Philosophy of Economics

According to Hobbes, individuals care about their relative standing in a way that shapes their social interactions. To model this aspect of Hobbesian psychology, this paper supposes that agents have social preferences, that is, preferences about their comparative resource holdings. Introducing uncertainty regarding the social preferences of others unleashes a process of trust-unravelling, ultimately leading to Hobbes’s ‘state of war’. This Trust-unravelling Model incorporates important features of Hobbes’s argument that past models ignore.

The standard version of sufficientarianism maintains that providing people with enough, or as close to enough as is possible, is lexically prior to other distributive goals. This article argues that this is excessive – more than distributive justice allows – in four distinct ways. These concern the magnitude of advantage, the number of beneficiaries, responsibility and desert, and above-threshold distribution. Sufficientarians can respond by accepting that providing enough unconditionally is more than distributive justice allows, instead balancing sufficiency against other considerations.

According to the Competing Claims View we decide between alternatives by looking at the competing claims held by affected individuals. The strength of these claims is a function of two features: how much they stand to benefit by each alternative, and how badly off they would be in its absence. The view can be, and is, endorsed by both egalitarians and prioritarians. For the former the second condition will concern looking at how badly off the person is relative to others, (...) whereas for the latter it will be how badly off she is in absolute terms. In this paper I want to argue that neither should be endorsed. The egalitarian version of CCV breaks down when attempting to assess the competing claims of possible persons who may never exist. Also, the view, on at least one plausible interpretation, leads to intransitive judgements. The prioritarian version of CCV, in turn, is vulnerable to its own unique objection, namely delivering an anti-prioritarian and rather implausible verdict in certain Single Person Cases. (shrink)

This paper reflects on the notion of partial ambiguity. Using a framework decomposing ambiguity into distinct layers of analysis, among which are risk and model uncertainty, and allowing for different attitudes toward these layers, I show that partial ambiguity may prove less desirable than full ambiguity, even under ambiguity aversion. This observation poses difficulties for interpreting the notion of partial ambiguity in relation to the partial information available to determine the potential compositions of an ambiguous urn. Two Ellsberg-style thought experiments (...) are described to challenge the meaning of partial ambiguity further, and an alternative interpretation, based on a more ambiguous relation, is discussed. (shrink)

According to Burri, a major reason why suicide is often irrational lies in the option value of life. Remaining alive is valuable because this allows for a larger menu of options, and the possibility of committing suicide in the future adds further value to the act of remaining alive now. In this note, I represent life as a trust game played by two selves – the young self and the old self – and I argue that the possibility to commit (...) suicide in the future can encourage committing suicide now, against what the theory of the option value of life predicts. (shrink)

The good of those who are worse off matters more to the overall good than the good of those who are better off does. But being worse off than one’s fellows is not itself bad; nor is inequality itself bad; nor do differences in well-being matter more when well-being is lower in an absolute sense. Instead, the good of the relatively worse-off weighs more heavily in the overall good than the good of the relatively better-off does, in virtue of the (...) fact that the former are relatively worse off. This paper articulates and defends the view just described. (shrink)

Structural Causal Modeling is an approach to causal inference closely associated with Judea Pearl and given an accessible instroduction in [Pearl, J., & Mackenzie, D.. The book of why:...

In the bitcoin whitepaper, Satoshi Nakamoto (2008: 2) defines an electronic coin as a chain of digital signatures. Many have since defined a bitcoin as a chain of digital signatures. This latter definition continues to appear in reports from central banks, advocacy centers, and governments, as well as in academic papers across the disciplines of law, economics, computer science, cryptography, management, and philosophy. Some have even used it to argue that what we now call bitcoin is not the real bitcoin. (...) The definition fails, however. This is important because the Chain Definition obscures Satoshi’s solution to a dilemma in the design of electronic cash, as well as the truth about bitcoin’s privacy and fungibility. In this article, I explain why the Chain Definition fails and what Satoshi likely endorsed instead. Along the way, I untangle some issues around bitcoin fungibility and clarify some others around the ontology of digital assets. (shrink)

Many proponents of the Harm Principle seem to implicitly assume that the principle is compatible with permitting the free exchange of goods and services, even if such exchanges generate so-called market harms. I argue that, as a result, proponents of the Harm Principle face a dilemma: either the Harm Principle’s domain cannot include a large number of non-market harm cases or market harms must be treated on par with non-market harms. I then go on to discuss three alternative arguments defending (...) the status of market harms as exceptions to the Harm Principle and discuss why these arguments also fail. (shrink)

This is a suggestion for a predictable economy.

Commitments are crucial for our lives but there is no consensus on how commitments and preferences relate to each other. In this paper, we present three empirical studies that provide evidence that...

