Forum for Social Economics, 42/1 (2013): Special Issue on Teaching Social Economics

Following are the contents (with abstracts) of the latest issue of Forum for Social Economics (42,1, 2013), a special issue on "Teaching Social Economics."

Editorial

Introduction to Teaching Social Economics, Geoff Schneider & Daniel Underwood

Teaching Macroeconomics

Critical Thinking and Applied Political Economy: Towards Understanding the Social Construction of Reality, Daniel A. Underwood

This article provides a design template to construct a macroeconomics course using a multiparadigmatic approach using discovery based learning. Students use alternative paradigms–Classical, Keynesian, Institutionalist, Marxist, Monetarist, Schumpterian–to explore forces explaining the business cycle. They access and manipulate primary economic data to evaluate distributional outcomes using applied political economy; the use of alternative paradigms to systematically trace out how economic science is used to support policies directing the distribution of income. The course capstone applies economic paradigms and data analysis to evaluate policy propositions related to contemporary macroeconomic issues.

Krugman Meets Marx and Keynes at the Baby-Sitting Co-op, Mark Lautzenheiser & Yavuz Yaşar

Paul Krugman tells the story of the Capitol Hill baby-sitting co-op as a means of introducing readers to the economics of recessions. We take the story from where Krugman stops and develop it by presenting different aspects of a monetary economy with the help of a graphical analysis. This is done with the introduction of history of economic thought to the curriculum by visiting monetary theories of Karl Marx's Capital (1867) and John Maynard Keynes's A Treatise on Money (1930). The benefit of using these two sources is twofold. First, it is possible to find a common theory in both Marx and Keynes's writings to explain the baby-sitting co-op story. Second, it is possible to move beyond the story and introduce other aspects of a monetary economy such as endogenoity of money, industrial and financial circulation of money, etc. In addition, a graphical framework is developed as teaching aid.

A Reading on Money and Money Creation, Kevin Furey

A difficulty in teaching undergraduate courses from a non-orthodox perspective is the lack of written material to draw upon. This reading, written for an introductory macroeconomics course, is an attempt to fill a small part of that void by providing a discussion of money creation from an endogenous money perspective. By focusing on the ability of banks to engage in asset and liability management, the reading makes it easy for students to comprehend why investment is never constrained by a lack of saving. For those who are compelled to also present the orthodox perspective, the question is which view to discuss first. Based on readings in cognitive science, unveiling the non-orthodox material first will greatly increase the chances students will analyze social problems from a non-orthodox perspective. Consequently, this reading is designed to be the student's first encounter with the subject of money and money creation. Orthodox textbooks usually omit from their balance sheets the two items that allow banks to make loans without excess reserves. By presenting the non-orthodox view first, students easily see the problems with the orthodox money multiplier approach.

Teaching Microeconomics

Minimum Wages and Economic Justice: A Classroom Exercise, Aaron Pacitti & W. Scott Trees

This paper presents a classroom exercise for an introductory economics course that allows students to discover the economic and social impacts of working for minimum wages. Students are asked to estimate a budget necessary for both a desirable and sustainable standard of living for those earning a minimum wage income. By engaging in active learning on topics such as economic justice, normative economic policy, living wages, and non-material needs, the exercise is an effective vehicle for integrating social economics into a principles course; and offers an opportunity to augment traditional economic pedagogy. Extensions, variations, and a suggested assessment tool for the exercise are also provided.

But That Is Unfair Professor: Using a Grade Structure to Help Students Understand Income Quintiles, Timothy Wunder

Economic instructors exploring issues of income disparities will often be facing students who are apathetic towards the topic. Although income disparities have grown in the US, the university experience is still overwhelmingly dominated by students coming from middle and upper class families who will rarely have personal experiences with poverty which may be part of the reason why so many students lack interest. By suggesting that a flat uniform grade distribution system will be used in the class, students often become frightened by the inevitable outcome that a large percent of the class will automatically receive low grades. This emotional reaction can then be used as an anchoring point for students to recognize the inevitability of poverty with respect to capitalist systems. This method almost always provokes heated and interesting classroom conversations and forces many students to rethink the issue of income inequality in the US.

