We expound an economic explanation of the nature, causes, and effects of moral conventions. We show, first, that systems of moral rules lead to Pareto-efficiency; second, that the efficiency they induce may be interpreted as the outcome of an exchange of courtesies; third, and finally, that moral exchange takes place whenever the costs of transaction are sufficiently low. We also explain various phenomena, including the diversity of moral rules in time and space. Finally, we give sufficient conditions for universal moral (...) rules to emerge in a sequence of agreements involving two agents only at a time. (shrink)

Francis Ysidro Edgeworth’s unduly neglected monograph New and Old Methods of Ethics (1877) advances a highly sophisticated and mathematized account of social well-being in the utilitarian tradition of his 19th-century contemporaries. This article illustrates how his usage of the ‘calculus of variations’ was combined with findings from empirical psychology and economic theory to construct a consequentialist axiological framework. A conclusion is drawn that Edgeworth is a methodological predecessor to several important methods, ideas, and issues that continue to be discussed in (...) contemporary social well-being studies. (shrink)

This paper identifies the major failings of mainstream economics and the rational choice theory it relies upon. These failures were identified by the four figures mentioned in the title: economics treats agents as rational fools; by the time the long … More ›.

Most scientific models are not physical objects, and this raises important questions. What sort of entity are models, what is truth in a model, and how do we learn about models? In this paper I argue that models share important aspects in common with literary fiction, and that therefore theories of fiction can be brought to bear on these questions. In particular, I argue that the pretence theory as developed by Walton (1990, Mimesis as make-believe: on the foundations of the (...) representational arts. Harvard University Press, Cambridge/MA) has the resources to answer these questions. I introduce this account, outline the answers that it offers, and develop a general picture of scientific modelling based on it. (shrink)

The history of economic thought witnessed several prominent economists who took seriously models and concepts in physics for the elucidation and prediction of economic phenomena. Econophysics is an emerging discipline at the intersection of heterodox economics and the physics of complex systems, with practitioners typically engaged in two overlapping but distinct methodological programs. The first is to export mathematical methods used in physics for the purposes of studying economic phenomena. The second is to export mechanisms in physics into economics. A (...) conclusion is drawn that physics transfer is often justified at the level of mathematical transfer but unjustified at the level of mechanistic transfer. (shrink)

Recent interpretations of citizenship are firmly rooted in the value of social membership and social participation. Citizens are described as having a moral right to draw upon the support of the community, but at the same time have a responsibility to contribute to the provision of social services such as health care. In contrast, contemporary health economics has been criticised for taking a narrow and individualistic view of human behaviour. This paper examines the extent to which economic theory and practice (...) have been developed to accommodate a more ‘civic’ view, namely, the notions of mutual concern for community members, social participation and social rights. It is argued that because the provision of health care is often linked to feelings of compassion and social responsibility and not just to individual well-being, this sort of insight may enrich economic analysis and, in turn, provide a way around health economics’ reputed ‘dead end’. (shrink)

The fundamental postulate of sociobiology is that individuals exploit favorable environments to increase their genetic representation in the next generation. The data on fertility differentials among contemporary humans are not cotvietent with this postulate. Given the importance ofHomo sapiensas an animal species in the natural world today, these data constitute particularly challenging and interesting problem for both human sociobiology and sociobiology as a whole.The first part of this paper reviews the evidence showing an inverse relationship between reproductive fitness and “endowment” (...) in contemporary, urbanized societies. It is shown that a positive relationship is observed only for those cohorts who bore their children during a unique period of rising fertility, 1935–1960, and that these cohorts are most often cited by sociobiologists as supporting the central postulate of sociobiology. Cohorts preceding and following these show the characteristic inverse relationship between endowment and fertility. The second section reviews the existing so-ciobiological models of this inverse relationship, namely, those of Barkow, Burley, and Irons, as well as more informal responses among sociobiologists to the persistent violation of sociobiology's central postulate, such as those of Alexander and Dawkins. The third section asks whether the goals of sociobiology, given the violation of its fundamental postulate by contemporary human societies, might not be better thought of as applied rather than descriptive, with respect to these societies. A proper answer to this question begins with the measurement of the pace and direction of natural selection within modern human populations, as compared to other sources of change. The vast preponderance of the shifts in human trait distributions, including the IQ distribution, appears to be due to environmental rather than genetic change. However, there remains the question of just how elastic these distributions are in the absence of reinforcing genetic change. (shrink)

This commentary focuses on the parts of psychological game theory dealing with preference, as illustrated by team reasoning, and supports the conclusion that these theoretical notions do not contribute above and beyond existing theory in understanding social interaction. In particular, psychology and games are already bridged by a comprehensive, formal, and inherently psychological theory, interdependence theory (Kelley & Thibaut 1978; Kelley et al. 2003), which has been demonstrated to account for a wide variety of social interaction phenomena.

