« January 2011 | Main | March 2011 »

February 2011 posts

Call for papers (2): History and methodology of economics at 2012 ASSA meetings

Mark D. White

The History of Economics Society (HES) and the International Network for Economic Method (INEM) are both accepting proposals for individual papers or organized sessions for the next ASSA meetings to be held in Chicago, from January 6-8, 2012. HES will sponsor four sessions and INEM will sponsor two.

Both organizations request abstracts of around 200 words, and the deadline for both is May 1, 2011.

To submit for the HES sessions, contact Robert Leonard at [email protected].

To submit for the INEM sessions, contact Jack Vromen at [email protected].

(Remember also the Association for Social Economics call for papers on the topic of "The Economics of Social Responsibility" for the 2012 ASSA sessions, which can be found here.)

Dan Hausman on "Mistakes about Preferences in the Social Sciences"

Mark D. White

Dan Hausman has an article in the new issue of Philosophy of the Social Sciences (41/1, March 2011) titled "Mistakes about Preferences in the Social Sciences":

Preferences are the central notion in mainstream economic theory, yet economists say little about what preferences are. This article argues that preferences in mainstream positive economics are comparative evaluations with respect to everything relevant to value or choice, and it argues against three mistaken views of preferences: (1) that they are matters of taste, concerning which rational assessment is inappropriate, (2) that preferences coincide with judgments of expected self-interested benefit, and (3) that preferences can be defined in terms of choices.

I'm not sure exactly what he means by (1), but I certainly agree with (2) and (3). Perhaps I'll have more to say after I manage to get my hands on a copy... I read it (noting that Professor Hausman graciously sent me a copy).

Follow-up on "The Role of Economists and Their 'Ethics' in the Financial Crisis" (EEA 2011 session)

Mark D. White

Yesterday I attended the "The Role of Economists and Their 'Ethics' in the Financial Crisis" session at the Eastern Economic Association meetings in New York, which I previewed earlier. One of the presenters didn't attend, but the three remaining presentations, by Martha Starr (editor of Consequences of Economic Downturn: Beyond the Usual Economics), George DeMartino (author of The Economist's Oath: On the Need for and Content of Professional Economic Ethics), and Gerald Epstein and Jessica Carrick-Hagenbarth (University of Massachusetts-Amherst), provided much for the standing-room-only audience to discuss.

Martha's paper, "Contributions of Economists to Housing-Price Bubbles," provided a fascinating and insightful look at how the predictions of future trends in housing prices leading up to the burst of the recent bubble depended on economists' affiliations, casting a particularly dark light on economists in the real-estate industry, who were extraordinarily bullish about housing prices after most other economists had recognized the existence of a bubble.

George's presentation, "The Economic Crisis and the Crisis in Economics," based on both his own book and his contribution to Martha's, argued that one of the causes of the economic crisis was the implicit use by economic analysts and decision-makers of a maxi-max rule, in which only the best possible outcomes of various policy options are considered and then the best is chosen, regardless of the likelihood of those successes or the harm that would accrue if the policies were not to succeed. As if he hadn't made the point strongly enough himself, George cited philosopher Robert Nozick, who argued in Anarchy, State, and Utopia that:

Everyone who has considered the matter agrees that the maxi-max principle... is an insufficiently prudent principle which one would be silly to use in designing institutions. Any society whose institutions are infused by such wild optimism is headed for a fall or, at any rate, the high risk of one makes the society too dangerous to choose to live in. (p. 298)

Finally, in their presentation titled "Financial Economists, Financial Interests and Dark Corners of the Meltdown: It’s Time to set Ethical Standards for the Economics Profession," Gerald and Jessica investigated how often academic economists report their affiliations with the financial industry when giving statements and forecasts to the press, and found that around two thirds of them never report their ties to financial concerns when quoted in the media regarding matters that may influence those very concerns.