Gender/Social Construction of Knowledge

Teaching Feminist Economics through Student-Written Diaries, Genna R. Miller

As a heterodox, economics paradigm, feminist economics seeks to improve women’s economic status and reduce the androcentric bias in economics. Thus, teaching feminist economics involves teaching students different ways of analyzing social inequalities and how to access more emotionally connected aspects of human behavior. This article argues that using student-written ‘gender diaries’ serves as an important pedagogical device for teaching feminist economics, because diaries enable students to more fully consider social inequalities and critique the masculine-centered features of neoclassical economics. Furthermore, when the diary approach is used in tandem with traditional lectures, this may serve to challenge gendered pedagogical dualisms which pose lectures and diaries in gendered oppositions to one another rather than envisioning them as complementary human ways of teaching. A case-study is presented from a “Women in the Economy” course in which students kept a gender diary. An analysis of a survey of the students indicates that the majority of students found the diary to be both a pleasurable and useful pedagogical device, and recommended continued use of the diary specifically for this course. Students were less enthusiastic in recommending the diary for use in other economics courses.

Examining the Unique Characteristics of Economics: A Description of a Student Assignment, Elizabeth Moorhouse

This article discusses a classroom activity which introduces students to the knowledge creation process in the field of economics. Although the assignment was used in an upper level history of economic thought class, it could be tailored to fit almost any broadly themed course in the field. Economics is a discipline that faithfully adheres to a particular approach—one based on self-interest and contractual exchange; ideas that deviate from this approach are often overlooked by economists or deemed outside the discipline. Likewise, arguments made without the use of core assumptions or mathematical models are screened out as not truly being economics. Due to this allegiance to a specific form of argument, economics has developed unique characteristics. The class activity asks students to think about the implications of these characteristics and identity economic models and theories that exemplify them.

Student Evalutions and Heterodox Teaching

Student Evaluations, Grade Inflation and Pluralistic Teaching: Moving from Customer Satisfaction to Student Learning and Critical Thinking, Geoff Schneider

Faculty at universities that place significant weight on student evaluations often report that they give out easy grades, avoid controversial material and dumb down courses in order to get higher student evaluations. Unfortunately, research on student learning indicates that challenging courses, especially those that challenge students' existing mental models, facilitate greater learning. Meanwhile, research on student evaluations indicates that grading more easily and teaching easier courses has, at best, a small impact on student evaluations. Thus, ironically, faculty perceptions about student evaluations are more problematic than student evaluations themselves. In order to improve the quality of teaching, it is important for universities to develop a system for evaluating teaching that emphasizes (and rewards) the degree of challenge and learning that occurs in courses. This can be achieved by altering student evaluation forms to emphasize the amount students learn and the amount of work they do in a course. Additional possibilities include the development of a more robust system of peer evaluation of teaching and of teaching materials. Given that heterodox economists teaching pluralistic material tend to challenge the status quo, it is particularly important for an evaluation system to reward teaching that challenges students' perceptions of the world. Otherwise heterodox teachers will not be evaluated fairly.

Call for papers: Association for Social Economics sessions at Southern Economic Association meetings

The annual conference of the Southern Economic Association will be held at the Tampa Marriott Waterside in Tampa, Florida, on November 23-25, 2013 (Saturday-Monday). 

The Association for Social Economics will host three sessions at the SEA meetings this year.  This year's theme will be "Social Issues and Human Development."  Research oriented towards health, education, poverty, family structure, and welfare of the general population in the U.S. and other parts of the world are especially welcome.

Please submit your proposals along with your department names, addresses, and affiliations to Dr. Aparna Mitra (amitra@ou.edu) by April 15, 2013.

Is Jeffrey Sachs taking the name of Keynes in vain?

By Steven Pressman

Jeffrey Sachs has written an unbelievably bad piece for the Huffington Post. The piece is a follow-up to his Washington Post op-ed with Joe Scarborough entitled “Deficits Do Matter” as well as Krugman’s response to this op-ed on his New York Times blog.
 
I don’t really want to delve deeply into the issue of whether or not a short-term stimulus will contribute to economic growth and employment. That is an issue on which I will not likely convince Sachs or opponents of fiscal stimulus.
 
