There are many general economic policies I favour such that I would feel significantly ashamed were I to succumb to bribery, or to institutional pressure short of physical threat, to publicly support their opposites. Here are a few of these policies: (1) Rich countries should not impose trade barriers, including subsidies for their own producers, against imports from poor countries. (2) Leaders of poor countries should be regarded as irresponsible when they imply to their people that their economic difficulties arise (...) principally from wickedness and exploitative behavior on the part of rich countries – the moral urgency of (1) notwithstanding. (3) Much freer movement of people across national borders for purposes of labour should be allowed everywhere. (4) Destitution is an unduly severe penalty for laziness, lack of talent or intelligence, or bad luck. More productive people should provide the lazy, the unskilled and the unlucky with as large a basic income grant as is compatible with maximizing net social productivity (which no present society comes very close to doing, partly due to confused social morality and partly due to incentive-distorting tax systems). (shrink)
The paper replies to Wade Hands’s recent criticism of one part of my 2005 book, Economic Theory and Cognitive Science: Microexplanation (ETCS). Hands argues that my association of my view of the foundations of microeconomics with aspects of the thought of Lionel Robbins and Paul Samuelson is gratuitous and historically misleading. I argue in turn that Hands’s general criticism rests on his ignoring the fact that my treatment of both Robbins and Samuelson is explicitly critical. On Robbins, I argue that (...) Hands’s concerns amount to an objection to me only given an absurd principle to the effect that the only non-misleading kind of associative relationship one can draw between two historical theses is identity. On Samuelson the dialectic is more complicated because, as a result of not understanding what philosophers call ‘externalism about intentional content’, Hands misreads the relationship I aim to construct between my general view and Samuelson’s. (shrink)
If one player’s gain is exactly equivalent to another’s loss, the game is said to be zero-sum. For example, football: every improvement of position for one team is an exactly corresponding deterioration for the other team. On the other hand, a buyer and a supplier haggling over a price is not a zero-sum game, since the parties hope to mutually gain.
People differ in the extent to which they discount the values of future rewards. Behavioural economists measure these differences in terms of functions that describe rates of reduced valuation in the future – temporal discounting – as these vary with time. They measure differences in preference for risk – differing rates of probability discounting – in terms of similar functions that describe reduced valuation of rewards as the probability of their delivery falls. So-called ‘impulsive’ people, including people disposed to addiction, (...) tend to choose rewards in patterns that are described by unusually steeply sloped discount functions. The empirical literature is ambivalent as to whether this applies to pathological gamblers (PGs) who manifest most other behavioural patterns associated with addiction, with different, equally careful studies suggesting opposite conclusions (Petry & Casarella 1999; Holt, Green & Myerson 2003). This puzzle may arise from the fact that most previous experiments on discounting behaviour were not designed so as to allow effects of high temporal discounting to be distinguished from effects of low probability discounting. (Addiction has sometimes been associated with the latter because it seems to involve, at least in the starting addict, under appreciation of risk.) Our research project investigates both forms of discounting behaviour and their relationship to severity of risk of PG in a community sample of South African gamblers. (shrink)
Addiction may or may not be a highly prevalent condition, but the concept of addiction is undeniably ubiquitous. From the people who cheerfully and publicly announce their addiction to coffee, or chocolate, or shopping, to those who ruefully and perhaps only in very special settings admit their addiction to alcohol or drugs, ‘‘addiction” is an oft-invoked explanatory frame for the presentation and characterization of individual behavior. Lately, it has even been applied to the behavior of super-personal entities, as in America’s (...) ‘‘addiction” to oil. Although the ubiquity of the concept is surely a sign of its usefulness, it also gives one pause; can a term of such broad application really have precise meaning (compare the word ‘‘thing”)? And if not—if there is nothing that all the ‘‘addicted” entities above have in common—then why is the concept so apparently useful, and what is it useful for? Such questions may seem tailor made for Ivory Tower semantic analysis, but in fact the matter is much more urgent than that. For we live in a world where involuntary commitments and other coercive measures are sometimes considered justified