we live in an uncertain and complex world; and (b) that the content of current economics education has sidelined many of the relevant insights to be found in the history of the discipline. This has led the critics to call for changes in the institutional structure of discipline, with a particular emphasis on the promotion of interdisciplinarity, and theoretical and methodological pluralism. (shrink)

The firm is a real entity and not an imaginary, fictitious or linguistic entity. This implies that the firm as a whole exhibits a sufficient degree of unity or cohesiveness and is durable and persistent through time. The firm is essentially composed of a particular combination of constituents that are bound together by something that acts as an ontological glue, and is therefore non-reducible to other more basic entities, i.e., to its parts or its members. From our perspective, the firm (...) is not simply an aggregate or a collection. It is a real integrated entity and a dynamic causal system. Institutional and organizational aspects enter the picture. These assertions stand in sharp contrast with mainstream theories of the firm whose proponents are more preoccupied with questions of contractual provisions, vertical integration or opportunism than the general and more fundamental questions related to what firms really are. (shrink)

This article is the introductory chapter to a festschrift in honour of Geoff Hodgson. In work spanning four decades, Geoff Hodgson has made many path-breaking contributions to institutional economics, evolutionary economics, economic methodology, the history of economic thought and social theory more broadly. Hodgson’s reputation as a prolific and important writer, whose work transcends traditional disciplinary boundaries, is matched by his credentials as an academic entrepreneur, whose involvement in the formation of two international scholarly societies and the foundation of the (...) Journal of Institutional Economics has expanded the opportunities for constructive dialogue among social scientists. To celebrate Hodgon’s fantastic career, this volume brings together 19 original contributions by world-leading scholars in specific areas that have played a significant role in influencing Hodgson’s thinking or represent key debates to which he has contributed. The chapter introduces these contributions, and summarizes a conversation with Hodgson that is also included in the volume. (shrink)

Розглянуто суспільну проблематику людського розвитку і визначено доцільність відзнайдення нових стійких фундаментальних рішень у сфері побудови парадигми розвитку людських ресурсів у світовому господарстві.

Rival causal and interpretive approaches to explaining social phenomena have important ethical differences. While human actions can be explained as a result of causal mechanisms, as a meaningful choice based on reasons, or as some combination of the two, it is morally important that social scientists respect others by recognizing them as persons. Interpretive explanations directly respect their subjects in this way, while purely causal explanations do not. Yet although causal explanations are not themselves expressions of respect, they can be (...) used in respectful ways if they are incorporated into subjects’ self-directed projects. This can occur when subjects correctly understand and freely adopt researchers’ goals through a process of informed consent. It can also occur when researchers correctly understand and adopt their subject’s goals, using their research to empower those they study. (shrink)

This dissertation undertakes a philosophical analysis of “natural capital” and argues that this concept has prompted economists to view Nature in a radically novel manner. Formerly, economists referred to Nature and natural products as a collection of inert materials to be drawn upon in isolation and then rearranged by human agents to produce commodities. More recently, nature is depicted as a collection of active, modifiable, and economically valuable processes, often construed as ecosystems that produce marketable goods and services gratis. Nature (...) is depicted as consisting of various unproduced mechanisms or “natural machines” that are first discovered and then channeled so as to serve human ends. In short, nature as an ideal is a kind of garden that is characterized by natural objects purposefully arranged by intentional human agents. This dissertation first lays out working definitions of the key terms, such as capital and Nature, and then traces the historical roots of natural capital in the writings of eminent classical political economists, such as Adam Smith, John Stuart Mill, and Karl Marx. I then examine the question of substitutes for “critical natural capital”, and argue that the preservation paradox is warranted: no one can restore or preserve a part of Nature without turning it into an artifact. Following the recent work of Debra Satz and Michael Sandel, I finish my dissertation by situating the question of natural capital in the broader context of whether some goods should not be for sale, particularly those I define as Basic Ecological Goods. (shrink)