What I mainly want to take issue with is using the name of Keynes in vein, and presenting a misleading view of what Keynes wrote to argue against the sort of Keynesian stimulus that Keynes himself clearly supported. It is hard to read The General Theory, especially when thinking about the context in which it was written, and not see that Keynes was proposing an active policy of tax cuts and government spending in order to increase demand and put people to work. Many other writings by Keynes from the early 1930s (and even earlier) make the same point about fiscal policy. It is clear where Keynes stands on deficits in the midst of high unemployment; to imply otherwise is to do Keynes a grave injustice.

Sachs starts by quoting Keynes on the need for structural policies to deal with the unemployment problem facing the UK in 1937. In an article in The Times, Keynes wrote in 1937: "We are in more need today of a rightly distributed demand than of a greater aggregate demand." Then, adopting the debating technique of the non-sequitur, Sachs accuses Krugman of holding several views that he calls “crude Keynesian” and refers to some of Keynes’s writing that seems to support this. He then moves on to critique some elements of this crude Keynesian economics.
 
First, the one sentence quotation from Keynes is not a clarion call for structural policies; nor is it an admission that the UK was experiencing structural rather cyclical unemployment (it was written when unemployment in the UK was 12%). For a long time Keynes had supported policies that would increase demand through redistribution—policies such as family or child allowances financed by higher taxes on business profits. His 1930 article in the Political Quarterly, "The Question of High Wages," makes the case for such redistributive policies in order to raise demand. This piece also advocates greater government spending on social insurance programs, pensions and "useful expenditures" such as health, education and travel.

All this is not really much different from what Keynes set forth in The General Theory. To argue that Keynes abandoned Keynesian demand policies for structural policies based on this single sentence fails to do justice to Keynes. The sort of policies he supported in 1937 were the sort of policies he had supported for years—running large government deficits in times of unemployment (and surpluses in good economic times) in the belief that unemployment was cyclical in nature. His preferred solution was always the sort of public investments that most economists (including Jeff Sachs) advance and support. But Keynes was a realist. He knew that when, for political reasons, we could not build schools and hospitals, or invest in pre-school, we would have to print money and bury it in abandoned coal mines—the deficit be damned. Keynes was focused on a practical means to increase demand and employment; he wanted the biggest bang in terms of jobs for the lowest buck (government deficits). If Sachs would only read some Keynes, or some good commentaries on Keynes (the chapter on Keynes in my book 50 Major Economists is a simple and easy place to start), he would at least get Keynes right.
 
Sachs’ rejection of crude Keynesian economics because it depends on a particular value of Keynesian multipliers and assumes their consistency over time is even more disturbing. It is also really beside the point. It does not matter if the spending multiplier is 1.5 or 1.3 or even 1.7. And it does not matter if the value of multiplier changes or varies within this range, as long as fiscal policy does what it is supposed to do and creates jobs. In fact, even if the government spending multiplier were 1, and even if it varied substantially around its mean value of 1, each dollar of government spending would increase GDP by one dollar (on average) and more jobs would be created as a result. There is absolutely nothing in Keynes and nothing Keynesian that requires a large and stable multiplier. Again, some familiarity with Keynes and Keynesian economics before writing about them is the least one would expect from an economist teaching at Columbia.  
 
This would somewhat excusable if the debate were mainly a matter of abstract theory. But much is at stake here. At this point in time, the choice for both the US and Europe seems relatively simple. Are we to have a stimulus program in the face of high unemployment, as Keynes advocated? Or are we to have austerity and extremely high rates of unemployment? Do we have Keynesian economics or do we have de-Keynesian (pardon the pun) economics due to Jeff Sachs?

Steven Pressman is Professor of Economics and Finance at Monmouth University in Long Branch, NJ, USA. He is a trustee of the Association for Social Economics and a member of the editorial board of Forum for Social Economics, as well as the North American editor of Review of Political Economy and associate editor/book review Editor of Eastern Economic Journal. He is author/editor of more than a dozen books, including Fifty Major Economists, 3rd ed. (Routledge, forthcoming in 2013), and can be found on Facebook and Twitter.