in the course of dealing with addicted persons. Why is this so? What could be wrong with addicted persons that would justify such treatment? And why is the word extended to apply to persons for whom such treatment would presumably not be justified? These are some of the several questions asked by the authors of Midbrain Mutiny, and they have not just scientific, but also political and philosophical motivations for wanting to answer them. So what is an addict? One possible definition—one that would seem to accord with the widespread use of the term—is an agent with abnormal preferences, in the sense that the addict is willing to pay far more, and to pay for far higher quantities of a good than is the average consumer. Here we should think not just of the novelist maniacally devoted to the twin pleasures of writing and alcohol, but also of the late Steve Irwin ‘‘addicted” to contact with dangerous animals, or of the infinitely more prosaic CEO who devotes all of her time to work.. (shrink)
I discuss the role of economics in the study of social cognition. A currently popular view is that microeconomics should collapse into psychology partly because cognitive science has shown that valuation is constitutively social, whereas non-psychological economics insists that it is not. In the paper I resist this view, partly by reference to the relevant history of economic theory, and partly by reference to an alternative model of the way in which that theory complements, without reducing to, psychological accounts of (...) social cognition. (shrink)
Economics is the only established discipline that is regularly charged not just with including ideologically motivated research programs and hypotheses, but with actually being (at least in its institutionalized mainstream form) an ideology. As Coleman (2002) documents, this charge has followed economics since its modern inception as ‘political economy’ in the eighteenth century. There is a veritable tradition of what Coleman calls ‘anti-economics’, most famously populated by people such as Ruskin and Carlyle, and extending in the contemporary environment to include (...) philosophers John Gray and John Dupré, numerous popular agitators associated with environmentalism and the self-styled ‘anti-capitalist’ and ‘anti-globalization’ movements, and no small number of disillusioned economists. Of course all disciplinary establishments rightly attract critical literature; but as far as I know no one has ever published a book called ‘The Death of Geology’ featuring a hangman’s noose on the cover. Coleman’s compendium of evidence shows conclusively, in case anyone hasn’t been keeping their eyes and ears open, that economics is actively hated by a substantial number of people. There is no other discipline of which this is true, except insofar as some people hate all actual and would-be scientific disciplines from religious, green, or aesthetic motivations. (shrink)
This paper critically discusses Amartya Sen’s case for broadening the basket of wellbeing indicators in development policy beyond income and consumption expenditure. I first argue that, contrary to what Sen has suggested, the theoretical and practical motivations that he gives for this do not form a mutually complementary set. In the second, policy-focused, part of the paper I present problems Sen’s approach to measurement raises in the context of a case study from rural South Africa. I conclude by suggesting that (...) development indicators should be regarded as narrower – in particular, that we should give privileged attention to women’s incomes – rather than broader. Keywords: development policy; well-being proxies; welfare; Amartya Sen Word count: 11,315.. (shrink)
Three recent book-length studies in the philosophy of economics (Mirowski 2002, Davis 2003, Ross 2005) have drawn attention to the fact that mainstream economic theory has consistently avoided commitment to any particular model of the person. This is the most significant respect in which economics has kept aloof from part of psychology. The widespread belief, on the other hand, that economists’ attentiveness to the psychology of choice and decision had to wait for the Allais challenge and then for Kahneman and (...) Tversky is a myth. It is true that for a brief period after World War II economists led by Samuelson tried to operationalize choice as analytically derivative from observed consumer demand. This was a minor episode in the history of theory. Ross (2005) argues that, if anything, mainstream microeconomics has been more sensitive to theoretical fashions in the psychology of choice than has been good for it. (shrink)
Of crucial importance to all parts of the transport services and materials sector in South Africa is the way in which the Government chooses to implement its ambitious plans to reinvest in the country’s basic infrastructure. How will it navigate competing demands from urban and rural environments, given the divergent economics that describe them? How will it balance the goals of poverty fighting, skills empowerment, and keeping SA internationally competitive, as it considers infrastructure project options?