Effective altruism requires that when we donate to charity, we maximize the beneficial impact of our donations. While we are in broad sympathy with EA, we raise a practical problem for EA, which is that there is a crucial empirical presupposition implicit in its charity assessment methods which is false in many contexts. This is the presupposition that the magnitude of the benefits generated by some charity vary continuously in the scale of the intervention performed. We characterize a wide class (...) of cases where this assumption fails, and then draw out the normative implications of this fact. (shrink)

To unify rival theories is to combine their key insights into a single coherent framework. It is often achieved by integrating the theories and forging new connections between their explanatory fac...

In fewer than 200 pages, Joyce P. Jacobsen, a long-time feminist economist and current President of Hobart and William Smith Colleges, skillfully summarizes feminist contributions to economics acro...

The rational expectations hypothesis holds that agents should be modeled as not making systematic forecasting errors and has become a central model-building principle of modern economics. The hypot...

Behavioral welfare economics assigns different roles to preferences than either non-behavioral forms of welfare economics or theories outside of the domain of welfare economics. In particular...

Extrapolating causal effects is becoming an increasingly important kind of inference in Evidence-Based Policy, development economics, and microeconometrics more generally. While several strategies...

This paper argues that the concept of intrinsic motivation has been used by economists in inconsistent ways because the underlying theories of intrinsic motivation, imported into economics from psy...

The 14th Conference of the International Network for Economic Method was held in Finland at the University of Helsinki, from 18th to 21st of August 2019. It was the second time the biannual...

Amartya Sen’s remarkable endeavour to realize the normative capability of welfare economics goes beyond the impecunious resultants of the neoclassical welfare economy. The neoclassical welfare economy decoratively bracketed values to speculate about factual observations. This was due to the influence of logical positivists and their convictions about experimental scientific statements (primarily mathematical) and their vicinity to empirical truths and analytic statements. Sen adequately inquires “whether morality can be expressed in the form of choice between preference patterns rather than between actions” (...) (Sen, 1997a, 78). “A new phase classical theory” in economics from the hands of Sen and some others put forth two pivotal issues in a unified manner: a. Mathematical models of an economy. b. Ethical reflection on the subject of welfare economy–a value-laden enterprise in Sen’s literature. -/- In general, welfarists and utilitarians affirm that moral values are anchored in individual agency and involve mental metric utilities (pleasure, happiness, pain etc.). This focus, first of all, results in a disadvantage, as it undermines freedom in terms of achievement. Secondly, it pays no heed to achievement reasonably giving more importance to those who are incapable of reflecting on any one of those mental metrics. Besides, Sen argues that equality of opportunity does not accord with the equality of freedom, and its reason is rooted in the scope of the incongruity of human beings and the diversified meanings of efficiency. Developing a general methodological approach to revisit the notion of inequality concerned by exploring a particular substantive stand that Sen aims to underscore involves examining how social arrangements work to define freedom, capabilities, and welfare to ensure comparisons and assessments of quality of life. (shrink)

In this paper I challenge the pernicious aspects of Milton Friedman's methodological outlook that continues to hold sway over mainstream neoclassical economists. I do this by showing how Friedman's own methodological dicta could have been used against him when he famously advanced the expectations critique of the Phillips curve at his presidential address to the American Economic Association. I use this case study to further suggest that psychological and neurophysiological data should not be deemed irrelevant to economic science.

Periodically, by a rough estimate twice per decade, a new popular book aspires to shake our common understanding of rationality. Since this concept is not only the backbone of normative analysis in...

Nobel laureate James Buchanan downplays any theory of ethical politicians, focusing instead on rules which economize personal restraint, setting lower moral expectations. Through a constructive critique of James Buchanan’s work, I argue these lowered expectations come at a cost: degraded character in politicians, leading to constitutional decay. Buchanan lacks a theory to address choices between action which furthers the politician’s self-interest and action which protects some already accepted, good rule, but which does not further their self-interest. I generate a theory (...) of the Principled Politician, an agent characterized by a prior commitment to fair play. (shrink)

Philosophers have typically shown high confidence in their evaluations of Utilitarianism, whether as an endorsement or a disparagement. Rarely, however, has much effort been spent on investigating...

When the methodology of economics first emerged as a distinct field of economics in the 1970s, historians of economic thought contributed greatly to its development. This is visible in the publicat...

Kevin Hoover explores retroduction as a means of theorizing in macro-economics, rather than exclusive reliance on deductivism or inductivism. Retroduction is discussed as involving conceptualizatio...

This paper examines methods for narrating consciousness in game theory. In order to represent how players process their environment, posture towards one another, and hold themselves accountable to...

Interdisciplinarity in behavioral economics has often been described as limited or decreasing since the 1980s. In this article, we investigate the interdisciplinary influences of behavioral ec...

The rise of behavioral economics since the 1980s led to richer mutual influence between economic and psychological theory and experimentation. However, as behavioral economics has become increasing...

This paper suggests that Nash equilibrium can be interpreted as a conceptual tool for addressing comparative-statics issues on an aggregate level. Together with additional assumptions, Nash equilib...