Call for proposals: Hosting the 2014 or 2016 World Congress of Social Economics

From current ASE president Jonathan B. Wight:

The Association for Social Economics is pleased to consider expressions of interest for hosting sites for the 2014 or 2016 World Congress of Social Economics.

The World Congress represents an exciting opportunity to interact with social economists from around the world.  The 14th World Congress was in Glasgow, Scotland in June 2012.  ASE also hosted the first Summer School in Social Economics at that Congress.  For a history of World Congresses please see the ASE website. 

If you are interested in proposing a site for either the 2014 or 2016 World Congress, please visit the ASE website and follow the instructions on Conferences => World Congress => Expression of Interest in Hosting.  Please submit your suggestions using the on-line form.

The deadline for expressing interest in a 2014 site is April 5, 2013. 

Thank you for your efforts in helping promote social economics. 

Some simple facts on the corporate income tax

By Steven Pressman

While corporations have become a bigger part of our economy, and partnerships and individually owned firms have shrunk as part of our economy, corporate tax receipts have fallen as a share of GDP over the past half century.

Roughly, the corporate income tax has fallen from 4%+ of GDP in the 1950s and 1960s (the best days for the US economy) to 2% more recently. Reducing the corporate tax burden does not seem to have had any big economic benefits. And the consensus among public finance economists is that the burden of the tax falls on shareholders (rather than being passed to consumers or workers). Yes, most of are shareholders to some extent because of our pensions or small stock holdings, but shares of stock are held disproportionately by the very wealthy.

So, increasing corporate taxes or cutting their ability to dodge taxes should hurt neither average Americans or the economy. And to the extent that they prevent cuts in Social Security, Medicare, Medicaid, unemployment insurance, and other programs, this will be a net economic plus. And the nearly 2% cut in corporate tax payments is around $300 billion per year that can go to either deficit reduction, tax breaks for low-income and middle-income households, or to develop important programs that exist in all other developed countries except for the U.S. (for example, paid parental leave).

A corporate tax fairness bill addressing some of these issues was introduced in the U.S. Senate last week by Bernie Sanders of Vermont and in the House by Jan Schakowsky of Illinois. In a reasonable world, it should receive enormous support and would get passed easily.

Alas, we do not live in that world. We live in a world where death and taxes are inevitable because tax reform and gun control legislation can never get passed. Still, it is worth pressing for this legislation.

Steven Pressman is Professor of Economics and Finance at Monmouth University in Long Branch, NJ, USA. He is a trustee of the Association for Social Economics and a member of the editorial board of Forum for Social Economics, as well as the North American editor of Review of Political Economy and associate editor/book review Editor of Eastern Economic Journal. He is author/editor of more than a dozen books, including Fifty Major Economists, 3rd ed. (Routledge, forthcoming in 2013), and can be found on Facebook and Twitter.

Forum for Social Economics, 41/2-3 (July-October 2012)

Following are the contents (with abstracts) of the latest issue of Forum for Social Economics (41/2-3, July-October 2012).

Editorial

Economic Development, State, Policy, and Social Well-Being – Welcoming the Forum's Double Issue 2–3/2012, Wolfram Elsner

Economic Policy Alternatives, Social Security, the Living Wage, and Social Well-Being

A New Economic Strategy for the USA: A Framework of Alternative Development Notions, Nikolaos Karagiannis and Zagros Madjd-Sadjadi

This paper seeks to provide a new economic strategy for the United States while considering a range of development-related impediments to the country’s recent economic performance. It is argued here that strategic industrial policy needs to come to the center stage if local production growth, competency upgrading, and competitiveness improvement are to be aggressively pursued. The first section outlines the present context of the US economy by discussing economic and socio-cultural aspects. The second main section frames an alternative development paradigm for the United States. Policy recommendations are discussed in the third section. Some brief conclusions end the paper.