‘Naturalism’ about the ontology of society can most blandly be characterized as the belief that social phenomena are among the class of natural phenomena. Contemporary scholars are apt to regard this thesis as bland because its denial seems quaint at best, if not outright unhinged, after a century and a half of development in the social sciences. There has, however, been a powerful tradition in (at least) Western culture that has understood the ‘artificial’ as a primary contrast class with the (...) ‘natural’, and which has interpreted the social as a creation of human beings that stands over and against the natural realm. Often.. (shrink)
This paper argues that the most common reading of Robbins’s Essay on the Nature and Significance of Economic Science in the methodology literature, according to which it was an historical foil for subsequent positivist-empiricist ideas, underestimates its contemporary relevance. In light of recent scholarship on 1930s positivism in philosophy, Robbins’s Essay is better interpreted as representing an attitude I call ‘broad positivism’, which remains a live option in contemporary philosophy of science. In consequence, the basis of Robbins’s preference for clear (...) demarcation between economics and psychology should be regarded as not merely historical in interest, but as raising valid considerations against the widespread current trend towards ‘correcting’ aspects of economic theory by reference to psychological experiments. (shrink)
The aim of this report is to consider feasible conditions under which South Africa!!" processed (e.g., canned and other packaged) fruit industry would be internationally competitive and a profitable site of investment, and therefore able to resume a pattern of growth from which it departed in the early part of the present decade. This is in service of the wider aim of identifying, in a subsequent phase of the project, appropriate industrial policy measures which Government might put in place to (...) assist the industry, in accordance with sound principles of national welfare optimization and public finance. (shrink)
Writing in the Business Day on 2 October 2007, economics journalist Hilary Joffe notes that “it was not long ago that there was a famine of infrastructure investment [in South Africa]; now there’s a feast, with each new week bringing reports of new projects and new, much higher estimates of the totals to be spent in years to come.” Joffe expresses enthusiasm about this, for reasons with which we agree: The infrastructure feast has already helped to raise SA’s investment ratio (...) to nearly 21% of gross domestic product, from a low of below 15% just five years ago. We are already seeing the beginnings of a shift from consumptiondriven to investment-driven growth that the economy needs if it is to grow on a sustainable basis. And of course much of that infrastructure is already urgently needed; and the need will grow as economic growth takes place. However, she is immediately led to ask two pressing questions. First, “even if these are all good and necessary projects, can SA’s economy afford them … all at the same time?” And second, “is anyone counting the total cost to the economy and puzzling out which projects should take priority, and whether some should wait (or be dropped altogether)?”. (shrink)
Critics of mainstream economics typically rest important weight on the differences between people and the 'agents' that populate economic theory and economic models. Hollis and Nell (1975) is both representative of and ancestral to many more recent variations on the theme. Lately, the upgraded status of behavioral economics (BE) within the discipline's mainstream has encouraged a number of writers to use revolutionary rhetoric in promotion of a 'paradigm shift' that includes the rejection of 'rational economic man' (Ormerod 1994, Heilbroner and (...) Milburg 1995, Fullbrook 2003). The current leading developers of BE are generally more circumspect, claiming that their approach complements standard theory rather than promising to supplant it (Camerer and Loewenstein 2004, Angner and Loewenstein this volume). However, they generally join the more florid critics in supposing that microeconomics is bound to improve its empirical relevance to the extent that it substitutes the study of people for that of abstract economic agents. Another body of thought that promotes this view stems from Sen's (1977) attack on standard economic agents as 'rational fools', amplified in Davis's (2003) argument that since economic agents lack some essential properties of human individuals, economic theory requires fundamental reform if it is to make progress in explaining human behavior. (shrink)
There may not be many points of consensus over what best promotes economic development, but here is one that has formed over the past decade: the institutional context matters a lot. This represents the single greatest shift in economic thinking about development since World War II, for there once was an almost equally clear consensus that institutions..