The publication of Guido Calabresi’s book “The Future of Law and Economics” has drawn a substantial amount of attention among law and economics scholars. We thought that the best way to devote special attention to this book was to devote a Special issue to it. This article situates Calabresi’s book among other reflections on the future of the discipline, introduces and explains the reasons behind this Special issue and discuss the organization and content of it. -/- We emphasize how Calabresi’s (...) historical-conceptual standpoint allows him to isolate the stakes of different future developments around the question of how could further appreciation of legal institutions that defy the standard economic assumptions help the field develop theoretically. Overall, the contributors all shared Calabresi’s attempt to restore the balance between Law and Economics and the need to better account for the “whole unanalysed experience of human race”, often neglected by the Economic Analysis of Law approach. Most disagreements are about the ‘how’. In any case, the search for the Law and Economics ‘not (yet) taken’ or for other “Law and … ” approaches is always open to the Future. (shrink)

Can taxation and the redistribution of wealth through the welfare state be conceived as a modern system of circulation of the gift? But once such a gift is institutionalized, regulated and sanctioned through legal mechanisms, does it not risk being perverted or corrupted, and/or not leaving room for genuinely altruistic motives? What is more: if the market’s utilitarian logic can corrupt or ‘crowd out’ altruistic feelings or motivations, what makes us think that the welfare state cannot also be a source (...) of corruption? To explain the standard answers to the abovementioned questions as well as their implications I will first re-examine two opposing positions assumed here as paradigmatic examples of other similar positions: on the one hand, Titmuss’s work and the never-ending debate about it; on the other, Godbout’s position, in-so-far as it shows how Titmuss’s arguments can easily be turned upside down. I will then introduce and reinterpret Einaudi’s “critical point” theory as a more complex and richer anthropological explanation of the problems and answers considered herein. Through the analysis of these paradigmatic positions I will develop two interrelated arguments. 1) The way these problems are posed as well as the standard answers to them are: a) subject to fallacies: the dichotomy fallacy and the fallacy of composition; b) too reductive and simplistic: we should at least try to clarify what kind of ‘gift’ or ‘corruption’ we are thinking about, and who or what the ‘giver’, the ‘corrupter’, the ‘receiver’ and/or the ‘corrupted’ party are. 2) The answers to these problems cannot be found by merely following a theoretical approach, nor can they be merely based on empirical evidence; instead, they need to take into account the forever troublesome, ambiguous and unpredictable matter of human freedom. (shrink)

This introduction explains the reasons behind this Special issue and discuss the organization and content of it. The difficulty of a genuine dialogue and understanding between economics, law and humanities, seems to be due not only to the fragmentation of reflections on man, but to a real ‘conflict of anthropologies’. What kind of conceptions of man and human values are presupposed by and / or privileged by economics, law, economic approaches to law and social sciences? How and when do these (...) conceptions come into conflict within and between disciplines? How do these conceptions of man and his values influence the conceptions of economics, law and institutions, and vice versa, how do these last conceptions influence the former? What are the normative, regulatory and practical implications of assuming an anthropological and / or axiological perspective instead of another? This Special issue aims at exploring the possibility of finding a common ground for discussion between economics, law and humanities, through the analysis and comparison of both the conceptions of man, human action and values assumed by economics, law and humanities, and their normative implications. The contributions to this Special issue and its organization are outlined at the end of this introduction. (shrink)

The paper advances a new comprehensive complex approach to the investigation of the civilizational aspects in the development of regional associations of countries. The research starts with the overview of historical dimensions of the civilizational approach and the contribution of the founding scholars to its development. It continues with the analysis of the scientific and methodological input of the followers and the critics of this approach. The authors suggest their theoretical approach to the identification of the modern local civilizations according (...) to six parameters: natural, biological, technical, economic, social, and governing. The civilizational affiliation of countries and the civilizational structure of major 17 regional associations of countries are identified. The results demonstrate that some regional groups have been more homogeneous in terms of civilizational composition, others – less homogeneous, which does not interfere with their dynamic development. However, the logic of the historical dynamics of human development indicates the inevitability of changing the current situation through prolonged civilizational conflicts resulting in significant changes in the global social dynamics and the civilizational structure of the world and of regional associations of countries. The identification of the civilization structure of countries and regional associations contributes to the rational decision-making in the areas of international economic relations and to the formation of the integration/disintegration policies on the national and regional levels. It is predicted that from 2030 global social dynamics will undergo a fundamental breakthrough that will radically change the civilizational structure of the world and regional unions of countries. Methods. The research is based on the application of the systemic and historical approach, combined with the methods of analysis, synthesis, analogy, abstraction, generalization and method of individual expert assessment. Novelty of the research. The authors have identified the civilizational structure of countries using statistically available criteria for the six groups of factors, which allows to determine the homogeneity level of the major regional groups of countries. Practical significance. Identification of civilization structure of countries and regional associations creates the opportunity for adjusting national and subregional integration and disintegration policies. The aim of the study is to determine the civilizational structure of the regional associations of countries. To achieve this goal the following tasks are set and solved: –to analyze and optimize the existing approaches to the identification of local civilizations; –to identify the current state of the countries’ belonging to this or that civilization, their civilizational structure; –to reveal the civilizational structure of the major regional blocs. (shrink)

