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4 posts from May 2014


New heterodox microeconomics textbook: The Microeconomics of Complex Economies

TextbookFrom Wolfram Elsner (managing editor of Forum for Social Economics):
Dear social-economics friends and colleagues,
This is to let you know about a new ‘heterodox’ microeconomic textbook that has just has appeared. Please visit its website for details. If you consider a review, the authors would be happy to have sent you an inspection copy through the publisher:
The Microeconomics of Complex Economies:
Evolutionary, Institutional, Neoclassical and Complexity Perspectives.
An Intermediate Textbook
Wolfram Elsner, Torsten Heinrich, and Henning Schwardt
New York, San Diego, Amsterdam:  Elsevier/Academic Press, 2014, ca. 580pp.
Should you have any question or comment, please do not hesitate to contact me at: welsner@uni-bremen.de.


Review of Social Economy, 72/2 (2014)

RSEFollowing are the contents (with abstracts) of Review of Social Economy (72/2, 2014).


Alpine Farming in Switzerland: Discerning a Lifestyle-Driven Labor Supply, Chiara Calabresea, Stefan Mannb & Michel Dumondelc

This paper deals with the labor supply for alpine farming—a sector in which employees obtain at best seasonal employment and work extremely long hours for very little pay, but nevertheless often return year after year. Based on data obtained from 120 interviews carried out in 2011, we implemented a logistic regression model to discover which factors influence an employee's decision to return to an alpine summer pasture. Results are presented quantitatively, and their interpretation is also supported by a qualitative approach. Our findings indicate that occupational choice in this region is mainly driven by motivational values and quality of infrastructure, with pecuniary benefits playing a marginal role.

Thinking Like an Economist: The Neoliberal Politics of the Economics Textbook, Peter-Wim Zuidhof

This article surveys 10 introductory economics textbooks to examine whether and how economics contributed to the rise of neoliberalism. It defines neoliberalism as a political rationality characterized by market constructivism. In contrast with conventional liberal approaches that view limited government as legitimized by the failure of naturalist markets, neoliberalism constructs the market as norm and means of government. Economics textbooks overall have a liberal outlook, as exemplified by Samuelson's classic, however, with three liberal subgenres: the imperfect market view, the free market view, and an institutionalist view. While the introductory textbook cannot be construed as an instruction manual for neoliberalism, the article nevertheless identifies two important neoliberal moments: the discussion of market-based forms of government and the rise of a new genre of principles textbook that urges students to “think like an economist.” The article concludes with novel insights on how economics may have contributed to the spread of neoliberalism.

Regional Differences in Chapter 13 Filings: Southern Legal Culture or Religion?, John H. Becka, Donald D. Hackneya, John Hackneyb & Matthew Q. McPherson

Chapter 7 is designed for debtors who do not have the ability to pay their existing debts and many times leads to a legal release of most debt. Chapter 13 is designed for debtors who have the ability to pay all or part of their debts in installments over a period of time. Bankruptcy research finds that the southern region of the USA has a significantly higher portion of Chapter 13 filings than the rest of the country, unexplainable by quantifiable demographic, legal, or economic differences. Our results suggest that religion is the driving force behind the abnormally high Chapter 13 filings in the southern USA.

“Fair Trade,” Market Failures, and (the Absence of) Institutions, Andrew Samuela, Fred W. Derricka & Charles Scott

This paper presents an analysis of Fair Trade using a general equilibrium model of an economy where externalities are present and where the institutional or legal framework needed to regulate these externalities may be weak. Weak institutions and externalities are common in the developing world, where Fair Trade is targeted, making perfect competition models inappropriate measures of the value of Fair Trade. Members of Fair Trade cooperatives are required to adopt sustainable production methods, and not employ other socially harmful practices such as child-labor. Thus, Fair Trade organizations can serve as a complement to the existing weak institutions in the economy, creating incentives for entrepreneurs to move from the informal to the formal sector. Specifically, the analysis confirms that in many cases an increase in the Fair Trade premium can reduce the overall level of harmful activities, even from those producers who are not Fair Trade certified, and thereby raise welfare.

From Bretton Woods to the Global Financial Crisis: Popular Politics, Paradigmatic Debates, and the Construction of Crises, Wesley Widmaier

How do popular values shape constructions of crises and paradigmatic debates? In this paper, I offer a constructivist framework highlighting the popular bases of paradigmatic ideas and policy interests. In historical terms, I then trace the evolution of values, ideas, and polic]ies across three crises—the Bretton Woods-era inflation and currency crises of the 1960s, the South Korean and Long Term Capital Management crises of the 1990s, and the global financial crisis. In concluding, I stress implications for tensions not only between intellectuals and populists, but also among populists themselves—as in the affective divides between Tea Party and Occupy movements.