McClamrock argues for a thesis he calls radical externalism' in the behavioral and cognitive sciences. In my paper, I contend that McClamrock's thesis, though true, is not radical. This is because he urges externalism with respect to cognitive task-individuation and task-explanation, both of which are standard practice in the relevant disciplines. Semantic externalism may remain contentious, I argue; but the sense in which philosophers continue to argue about it has little bearing on the actual conduct of cognitive science. I conclude (...) with a diagnosis as to why externalism seems more contentious than it ought to. (shrink)
It is widely appreciated that establishment and maintenance of coordination are among the key evolutionary promoters and stabilizers of human language. In consequence, it is also generally recognized that game theory is an important tool for studying these phenomena. However, the best known game theoretic applications to date tend to assimilate linguistic communication with signaling. The individualistic philosophical bias in Western social ontology makes signaling seem more challenging than it really is, and thus focuses attention on theoretical problems - for (...) example, coordination on lexical meaning - that actual evolution did not need to solve by improving humans' strategic or social intelligence relative to the endowments of other primates. At the same time, issues of genuine evolutionary significance related to language, especially those around the tensions between individual and collective agency, and around intergenerational accumulation of knowledge, are obscured. This in turn leads to underestimation of the potential contribution that game theory can make to enlightening models of the evolution of human language. JEL classification: A11, A12, B52, C73, D02, D03, D82, Z13. (shrink)
Guala notes that low-cost punishment is the main mechanism that deters free-riding in small human communities. This mechanism is complemented by unusual human vulnerability to gossip. Defenders of an evolutionary discontinuity supporting human sociality might seize on this as an alternative to enjoyment of moralistic aggression as a special adaptation. However, the more basic adaptation of language likely suffices.
The revised edition of Paul Seabright’s The Company of Strangers is critically reviewed. Seabright aims to help non-economists participating in the cross-disciplinary study of the evolution of human sociality appreciate the potential value that can be added by economists. Though the book includes nicely constructed and vivid essays on a range of economic topics, in its main ambition it largely falls short. The most serious problem is endorsement of the so-called strong reciprocity hypothesis that has been promoted by several prominent (...) economists, but does not pass muster with biologists. (shrink)
Gul and Pesendorfer provide the best-known and most strident of a set of recent backlashes by economists against methodological revolutions promoted by some behavioural economists and neuroeconomists. Philosophers are likely to read these responses as merely reactionary, especially as their rhetoric goes beyond what their explicit argumentation validly supports. The present paper identifies the accurate insight on Gul and Pesendorfer's part that explains the impact of their philosophically ragged polemic. This centers on importantly different concepts of choice in the psychological (...) and economic literatures. The psychologist's idea of choice descends from a culturally familiar folk construct generally thought to lie within everyone's unreflective personal acquantance. By contrast, the economist's concept of choice refers to abstract sensitivity of behavioral patterns to changes in incentives, typically at the statistical level of populations. It is reasonable to regard this abstract idea as the basic subject matter of economics, just as Gul and Pesendorfer assert. Appreciating the difference between psychological choice and economic choice is crucial for understanding the methodologically schizophrenic character of neuroeconomics. Much of it merely identifies neural correlates of elements from models in the psychology of valuation. However, the neuroeconomics worthy of the name, as constructed by Glimcher and his collaborators, aims to unify economics and neuroscience. It so far fails to do so in an entirely satisfactory way because it falsely assumes that the conception of choice in psychology and economics is already shared. (shrink)