The article analyzes the phenomenon of ownership in its legal, economic, political and philosophical perspectives. Ownership is considered as an opportunity and as a guarantee of sustainable development. Comparative context is used to identify the specificity of the bourgeois model of owners’ power (social state) and the domestic concept of power-ownership (including socialist state). The author draws conclusions about ways to overcome the competition between the state and the market for the human resource and proposes to explore the ideological provision (...) of power-ownership in order to appreciate its progressive potential and predilection in relation to the liberal model of social development . (shrink)

Volume 26, Issue 4, December 2019, Page 380-384.

Whereas many others have scrutinized the Allais paradox from a theoretical angle, we study the paradox from an historical perspective and link our findings to a suggestion as to how decision theory could make use of it today. We emphasize that Allais proposed the paradox as a normative argument, concerned with ‘the rational man’ and not the ‘real man’, to use his words. Moreover, and more subtly, we argue that Allais had an unusual sense of the normative, being concerned not (...) so much with the rationality of choices as with the rationality of the agent as a person. These two claims are buttressed by a detailed investigation – the first of its kind – of the 1952 Paris conference on risk, which set the context for the invention of the paradox, and a detailed reconstruction – also the first of its kind – of Allais’s specific normative argument from his numerous but allusive writings. The paper contrasts these interpretations of what the paradox historically represented, with how it generally came to function within decision theory from the late 1970s onwards: that is, as an empirical refutation of the expected utility hypothesis, and more specifically of the condition of von Neumann–Morgenstern independence that underlies that hypothesis. While not denying that this use of the paradox was fruitful in many ways, we propose another use that turns out also to be compatible with an experimental perspective. Following Allais’s hints on ‘the experimental definition of rationality’, this new use consists in letting the experiment itself speak of the rationality or otherwise of the subjects. In the 1970s, a short sequence of papers inspired by Allais implemented original ways of eliciting the reasons guiding the subjects’ choices, and claimed to be able to draw relevant normative consequences from this information. We end by reviewing this forgotten experimental avenue not simply historically, but with a view to recommending it for possible use by decision theorists today. (shrink)

Preference relations are intensively studied in Economics, but they are also approached in AI, Knowledge Representation, and Conceptual Modelling, as they provide a key concept in a variety of domains of application. In this paper, we propose an ontological foundation of preference relations to formalise their essential aspects across domains. Firstly, we shall discuss what is the ontological status of the relata of a preference relation. Secondly, we investigate the place of preference relations within a rich taxonomy of relations (e.g. (...) we ask whether they are internal or external, essential or contingent, descriptive or nondescriptive relations). Finally, we provide an ontological modelling of preference relation as a module of a foundational (or upper) ontology (viz. OntoUML). The aim of this paper is to provide a sharable foundational theory of preference relation that foster interoperability across the heterogeneous domains of application of preference relations. (shrink)

This paper considers the relevance of the Duhem-Quine thesis in economics. In the introductory discussion which follows, the meaning of the thesis and a brief history of its development are detailed. The purpose of the paper is to discuss the effects of the thesis in four specific and diverse theories in economics, and to illustrate the dependence of testing the theories on a set of auxiliary hypotheses. A general taxonomy of auxiliary hypotheses is provided to demonstrate the confounding of auxiliary (...) hypotheses with the testing of economic theory. (shrink)