Philosophy of Economics: A Heterodox Introduction provides an introduction to the philosophy of economics through the prism of heterodoxy. Heterodox economics covers a range of approaches and schools of thought but what they have as a common denominator is the conviction that economic phenomena cannot be understood, and thus must not be studied, in isolation from their relevant context. Conversely, the current form of neoclassical economics emerged from the conviction that there is something like economic rationality sui generis which can (...) be treated independently from all other aspects of our world, social or natural. Heterodox approaches challenge this conviction, from a variety of angles: the economic actor is not isolated, but lives in society which shapes him; market goods are only one kind of goods among others, constituting a larger set with ambiguous and shifting inner frontiers; production of goods takes place within nature, is subjected to physical laws, and induces in most cases ecologically problematic fluxes of matter ; finally, the whole economic process in general is not in equilibrium, but shows secular trends through which it is connected to the historical world. This book demonstrates the vitality of these heterodox challenges from a philosophical point of view because not only do they formulate new hypotheses within economics, but they challenge economic theory on a much more fundamental level: how is the economy situated in the world, and which are the right methods for its investigation? This book is an ideal introduction for anyone seeking alternative or critical perspectives on the philosophy of economics and economic theory. (shrink)

I examine the once popular claim according to which interpersonal comparisons of welfare are necessary for social choice. I side with current social choice theorists in emphasizing that, on a narrow construal, this necessity claim is refuted beyond appeal. However, I depart from the opinion presently prevailing in social choice theory in highlighting that on a broader construal, this claim proves not only compatible with, but even comforted by, the current state of the field. I submit that all in all, (...) the most accurate philosophical assessment consists not in flatly rejecting this necessity claim, but in accepting it in suitably revised form. (shrink)

Consider a subjective expected utility preference relation. It is usually held that the representations which this relation admits differ only in one respect, namely, the possible scales for the measurement of utility. In this paper, I discuss the fact that there are, metaphorically speaking, two additional dimensions along which infinitely many more admissible representations can be found. The first additional dimension is that of state-dependence. The second—and, in this context, much lesser-known—additional dimension is that of act-dependence. The simplest implication of (...) their usually neglected existence is that the standard axiomatizations of subjective expected utility fail to provide the measurement of subjective probability with satisfactory behavioral foundations. (shrink)

In this paper, I present some responses to an argument made by an economist in an online video: that when Britain leaves the European Union, it will be taking many high ranking universities with it, which will lead to an innovation deficit in the union. I present some responses by means of a pastiche of a widely read European fiction writer.

Cette note épistémologique porte sur le statut, en théorie de la décision, des concepts d’attitude par rapport au risque. A première vue, l’analyse axiomatique ne les exploite pas, ce qui reflète une certaine neutralité des modèles de décision au sujet de l’attitude par rapport au risque. Mais un examen plus poussé met en valeur la variation conditionnelle et le renforcement de l’attitude par rapport au risque, qui rattachent les concepts d’attitude par rapport au risque à l’analyse axiomatique.

Recently several authors have proposed proxies of welfare that equate some choices with welfare. In this paper, I first distinguish between two prominent proxies: one based on context-independent choices and the other based on reason-based choices. I then propose an original proxy based on choices that individuals state they would want themselves to repeat at the time of the welfare/policy evaluation. I articulate three complementary arguments that, I claim, support confirmed choices as a more reliable proxy of welfare than context-independent (...) and reason-based choices. Finally, I discuss the implications of these arguments for nudges and boosts. (shrink)

Recent work in economics has rediscovered the importance of belief-based utility for understanding human behaviour. Belief ‘choice’ is subject to an important constraint, however: people can only bring themselves to believe things for which they can find rationalizations. When preferences for similar beliefs are widespread, this constraint generates rationalization markets, social structures in which agents compete to produce rationalizations in exchange for money and social rewards. I explore the nature of such markets, I draw on political media to illustrate their (...) characteristics and behaviour, and I highlight their implications for understanding motivated cognition and misinformation. (shrink)

Markus argues that the causal modelling frameworks of Pearl and Rubin are not ‘strongly equivalent’, in the sense of saying ‘the same thing in different ways’. Here I rebut Markus’ arguments against strong equivalence. The differences between the frameworks are best illuminated not by appeal to their causal semantics, but rather reflect pragmatic modelling choices.

We highlight a new paradox for the social evaluation of risk that bears on the evaluation of individual well-being rather than social welfare, but has serious implications for social evaluation. The paradox consists in a tension between rationality, respect for individual preferences, and a principle of informational parsimony that excludes individual risk attitudes from the assessment of riskless situations. No evaluation criterion can satisfy these three principles. This impossibility result has implications for the evaluation of social welfare under risk, especially (...) when the preferences of some individuals are not known. It generalizes existing impossibility results, while relying on very weak principles of social rationality and respect for individual preferences. We explore the possibilities opened by weakening each of our three principles and discuss the advantages and drawbacks of these different routes. (shrink)