Book Reviews

Exchange Entitlement Mapping: Theory and Evidence, by Aurélie Charles (reviewed by Stefano Solari)

International Economics: A Heterodox Approach (2nd ed.), by Hendrik Van den Berg (reviewed by Valentin Cojanu)

Durkheim and the Birth of Economic Sociology, by Philippe Steiner (reviewed by Alexander Ebner)

Forum for Social Economics, 43/1 (2014)

FseFollowing are the contents (with abstracts) of the latest issue of Forum for Social Economics (43/1, 2014).


Welcome to the Poverty and Human Development Issue of the Forum for Social Economics #1-2014

Fairness, Transparency, and Conflict-of-Interest Policies, Wolfram Elsner (Managing Co-Editor), Cecilia Winters (Co-Editor), Phil O'Hara (Co-Editor) & Paolo Ramazzotti (Co-Editor)

Forum Best Paper Award, 2013

Methodenstreit 2013? Historical Perspective on the Contemporary Debate Over How to Reform Economics,” Peter M. Spiegler & William Milberg (from issue 42/4)


The Last Mile in Analyzing Wellbeing and Poverty: Indices of Social Development, Irene van Staverena, Ellen Webbinka, Arjan de Haanb & Roberto Foa

Development practitioners worldwide increasingly recognize the importance of informal institutions—such as norms of cooperation, non-discrimination, or the role of community oversight in the management of investment activities—in affecting well-being, poverty, and even economic growth. There has been little empirical analysis that tests these relationships at the international level. This is largely due to data limitations: few reliable, globally representative data sources exist that can provide a basis for cross-country comparison of social norms and practice, social trust, and community engagement. The International Institute of Social Studies now hosts a large database of social development indicators compiled from a wide range of sources in a first attempt to overcome such data constraints, at a low cost (http://www.IndSocDev.org). The Indices of Social Development are based on over 200 measures from 25 reputable data sources for the years 1990 to 2010.These measures are aggregated into six composite indices: civic activism, interpersonal safety and trust, inter-group cohesion, clubs and associations, gender equality, and inclusion of minorities. Not all data sources provide observations for indicators in each country, but together these data sources allow for comprehensive estimates of social behavior and norms of interaction across a broad range of societies, and increasingly with possibilities to track changes over time. This paper presents the database, highlights the differences, similarities, and complementarities with other measures of well-being, including those around income poverty, multidimensional poverty, and human development.

Yet, Two More Revisions to the Human Development Index, Edsel Bega Jr.

The Inequality-adjusted Human Development Index (IHDI) was adopted in the 20th anniversary edition of the Human Development Reports, in 2010. In using a penalty set-up for the calculations of the IHDI, however, the results overestimated the adjustments. This article suggests a revision to the procedure in order to harmonize the calculations with the underlying attainment set-up of the Human Development Index and minimize the bias in the adjustments. This article also suggests an extension to the IHDI, specifically the inclusion of a subjective measure of inequality in the calculation of the IHDI.

IQ and Economic Development: A Critique of Lynn and Vanhanen, Jennifer Morealea & John Levendis

We re-examine Lynn and Vanhanen's argument that gross domestic product (GDP) depends upon IQ. We argue that their analysis suffers from three types of biases, each of which would tend to erroneously favor their hypothesis. Despite this stacked deck, we find that their results are rather fragile. Rather, education has a stronger impact on GDP than does IQ, whose effect we find to be insignificant. In other words, it is a country's actual human capital, rather than its potential human capital, which determines its GDP. In short, we are unable to replicate their results.

Consumption, Credit, and Institutions: Using Field Research and Theory to Consider Poverty Alleviation, W. Parker Wheatley

This paper discusses the role of social, institutional, and psychological factors in the consumption and borrowing behavior of low-income households, and makes arguments in favor of policy interventions to alleviate some of the challenges of these households. Focus group evidence and findings on the current behaviors and borrowing patterns of low-income families are provided to support and motivate this perspective on consumption and policy. While the data are drawn from a specific region, the observations and findings could be generalized to other communities after accounting for different cultural and social characteristics. This research provides an in-depth understanding of the challenges confronted by low-income individuals at achieving their economic desires for lives of basic dignity, explores both economic and non-economic motivations, and provides insights useful for policy deliberation and model development.

Book Review

Thorstein Veblen and His European Contemporaries, 1880–1940: A Study of
Contemporary Sociologies, by Rick Tilman, with a foreword by Doug Brown (reviewed by John Hall)


Review of Social Economy, 72/1 (2014)

RSEFollowing are the contents (with abstracts) of Review of Social Economy (72/1, 2014).