Mill (1872, 1874) is an early proponent of the thesis that economics has a special domain in which it can operate relatively independently of findings from other sciences. Contra Mill, I argue that this so-called separateness-thesis is best defendedunder an externalist interpretation of Rational Choice Theory (RCT). Mill’s defence is consistent with an internalist interpretation of RCT. Internalism holds that RCT depicts psychological mechanisms operating in economic agents. I argue that such a defence fails to establish separateness, because it makes (...) economics highly depended on psychological findings. However, externalism understands RCT as an adequate description of how agents react to incentives if certain environmental structures are present. Under this interpretation, we can defend separateness by investigating which features of an environmental structure will lead agents to behave in accordance with RCT. Thereby, we can derive indicators that enable us to demarcate a separate domain for economics. (shrink)

Book Reviews Brian Epstein, Economics and Philosophy, FirstView Article.

This paper addresses the issue of finite versus countable additivity in Bayesian probability and decision theory -- in particular, Savage's theory of subjective expected utility and personal probability. I show that Savage's reason for not requiring countable additivity in his theory is inconclusive. The assessment leads to an analysis of various highly idealised assumptions commonly adopted in Bayesian theory, where I argue that a healthy dose of, what I call, conceptual realism is often helpful in understanding the interpretational value of (...) sophisticated mathematical structures employed in applied sciences like decision theory. In the last part, I introduce countable additivity into Savage's theory and explore some technical properties in relation to other axioms of the system. (shrink)

An examination of Emmanuel Levinas’ writings on money reveals his distance from—and indebtedness to—a philosophical predecessor, Georg Simmel. Levinas and Simmel share a phenomenological approach to analyses of the proximity of the stranger, the importance of the face, and the interruption of the dyadic relationship by the third. Money is closely linked to the conception of totality because money is the medium that compares heterogeneous values. Levinas goes beyond Simmel in positing an ethical relation to money permitting transcendence.

We consider a case where consumers are faced with a choice between sweatshop-produced clothing and identical clothing produced in high-income countries. We argue that it is morally better for consumers to purchase clothing produced in sweatshops and then to compensate sweatshop workers for the difference between their actual wage and a fair wage than it is for them either to purchase the sweatshop clothing without this compensatory transfer or to purchase clothing produced in high-income countries.

This dissertation undertakes a philosophical analysis of “natural capital” and argues that this concept has prompted economists to view nature in a radically novel manner. Formerly, economists referred to nature and natural products as a collection of inert materials to be drawn upon in isolation and then rearranged by human agents to produce commodities. More recently, however, nature is depicted as a collection of active, modifiable, and economically valuable processes, often construed as ecosystems that produce marketable goods and services gratis. (...) Nature consists of various unproduced mechanisms or “natural machines” that are first discovered and then channeled so as to serve human ends. In short, nature as an ideal is a kind of garden that is characterized by natural objects purposefully arranged by intentional human agents. (shrink)

The game theoretic notion of best-response reasoning is sometimes criticized when its application produces multiple solutions of games, some of which seem less compelling than others. The recent development of the theory of team reasoning addresses this by suggesting that interacting players in games may sometimes reason as members of a team – a group of individuals who act together in the attainment of some common goal. A number of properties have been suggested for team-reasoning decision-makers’ goals to satisfy, but (...) a few formal representations have been discussed. In this paper we suggest a possible representation of these goals based on the notion of mutual advantage. We propose a method for measuring extents of individual and mutual advantage to the interacting decision-makers, and define team interests as the attainment of outcomes associated with maximum mutual advantage in the games they play. (shrink)

in recent years, policy makers have shown increasing interest in implementing policies aimed at promoting individual well-being. But how should policy makers choose their well-being policies? a seemingly reasonable first step is to settle on an agreed-upon definition of well-being. yet there currently is significant disagreement on how well-being ought to be characterized, and agreement on the correct view of well-being does not appear to be forthcoming. Nevertheless, i argue in this paper that there are several reasons to think that (...) the domain of well-being in the public policy context is narrower than that of well-being in general, which makes agreement on how to understand well-being in the public policy context more likely. (shrink)