We critically review the methodological practices of two research programs which are jointly called ?neuroeconomics?. We defend the first of these, termed ?neurocellular economics? (NE) by Ross (2008), from an attack on its relevance by Gul and Pesendorfer (2008) (GP). This attack arbitrarily singles out some but not all processing variables as unimportant to economics, is insensitive to the realities of empirical theory testing, and ignores the central importance to economics of ?ecological rationality? (Smith 2007). GP ironically share this (...) last attitude with advocates of ?behavioral economics in the scanner? (BES), the other, and better known, branch of neuroeconomics. We consider grounds for skepticism about the accomplishments of this research program to date, based on its methodological individualism, its ad hoc econometrics, its tolerance for invalid reverse inference, and its inattention to the difficulties involved in extracting temporally lagged data if people's anticipation of reward causes pre-emptive blood flow. (shrink)
Contemporary Philosophy in Focus will offer a series of introductory volumes to many of the dominant philosophical thinkers of the current age. Each volume will consist of newly commissioned essays that will cover all the major contributions of a preeminent philosopher in a systematic and accessible manner. Author of such groundbreaking and influential books as Consciousness Explained and Darwin's Dangerous Idea, Daniel C. Dennett has reached a huge general and professional audience that extends way beyond the confines of academic philosophy. (...) He has made significant contributions to the study of consciousness, the development of the child's mind, cognitive ethnology, explanation in the social sciences, artificial intelligence, and evolutionary theory. This volume is the only truly introductory collection that traces these connections, explores the implications of Dennett's work, and furnishes the non-specialist with a fully-rounded account of why Dennett is such an important voice on the philosophical scene. (shrink)
Pathological gambling (PG) is a kind of ‘ideal puzzle’ for the economic model of the consumer. The pathological gambler takes pains to engage in activity that transparently has negative expected returns if utility varies positively with money. She also, typically, spends further resources on commitment devices designed to interfere with her gambling. These properties together describe an agent that is a kind of perfect foil for the rationally maximizing consumer. Recently, aspects of the neuropathology underlying the strange economic agency of (...) the pathological gambler are becoming understood. Thus PG is an ideal test bed phenomenon for working out relationships between economic modeling based on constrained optimization of utility and the new neuroscience of behavior. (shrink)
The paper evaluates the claim, made by a range of commentators but most prominently by Akerlof and Shiller in Animal Spirits, that the recent financialcrisis illustrates gaps in the normative picture incorporated into standard macroeconomics that are plugged by insights due to behavioral economics. It is argued that Akerlof and Shiller's contention that we cannot understand what happened unless we supplement macroeconomic theory with social-psychological theory is convincing only after being so heavily qualified that most of the (...) surface excitement drains out of it. However, this is argued to be compatible with the idea that each recession or depression is a unique historical episode from which specific lessons can be learned; rejection of calls for paradigm shifts does not imply that each business cycle merely offers another observation to confirm a settled and stable understanding of macroeconomic dynamics. Discussion of factors that made the recent crisis unusually dangerous ? the extreme global savings imbalance and the very rapid shifts occurring in the composition of the global labor force ? leads to identification of a quite specific normative recommendation. This recommendation, that wealthy and middle-income people who care about efficiency, growth and prosperity should be willing to be taxed at higher levels to fund investments in human capital development, is certainly far from novel. However, I contend that the recent events have provided a new and newly specific reason to urge it. The reasoning in question owes nothing to behavioral economics or to any new advances in empirical psychology, which are indeed argued to obscure the most important implications of the recent crisis, and of recessions in general. (shrink)