The Living Wage, Economic Efficiency, and Socio-Economic Wellbeing in a Competitive Market Economy, Morris Altman

Conventional economic wisdom views a Living Wage as costly in term of economic efficiency and competitiveness. I argue, based on x-efficiency theory, that higher wages need not cause any economic harm and can, on the contrary, generate higher levels of material wellbeing. Higher wages can be expected to induce x-efficiency and technological change cost offsets. In this context, an effective living wage, one that is above some subsistence minimum, can have a net efficiency effect on the economy. Therefore, a living wage greater than the wage rate generated by the free market cannot be predicted to generate economic harm. With the institutional parameters in place to realize a living wage, the economic pie can be expected to grow to accommodate the living wage.

On the Pro-Social Security Rhetoric, Rojhat B. Avsar

We propose to reframe Social Security to offer a coherent anti-privatization rhetoric that has not been fully provided in the contemporary literature. The dissatisfaction that motivated this study centers on the observation that the prevalent anti-privatization rhetoric exposes the drawbacks of Private Retirement Accounts (PRAs), but this rhetoric itself doesn't satisfactorily explain why the current Social Security system is more desirable. In reframing Social Security, we will follow a two-stage strategy. First, we will articulate the desirability of Social Security grounded in the function it serves in a way PRAs are not suited for serving: being a social income insurance scheme whose provision inherently favors the least fortunate in a Rawlsian fashion. Second, we will concentrate how Social Security provides this non-market choice by drawing on the unique resources not entirely available to the market.

Merit Goods and Basic Paradigms of State Activity

Does Libertarian Paternalism Reconcile Merit Goods Theory with Mainstream Economics?, Stefan Mann and Miriam Gairing

In the wake of Musgrave's move to question the absolute hegemony of individual preferences for normative economics in the 1950's by propounding the existence of merit goods, a recent book by Thaler and Sunstein is now making a similar claim under the label of ‘libertarian paternalism’. This paper tackles the question of why the framework of libertarian paternalism has received a so much more friendly reception among economists than the theory of merit goods. The main reason is a better foundation, not only for the conditions under which paternalism may be justified but also for the tools that should be applied, utilizing transaction cost theory.

Globalization and State: Four Paradigmatic Views, Kavous Ardalan

Any adequate analysis of globalization and state necessarily requires fundamental understanding of the worldviews underlying the views expressed with respect to the nature and role of globalization and state. This paper is based on the premise that any worldview can be associated with one of the four basic paradigms: functionalist, interpretive, radical humanist, and radical structuralist. It argues that any view expressed with respect to globalization and state is based on one of the four paradigms or worldviews. It, therefore, discusses four views with respect to the nature and role of globalization and state which correspond to the four broad worldviews. The paper emphasizes that the four views expressed are equally scientific and informative; they look at the nature and role of globalization and state from a certain paradigmatic viewpoint. Emphasizing this example in the area of globalization and state, the paper concludes that there are opportunities for each paradigm to benefit from contributions coming from the other three paradigms.

Comprehensive Heterodox Methodological Critique, and Experimental Economics

Guy Routh's Heterodox Critique of Economic Methodology, Robert W. Dimand and Robert H. Koehn

Guy Routh was an outstandingly incisive and severe critic of mainstream economic theory's abstraction, class bias, and empirical irrelevance. Routh's The Origin of Economic Ideas (1975 1989), with such chapter titles as “The Preposterous Origins” and “From Propaganda to Dogma”, was described by Robert Heilbroner as “irreverent, original, controversial, and delightful” while J. K. Galbraith expressed his “utmost enjoyment” and “utmost approval” of the book. Routh's trenchant critique of mainstream theorizing and his vision of an empirically-grounded alternative have been largely forgotten since his death in 1993, but deserve the attention of heterodox and especially of institutionalist and social economists.

Competition for Power and Altruism, Luigi Bosco

The paper analyzes the trade-off between power and altruism by using an experimental framework which involved a group of experimental agents, undergraduate students of the University of Siena. The results show that the introduction into the experimental structure of a tournament for the power appreciably altered the behaviour of agents. More specifically the degree of altruism, measured by the dictator offers, significantly decreased when the agents were able to trade altruism for power. The results were more clear-cut and robust in the case of the dictator game, but also in the case of the ultimatum game the introduction of the tournament for power altered the behavior of subjects. A significant gender effect emerged.