In the present paper, on the basis of the theory of production principles and production revolutions, we reveal the interrelation between K-waves and major technological breakthroughs in history and make forecasts about features of the sixth Kondratieff wave in the light of the Cybernetic Revolution that, from our point of view, started in the 1950s. We assume that the sixth K-wave in the 2030s and 2040s will merge with the final phase of the Cybernetic Revolution (which we call a phase (...) of self-regulating systems). This period will be characterized by the breakthrough in medical technologies which will be capable to combine many other technologies into a single complex of MANBRIC-technologies (med-bio-nano-robo-info-cognitive technologies). The article offers some forecasts concerning the development of these technologies. (shrink)

One widely used method for allocating health care resources involves the use of cost-effectiveness analysis (CEA) to rank treatments in terms of quality-adjusted life-years (QALYs) gained. CEA has been criticized for discriminating against people with disabilities by valuing their lives less than those of non-disabled people. Avoiding discrimination seems to lead to the ’QALY trap’: we cannot value saving lives equally and still value raising quality of life. This paper reviews existing responses to the QALY trap and argues that all (...) are problematic. Instead, we argue that adopting a moderate form of prioritarianism avoids the QALY trap and disability discrimination. (shrink)

This article is a critical survey of the debate over the value of the social discount rate, with a particular focus on climate change. The ma- jority of the material surveyed is from the economics rather than from the philosophy literature, but the emphasis of the survey itself is on founda- tions in ethical and other normative theory rather than highly technical details. I begin by locating the standard approach to discounting within the overall landscape of ethical theory, and explaining (...) the assumptions and simplifications that are needed in order to arrive at the model that is standard in the discounting literature. The article then covers the general theory of the Ramsey equation and its relationship to observed interest rates, arguments for and against a positive rate of pure time preference, the consumption elasticity of utility, and the effect of various sorts of uncertainty on the discount rate. Finally, it turns specifically to the ap- plication of this debate to the case of climate change, focussing on the recent controversy over the low discount rate used in the Stern Review of the Economics of Climate Change. (shrink)

“Philosophy isn’t useful for changing the world,” parents of philosophy students and Karl Marx tell us (at least about non-Marxist philosophy). Cristina Bicchieri’s new book Norms in the Wild provides an impressive antidote against this worry. It stands to change of social practices as Che Guevara’s Guerrilla Warfare stands to political revolutions. Bicchieri combines hands-on advice on how to change social practices with compelling theoretical analyses of social norms. She draws heavily on her influential earlier work on norms, but the (...) book doesn’t presuppose familiarity with it. Many of her examples stem from her work with UNICEF and other NGOs; they include female genital cutting, open defecation, child marriage, and many more. I cannot do full justice to Bicchieri’s rich book here, but will instead focus on three points. 1. Bicchieri offers a detailed and helpful botanization of collective behavior. Purely behavioral definitions of the relevant categories are inadequate. We must look at preferences and beliefs in order to know, e.g., whether something is a social norm. 2. Intentionally changing social norms is a complex process that requires several steps and extensive diagnostics. Simple information campaigns or provision of resources are unlikely to be successful. 3. Trendsetters and scripts often play a crucial role in norm change. Any approach that doesn’t look at psychological mechanisms and variables that are unevenly distributed across the population is inadequate. (shrink)

Neuroeconomics illustrates our deepening descent into the details of individual cognition. This descent is guided by the implicit assumption that “individual human” is the important “agent” of neoclassical economics. I argue here that this assumption is neither obviously correct, nor of primary importance to human economies. In particular I suggest that the main genius of the human species lies with its ability to distribute cognition across individuals, and to incrementally accumulate physical and social cognitive artifacts that largely obviate the innate (...) biological limitations of individuals. If this is largely why our economies grow, then we should be much more interested in distributed cognition in human groups, and correspondingly less interested in individual cognition. We should also be much more interested in the cultural accumulation of cognitive artefacts: computational devices and media, social structures and economic institutions. (shrink)