We present experimental data on a simple market game. Several solution concepts from cooperative game theory are applied to predict the observed payoff distributions. Notably, a recently introduced solution concept meant to capture the influence of outside options on the payoff distribution within groups fares better than most other solution concepts under consideration. Our results shed some light on the effects of scarcity relations on markets on bargaining outcomes within negotiating dyads.

Liberals have often been attracted by contractarian modes of argument— and with good reason. Any system of social organization requires that some constraints be imposed on individuals' freedom of action; it is a central problem for any liberal political theory to show which constraints can be justified, and which cannot. A contractarian justification works by showing that the constraints in question can be understood as if they were the product of an agreement, voluntarily entered into by every member of society. (...) Thus, no one is required to give up his freedom for someone else's benefit, or in the pursuit of someone else's conception of the social good. (shrink)

We revisit classical Utilitarianism by connecting and generalizing two ideas. The first is that there is a representation theorem possible for hedonic value similar to, but also importantly different from, the one provided by von Neumann and Morgenstern to measure decision utility. The idea is to use objective time, in place of objective chance, to measure hedonic value. This representation for hedonic value delivers a stronger kind of scale than von Neumann–Morgenstern utility, a ratio scale rather than merely an interval (...) scale. The second idea is that measurement on a ratio scale allows the meaningful aggregation of utilities over a group. This is aggregation by product rather than sum. Aggregation by product is known to have interesting Prioritarian consequences. Aggregation becomes complicated when the two approaches are mixed, when hedonic value is mixed with uncertainly. It becomes problematic when pain as well as pleasure is taken into account. (shrink)

I examine the foundations of a just society using the lens of decision theory. The conception of just society is from an individual’s viewpoint: where would I rather live if I have an equal chance of being any individual? Three alternative designs for a just society are examined. These are: laissez-faire, maximin and social minimum. Two assumptions about human nature clarify the distinction among three societies. The first assumption is that a representative individual’s utility function is concave. The second assumption (...) recognizes that redistribution to achieve equality reduces total wealth. A rational individual would prefer a society where one is free to maximize one’s expected utility. A social minimum that includes both the provision of essential human needs and equality of opportunity (education, healthcare, access to capital) for a flourishing life emerges as a candidate solution for the basic structure of society. (shrink)

This study addresses a fundamental concern of research on economic ethics by examining the values of economics. While other studies have linked the study of economics to the adoption of rational economic behavior, this study goes one level deeper, investigating the values that underpin neoclassical economics and whether they are transmitted to students. We find that the study of economics is associated with an increase in hedonism and power values, a decrease self-direction value, and possibly a decrease in universalism value. (...) We measure value change among economics students using a quasi-experimental research design in accordance with the methodology of research on academic socialization. We discuss the practical implications of the internalization of economic values. (shrink)

This essay examines the administrative state as a ubiquitous phenomenon that results in part from the mismatch of incentives. Using two dramatic episodes in the history of economics, the essay considers two types of mismatch. It then examines how economists increasingly endorsed the “general good” as a unitary goal for society, even at the expense of private hopes and desires. More than this, their procedures and models gave them warrant to design mechanisms and advocate for legislation and regulations to “fix” (...) the supposedly suboptimal choices of individuals in service to the overarching goal. The rise of New Welfare Economics dealt an additional blow to the sovereignty of individual motivations, notwithstanding that Hayek and Buchanan warned that this engineering approach allowed social goals to override individual preferences. Throughout, the argument is that it is important to recognize that people within or advising the administrative state are influenced by the same sorts of motivations as actors throughout the economy. (shrink)

After reviewing the compelling case for separability (`social welfare is a separable function of individual utilities'), an argument is advanced for utilitarianism (defined as `social welfare is the unweighted sum of individual utilities'). Basically, a compelling individualism-type axiom leads us to (social welfare as an) unweighted sum (of individual utilities), given separability.

Many utilitarians accept Bentham's view that to argue for the principle of utility is as ‘impossible as it is needless'. They take utilitarianism as a first principle which one either accepts or does not. They do, of course, defend utilitarianism against objections, and make objections to other ethical positions; but the principle of utility itself, they hold, must stand on its own merits. In this article we use a different approach. We introduce a principle, which we call ‘Weak Majority Preference', (...) which we believe likely to be accepted by many who do not consider themselves utilitarians. We then show that from this principle it is possible to derive the general principle of utility. (shrink)

Modelling became one of the primary tools of mathematical economic research in the twentieth century, but when we look at examples of how nonanalogical models were first built in economics, both the process of making representations and aspects of the representing relation remain opaque. Like early astronomers, economists have to imagine how the hidden parts of their world are arranged and to make images, that is, create models, to represent how they work. The case of the Edgeworth Box, a model (...) widely used for theoretical work in twentieth-century economics, provides a good example to explore the process of making mathematical representations of the economy. It shows how, in making these new representations, conceptual elements were developed which could not have been represented in the older verbal forms of economics. (shrink)