Review of Social Economy, 70/4 (December 2012)

Following are the contents (with abstracts) of the latest issue of Review of Social Economy (70/4, December 2012).

Presidential Address

Social Economics and Evolutionary Learning, Zohreh Emami

The major premise of this paper is that social and individual well-being depends significantly on people's capacity to learn and unlearn in communication with each other. This paper builds on social economic traditions that see communication and conversation as evolutionary generative and adaptive mechanisms through which individual and social learning occurs. Drawing on educational psychology and organizational behavior scholarship, five dynamic processes of conversational learning are introduced with the contention that they can help social economists understand at a micro level more deeply and more concretely how learning happens in the give-and-take of conversation. The paper explores the role of the state, organizations, and communities in fostering individual freedom and dignity, human rights, and economic democracy and concludes that the investment of value in people and their capability for purposeful action as social economic stakeholders can be enhanced through conversation as learning.

Articles

Pragmatism to Dogmatism: The Laissez Faire Myth and the Disabling of the American Fisc, Richard V. Adkisson & Mikidadu Mohammed

The authors argue that the recent upsurge in anti-tax sentiment has its roots evolving social conditions and adherence to the laissez faire myth. Content analysis reveals that political anti-tax rhetoric increased in the late 1970s and early 1980s, a time of social distress in the US. This increased political attention provided a rhetorical punctuation whereby a substantial portion of Americans moved toward a much more dogmatic adherence to the laissez faire myth. The result has been to convert the laissez faire myth into a disabling myth that severely limits open discussion of fiscal issues and reduces the options in public finance decisions.

Do Flexible Labor Markets Indeed Reduce Unemployment? A Robustness Check, Robert Vergeer & Alfred Kleinknecht

Nickell et al. (2005) have frequently been cited as empirical evidence that labor market rigidities cause high unemployment. We find that their model is not robust. Leaving their database unchanged and changing three details in their estimation procedure, it turns out that several policy-relevant coefficients change sign or significance. We conclude that their claim from Non Accelerating Inflation Rate of Unemployment (NAIRU) theory that labor market rigidities cause unemployment is rather shaky. There is a remarkable discrepancy between weak empirical results and sweeping conclusions by policy practitioners with respect to the call for deregulation of labor markets.

Speaker's Corner

Opportunities for Smallholders from Developing Countries in Global Value Chains, Clemens Lutz

The current policy debate on opportunities for African smallholders in agricultural markets focuses on the need for proper institutions at the market level or governance in the global value chain (GVC). Both discussions neglect insights from strategic management. We argue that successful inclusion of smallholders in GVCs requires the deployment of strategic resources and capabilities in the farming systems. The consequence of this argument is that the ‘inclusion’ of smallholders in GVCs only makes sense if they have the opportunity to create strategic resources.

Exchange

Interrogating Sickonomics, from Diagnosis to Cure: A Response to Hodgson, Dimitris Milonakis & Ben Fine

Hodgson's review of our books argues against us that marginalism neither adopted methodological individualism nor excluded the social from economics. Thus, he finds a partial solution to sickonomics in abandoning the term methodological individualism and using both structures and individuals as analytical starting point(s), revisiting Marshallian marginalism dressed up in socio-institutional clothing. He also denies any relationship between the current malaise in economics and the marginal revolution, as we claim, focusing exclusively on institutional developments since the Second World War. We show Hodgson is either partial or wrong on all of these counts. Firstly, his alternative to methodological individualism is untenable. Secondly, institutions, although implicitly present in Marshallian and Walrasian economics, play no substantive analytical role and as such are superfluous. Finally, although institutional factors help explain the sickness of modern economics (in addition to socioeconomic, ideological, political, and intellectual factors), the intellectual roots of this decay lie in the conceptual framework established around the marginal revolution.

From Social Theory to Explaining Sickonomics: A Response to Dimitris Milonakis and Ben Fine, Geoffrey M. Hodgson

This response shows that, in their reply to my critique of their work, Ben Fine and Dimitris Milonakis generally maintain the impression that there is a single, widely accepted definition of methodological individualism, but they do not identify it. They assert that social structures (undefined but seemingly specified to exclude law and institutions) have ‘analytical priority’ and logically (but tacitly) imply that individuals should have no part in the analysis of social or economic phenomena. They mischaracterise Hodgson's (2011) position on Marshall by quoting just one part-sentence out of context. Fine, Milonakis and Hodgson agree that the intellectual roots of the predominance of technique over substance in modern economics can partly be traced to the 1870–1900 period, but disagree on what they are.