There is a long-standing debate in philosophy about whether it is morally permissible to harm one person in order to prevent a greater harm to others and, if not, what is the moral principle underlying the prohibition. Hypothetical moral dilemmas are used in order to probe moral intuitions. Philosophers use them to achieve a reflective equilibrium between intuitions and principles, psychologists to investigate moral decision-making processes. In the dilemmas, the harms that are traded off are almost always deaths. However, the (...) moral principles and psychological processes are supposed to be broader than this, encompassing harms other than death. Further, if the standard pattern of intuitions is preserved in the domain of economic harm, then that would open up the possibility of studying behaviour in trolley problems using the tools of experimental economics. We report the results of two studies designed to test whether the standard patterns of intuitions are preserved when the domain and severity of harm are varied. Our findings show that the difference in moral intuitions between bystander and footbridge scenarios is replicated across different domains and levels of physical and non-physical harm, including economic harms. (shrink)

This book is a collection and reworking of research done by Pascal Salin since around 1990. Salin is an economist in the tradition of the Austrian school of economics. He emphasizes the centrality of individual choice in an uncertain world in which individual actions interact to produce spontaneous orders. But he is no mere conduit of established ideas. He also offers his own highly original insights honed after a lifetime as an economist, one who has earned the respect in which (...) he is now held by his peers worldwide. The book makes delightful reading. Salin covers a lot of ground in this book, mostly within the topics indicated by the title, though in the final two chapters he goes beyond these and into the foundations of economic science. The book is divided into five parts: (1) firms, markets and competition, (2) globalization and international economic problems, (3) monetary integration, (4) money, finance and economic policies, and (5) foundations of economic theory. (shrink)

Economics claims to be an independent empirical social science but empirical evidence of the last century challenges this claim. By contrast Caritas in Veritate contains a set of linkages that demonstrate that economics is related to morals, anthropology and theology. Economics is practiced in a cultural setting with a moral dimension related to the human person, which is ultimately grounded in the nature of God. Pope Benedict has focused on love and gift as human qualities reflecting the Divine nature. The (...) anthropology that proceeds from this is a development of Pope John Paul II’s emphasis on human dignity and freedom. It suggests moral principles that can guide culture, social institutions and hence economic action. Pope Benedict uses his reflections on the social order to comment on the problems of development for less developed peoples, but his analysis also completes one theme of the social encyclicals. Whereas Pope Leo XIII concentrated on economic and political fundamentals such as property and political organization, subsequent contributions turned attention more towards the human actor in relationship to God. Pope John Paul II made this explicit by turning attention to anthropology. Pope Benedict has connected these and completed the vision initiated by his immediate predecessor. He has described more completely the grounding of anthropology on the family, culture and ultimately the Most Blessed Trinity. The encyclical can be read as an invitation to a broader methodology for economics, one that is better conformed to actual market actors and that has the capacity to overcome some of the contentious aspects of the current discipline. The groundwork has been established by thinkers including Aristotle and St. Thomas Aquinas and some of its elements are evident in the economic organisation of many non-modern cultures. (shrink)

My philosophical case study concerns textbook presentations of the theory of demand. Does this theory contain anything more than just a collection of tautologies? In order to determine its empirical content, it must be viewed holistically. But then, the theory implies false factual claims. We can avoid this result by embracing the theory's normative character. The resulting consequences will be illuminated with the new autodetermination thesis recently proposed in the philosophy of physics by Oliver Timmer. Applying his ideas to the (...) theory of demand reveals that the statements of this discipline simultaneously concern both values and acts. (shrink)

This essay is my review of economist Mark Skousen’s book, The Big Three in Economics. In it, he discusses the economic work of Adam Smith, Karl Marx, and John Maynard Keynes. He gives even-handed treatments of the major contributions of each, for example, Smith’s reputation refutation of mercantilist policies and Smith’s crucial insight into the role that division of labor plays in economic growth. My only complaint is that Skousen doesn’t adequately explain his choice of Marx as a great economist. (...) What enduring contributions did he make to the field? Why name him rather than (say) David Ricardo? (shrink)

Millikan's famous oil drop experiment is scrutinized from the viewpoint of the methodological dicta of the credibility revolution.