The Oxford Handbook of Philosophy of Economics is a cutting-edge reference work to philosophical issues in the practice of economics. It is motivated by the view that there is more to economics than general equilibrium theory, and that the philosophy of economics should reflect the diversity of activities and topics that currently occupy economists. Contributions in the Handbook are thus closely tied to ongoing theoretical and empirical concerns in economics. Contributors include both philosophers of science and economists. Chapters fall into (...) three general categories: received views in philosophy of economics, ongoing controversies in microeconomics, and issues in modeling, macroeconomics, and development. Specific topics include methodology, game theory, experimental economics, behavioral economics, neuroeconomics, computational economics, data mining, interpersonal comparisons of utility, measurement of welfare and well being, growth theory and development, and microfoundations of macroeconomics. The Oxford Handbook of Philosophy of Economics is a groundbreaking reference like no other in its field. It is a central resource for those wishing to learn about the philosophy of economics, and for those who actively engage in the discipline, from advanced undergraduates to professional philosophers, economists, and historians. (shrink)
The paper begins by providing a game-theoretic reconstruction of Gilbert’s (1989) philosophical critique of Lewis (1969) on the role of salience in selecting conventions. Gilbert’s insight is reformulated thus: Nash equilibrium is insufficiently powerful as a solution concept to rationalize conventions for unboundedly rational agents if conventions are solutions to the kinds of games Lewis supposes. Both refinements to NE and appeals to bounded rationality can plug this gap, but lack generality. As Binmore (this issue) argues, evolutive game theory readily (...) explains the origin of conventional behavior, but that is not Lewis’s project. Gilbert’s critique is generalized by reference to Bacharach’s (2006) work on team reasoning in games. The paper then argues that although Lewis’s account of the rationalization of conventions is shown by the reconstruction of Gilbert’s critique to be incomplete, Gilbert is wrong to conclude that classical (‘eductive’) game theory lacks the resources to explain conformity to conventions among people. A game-theoretic account of the dynamics of socialization, based on Ross’s (2005, 2006) idea of ‘game determination’, rationalizes choices of conventional strategies in overlapping generations contexts, provided agents are products of evolutionary selection and know that other players are also such products. (shrink)
Ontic structural realism (OSR) is crucially motivated by empirical discoveries of fundamental physics. To this extent its potential to furnish a general metaphysics for science may appear limited. However, OSR also provides a good account of the progress that has been achieved over the decades in a formalized special science, economics. Furthermore, this has a basis in the ontology presupposed by economic theory, and is not just an artifact of formalization. †To contact the author, please write to: 4th Floor, Humanities (...) Building, University of Alabama at Birmingham, 900 13th Street South, Birmingham, AL 35294‐1260; School of Economics, Leslie Social Science Building, University of Cape Town, Private Bag, Rondebosch 7701, Cape Town, South Africa; e‐mail: email@example.com. (shrink)
Murphy (2006) criticizes psychiatric nosology from the perspective of the philosophy of science, arguing that the model of pathology as encapsulated in the Diagnostic and Statistical Manual of Mental Disorders reflects a folk conception of the mental, and of malfunctioning, that is inadequately integrated with cognitive and behavioral neuroscience. The present paper supports this view through a case study of research on pathological gambling. It argues that recent modeling based on fMRI studies and behavioral genetics suggests a stipulative, non-seamless reduction (...) of pathological gambling to a specific disorder of the mesolimbic dopamine system. This argument is agnostic as between prior philosophical commitments to realism or empiricism. (shrink)
I distinguish between two styles of research that are both called . Neurocellular economics (NE) uses the modelling techniques and mathematics of economics to model relatively encapsulated functional parts of brains. This approach rests upon the fact that brains are, like markets, massively distributed information-processing networks over which executive systems can exert only limited and imperfect governance. Harrison's (2008) deepest criticisms of neuroeconomics do not apply to NE. However, the more famous style of neuroeconomics is behavioural economics in the scanner. (...) This is often motivated by complaints about conventional economics frequently heard from behavioural economists. It attempts to use neuroimaging data to justify arguments for replacing standard aspects of microeconomic theory by facts and conjectures about human psychology. Harrison's grounds for unease about neuroeconomics apply to most BES, or at least to its explicit methodology. This methodology is naively reductionist and illegitimately assumes that economics should not do what all successful science does, namely, model abstract aspects of its target phenomena instead of would-be complete and fully ecologically situated facsimiles of them. (shrink)