Book Reviews

Aftershock: The Next Economy and America's Future (Robert B. Reich, review by James A. Buss

Sustainable Development: Capabilities, Needs, and Well-being (ed. Felix Rauschmayer, Ines Omann, and Johannes Frühmann), reviewed by Michael F. Watts

Relationship Economics: The Social Capital Paradigm and Its Application to Business, Politics, and Other Transaction (Lindon J. Robison & Bryan K. Ritchie), reviewed by Stephen P. Barrows

Adam Smith: An Enlightened Life (Nicholas Phillipson), reviewed by Marvin T. Brown

The Economics of Social Responsibility: The World of Social Enterprises (ed. Leonardo Beccheti and Carlo Borzaga), reviewed by Rita Yi Man Li

Education and Inequality Across Europe (ed. Peter Dolton, Rita Asplund, and Erling Barth), reviewed by Xinyue Ye

Highlights of the 2013 ASE/ASSA meetings (part 3): Costly posturing in China

By Jonathan B. Wight

(This is the second in a series of posts from Dr. Wight, current president of the ASE, describing sessions at the recently completed ASSA meetings in San Diego. See also the first and second installments.)

Xi Chen (Yale University) presented a fascinating paper at the recent ASE/ASSA meetings in San Diego (co-author Xiaobo Zhang of the International Food Policy Research Institute and Peking University).

"Costly Posturing: Relative Status, Ceremonies and Early Child Development" explores the relationship between social behaviors and economic and health outcomes. In particular, it examines how public ceremonies such as funerals, weddings, home blessings, and other events negatively affect substantive measures of human well-being -- specifically by caloric intake and malnutrition.  People feel intense social pressure to participate in these social rituals even when it detracts from the well-being of their own children.

The authors present evidence that in rural areas of China, poor families spend more on gifts than do the richest families-- creating what the authors call "squeeze effects".  The impact of this is statistically observed on children who are in utero at the time of the ceremonies.

This is counter to what one normally thinks, which is that social events tend to be redistributive.  For example, in the highlands of Guatemala, ceremonies are paid for disproportionately by wealthier villagers.  Such ceremonies serve to redistribute wealth in society according to a cosmic vision of what promotes justice in the circumstances. (See: Blevins, Ramirez, and Wight, "Ethics in the Mayan Marketplace," in Mark D. White, ed., Accepting the Invisible Hand: Market-Based Approaches to Social-Economic Problems(Palgrave Macmillan, 2010, pp. 87-110).

These findings also appear to contradict Confucian beliefs about the duty of a leader to provide for those in a lower hierarchy.  It may be that these data can be explained by arguing that poor people have to try harder to make an impression and gain status. Hence, they give larger gifts.

Adam Smith noted that it is not simply the rich who are interested in status. Writing in The Wealth of Nations, Smith noted that:

"By necessaries I understand, not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life…. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in publick without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty, which, it is presumed, nobody can well fall into without extreme bad conduct. (566)" 

What is not in the paper is a broader general analysis that would examine whether social affiliations provide important pay-backs over many decades to the wider group.  That is, social events during hard times may injure an in-utero baby.  But being part of the social group may confer advantages to other siblings in terms of jobs and marriages. 

This was a highly stimulating paper and a remarkable attempt to understand the link between status spending and negative health indicators in poor communities.

Call for papers: Association for Social Economics sessions at 2014 ASSA meetings

Association for Social Economics

Call for Papers

Allied Social Science Associations Annual Meeting
Philadelphia, PA, January 3-5, 2014

THEME:  Exploring the Relationships between Law and Social Economics

Social economics has long emphasized the inherent social nature of the economy, stressing that the ties that bind people together in the economy have essential effects on economic outcomes (and vice versa). Law is also a social institution that regulates and influences how people relate to each other, including its effects on economic transactions and other related social interactions. In other words, law should be an integral part of social economics, and this conference theme hopes to enhance and highlight this.