Bringing Ethics Back to Welfare Economics, Ramzi Mabsout

Economists do not agree on the nature of welfare economics: is it normative or positive analysis? To overcome this disagreement and bridge the gap between the two views, the argument developed here takes two steps. The first identifies the metaethical positions of those for and those against the moral normativity of welfare economics. Metaethical positions differ on the ontology and ultimate legitimacy of morality. What appears in ethical terms as confusion can, in metaethical terms, be an attempt to arrive at an intellectually consistent position. A more constructive and less polarizing discussion on the aims and scope of welfare economics is expected once metaethical differences are accounted for. In the second step, ethical realism is introduced as a metaethical stance that views morality not in terms of subjective desires or preferences but as truth-apt claims. It is suggested that understanding the moral normativity of welfare economics in terms of ethical realism presents an opportunity to break the deadlock that halted its progress.

Killing for Money and the Economic Theory of Crime, Samuel Cameron

There is a large literature on the economics of crime and punishment, yet surprisingly little attention is paid to the receipt of money for crime. “Contract killing” is surprisingly neglected not only by economists but also by social scientists in general. In this paper, I look at the case not of professional gangster “hitmen” but of individuals who have found themselves in a position where they wish to have a killing carried out. This discussion does not condone the practice any more than an economic analysis of suicide is an inducement to individuals to kill themselves. To the lay reader, the cases where an individual feels the need to pay for killing may seem to be such that rationality is not a likely form of behaviour. However, the economics of crime has adopted the use of the rationality postulate as a heuristic for all types of crime.

Neutral Media? Evidence of Media Bias and its Economic Impact, Killian J. McCarthy & Wilfred Dolfsma

Three major surveys of professional journalists, in 1976, 1986, and 1996, suggest that the vast majority consider themselves to be neutral, objective, and balanced observers, whose role is merely to provide information. But how neutral is the media, in terms of its orientation and effects on the behavior of the markets? In this paper, we unite a number of literatures to suggest that by choosing what event to report, how much and how frequent to report an event, and by choosing what descriptive tone to adopt in their coverage, the media has a non-neutral impact on the economy. We report evidence to suggest that: (1) the media helps set the public agenda, by promoting certain events and causes, for better or for worse; (2) the media influence the public's perception of risk, by disproportionately sensationalizing risk and by emphasizing probable negative consequences over probably positive ones; (3) the media influences elections and their outcomes; (4) the media influences the public's perception of the manager, the reputation of the firm, and the goods that the firm produces; (5) the media shapes consumer sentiment and the consumers' willingness to spend; and (6) the media shapes business sentiment and influences both firm- and market-level behavior. In doing so, we demonstrate conclusively that the media is not neutral: the media alters the public's perception of reality. In other words, we suggest not only that the media reports the news, but also shapes the world in which we live.

Beyond Carrots and Sticks: How Cooperation and Its Rewards Evolve Together, Luigino Brunia, Fabrizio Panebiancob & Alessandra Smerillic

This paper is based on the intuition of Dragonetti, an old Neapolitan economist, which argues that a society experiences economic and civic development if agents promote values and virtues, more than solely rely on punishments stated by law. We thus study the evolution of cooperative behaviors using a mechanism of endogenous social rewards for cooperation (SRC). These additional (material) rewards depend on the recognition that the society—each agent in the society—gives to cooperative strategies. We formalize it with a cultural evolution model in which the payoff matrix and the population shares coevolve. We find that this endogenous mechanism can produce a large variety of long-run situations (victory of cooperators, of non-cooperators or, finally, their coexistence) depending on the social features. Moreover, we analyze the differences between SRC and exogenous punishment, changes in cooperation costs or changes in repetition of interactions and we disentangle their respective contributions.

Popular Attitudes Toward Market Economic Principles and Institutional Reform in Transition Economies, Petrik Runst

Transition countries display generally low levels of public support for market economic principles during the 1990s—but more successful countries display more support than less successful countries. The attitude difference is not just the result of transition speed or success. Rather, the data suggest that the varying levels of public support toward market economic principles existed initially and are a cause of the distinct transition trajectories. Different historical legacies affected popular attitudes long before the watershed moment of 1990.

Book Reviews

Social Economic Perspectives: An Interdisciplinary Review, Ron Nahser

A review of The Dissemination of Economic Ideas, edited by Heinz D. Kurz, Tamotsu
Nishizawa, and Keith Tribe; The Nature and Essence of Economic Theory, by Joseph A. Schumpeter, English edition and a new introduction by Bruce A. McDaniel; John Kenneth Galbraith, by James Ronald Stanfield and Jacqueline Bloom Stanfield; Property-Owning Democracy: Rawls and Beyond, edited by Martin O’Neill and Thad Williamson; and Approximating Prudence: Aristotelian Practical Wisdom and Economic Models of Choice, by Andrew M. Yuengert.

Examining the Place of Ethics in Economics: A Review, Steven McMullen

A review of Reckoning with Markets: Moral Reflection in Economics, by James Halteman and Edd Noell; Alternative Perspectives of a Good Society, edited by John Marangos; and Business Ethics and Corporate Sustainability, edited by Antonio Tencati and Francesco