In terms of economics, law is best established within the mainstream traditions of law-and-economics. But there is a need for this paradigm, based almost solely on neoclassical economic principles, to be supplanted by a social economics outlook. There are already efforts on the part of legal scholars to question neoclassical law-and-economics (such as the law and socio-economic movement and behavioral law-and-economics) as well as areas stressing the social aspects of law (such as law-and-society). Social economics has an tremendous opportunity to contribute to this reorientation of economic thinking within the law.

For the ASE sessions at the 2014 ASSA meetings we welcome proposals for papers on all aspects of social economics, especially those dealing with the law. Possible law-related topics include:

• In what ways can social economics offer an improved economic analysis of law?
• How have social economics addressed legal issues in the past, either directly or indirectly?
• How can social economists incorporate legal concepts into their work? Many substantive topics of interest to social economists, such as inequality, poverty, and discrimination have important legal components that affect social-economic outcomes.
• What general topics in legal studies could benefit from a social economics approach? Such as:
  • Contract law (based on promise, consent, efficiency, etc.)
  • Property (individual versus collective orientation, issues of taxation, etc.)
  • Criminal punishment (justified by deterrence, retributivism, rehabilitation, etc.)
  • Judicial decision-making (based on rights, efficiency, social justice, etc.)

To submit a paper or a session, please go to the proposal submission area of the ASE website (under Conferences > ASSA > Proposal submissions). Submission deadline is April 30, 2013.

Individuals whose papers are accepted for presentation must either be or become members of the Association for Social Economics by July 1, 2013, in order for the paper to be included in the program.  Membership information can be found at socialeconomics.org.

All papers presented at the ASSA meetings are eligible for the Warren Samuels Prize, awarded to the best paper that advances the goals of social economics and has widespread appeal. Papers can also be considered for a special issue of the Forum for Social Economics. Details of these opportunities will be sent to authors of accepted papers.

Highlights of the 2013 ASE/ASSA meetings (part 2): Professional economic practice

By Jonathan B. Wight

(This is the second in a series of posts from Dr. Wight, current president of the ASE, describing sessions at the recently completed ASSA meetings in San Diego. See here for the first installment.)

A wonderful panel session explored "Ethics and Professional Economic Practice – Next Steps?"

George F. DeMartino, University of Denver, argued for the creation of a new field in economics devoted to professional economic ethics, similar to what exists in law, accounting, and other fields.  In an informal survey of business and economics journalists, DeMartino found that despite the crisis of 2008 and the movie Inside Job, journalists and editors were almost totally uninterested in conflicts of interest when researching stories using economists as experts.

David Colander, Middlebury College, argued that ethical lapses in economics were rarely due to money bribes, but rather due to the hubris of economists in pretending to have answers when they really do not:  "[E]conomists have a tendency to convey more scientific certainty in their policy positions than the theory and evidence objectively would allow. Too many economists are willing to make seemingly definitive scientific statements about policy based on models, that they know, or should know, are highly imperfect." 

  David M. Levy, George Mason University, and Sandra J. Peart, University of Richmond, presented a paper on "The Ethics Problem: Solving the Collective Action Problem of Economic Expertise."  This explores the collective action problem that arises from economists having non-monetary commitments (such as to particular principles or ideologies). There's an interesting discussion of Ronald Coase's attempt to defend his name after he was accused of bias, and a look at John Rawl's margin notes to Frank Knight's, The Ethics of Competition.

Steven Payson, the Association for Integrity and Responsible Leadership in Economics and Associated Professions (AIRLEAP), was generally critical of the culture of academic economics, in which "contributing to the literature" substitutes for actually making the world a better place.  Instead, economist-academics are self-interested to advance their careers and there is a "pretense" of scientific merit. 

Much more than this was presented and I am sure each of these authors would be happy to send you their papers. 

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Jonathan B. Wight is the 2013 president of the Association of Social Economics and Professor of Economics and International Studies at Robins School of Business, University of Richmond. He blogs regularly at Economics and Ethics.