This, of course, is one of the points that George also makes in his work, and much of the discussion after the presentations turned to how to solve the problem, especially how to institute standards, codes, or norms of ethical behavior, not just in terms of the narrower problem of transparency in affiliation, but also broader ethical concerns with respect to modeling, research, and policy recommendations. Similar to the session on the same topic at the ASSA meetings in Denver, featuring Dean Baker, David Colander, and Deirdre McCloskey alongside George, much of the attention focused on the enforceability of ethical codes in the economics profession. (See here for my summary of that session and my opinions on the issues of ethics codes and enforceability.) But there was also some interesting commentary on self-selection and the systemic nature of bias in the economic profession, which reminded me of recent discussions of widespread bias in fields like social psychology.

Another terrific session on a critically important topic--let's all hope the efforts of Martha, George, Gerald, Jessica, as well as others such as Dean, David, and Deirdre, soon start to bear fruit...

Journal Watch: Utilitas, 23 (1), March 2011

Mark D. White

The latest issue of Utilitas (23/1, March 2011) contains some very interesting articles; it was very difficult to select just a few to highlight, but here they are:

MOZAFFAR QIZILBASH, Sugden's Critique of the Capability Approach

In comparing Sen's work with Mill's, Sugden criticizes Sen's capability approach because it may be applied in such a way that society or theorists judge what is best for people and potentially restrict liberty on that basis. Sugden cites Nussbaum's work as evidence in making his case. Sugden's critique of Sen's approach succeeds on a narrow reading of it. On that reading Sen is also critical of it because it does not leave enough room for liberty. On a broad reading, the critique has less force. Nussbaum's approach follows Mill in allowing people freedom to act on whatever desires they have if this does not harm others. This neutralizes the central element of Sugden's critique as it applies to her approach to some degree. Both Sen and Nussbaum nonetheless recognize the danger of illiberal restrictions in application which motivates Sugden's critique.

BEN COLBURN, Autonomy and Adaptive Preferences

Adaptive preference formation is the unconscious altering of our preferences in light of the options we have available. Jon Elster has argued that this is bad because it undermines our autonomy. I agree, but think that Elster's explanation of why is lacking. So, I draw on a richer account of autonomy to give the following answer. Preferences formed through adaptation are characterized by covert influence (that is, explanations of which an agent herself is necessarily unaware), and covert influence undermines our autonomy because it undermines the extent to which an agent's preferences are ones that she has decided upon for herself. This answer fills the lacuna in Elster's argument. It also allows us to draw a principled distinction between adaptive preference formation and the closely related – but potentially autonomy-enhancing – phenomenon of character planning.

SANDRINE BERGES, Why Women Hug their Chains: Wollstonecraft and Adaptive Preferences

In a recent article, Amartya Sen writes that one important influence on his theory of adaptive preferences is Wollstonecraft's account of how some women, though clearly oppressed, are apparently satisfied with their lot. Wollstonecraft's arguments have received little attention so far from contemporary political philosophers, and one might be tempted to dismiss Sen's acknowledgment as a form of gallantry. That would be wrong. Wollstonecraft does have a lot of interest to say on the topic of why her contemporaries appeared to choose what struck her as oppression, and her views can still help us reflect on contemporary problems such as the ones identified and discussed by Amartya Sen. In this article I will argue that a close look at Wollstonecraft's arguments may lead us to rethink some aspects of Sen's discussion of the phenomenon of adaptive preferences.

KEITH HORTON, Fairness and Fair Shares

Some moral principles require agents to do more than their fair share of a common task, if others won't do their fair share – each agent's fair share being what she would be required to do if all contributed as they should. This seems to provide a strong basis for objecting to such principles. For it seems unfair to require agents who have already done their fair share to do more, just because other agents won't do their fair share. The philosopher who has written most about this issue, however, Liam Murphy, argues that it is not unfair to do so, at least in the standard sense of that term. In this article, I give Murphy's reasons for saying this, explain why I think he's wrong, and then say a little about why this issue might be important.

MATTHEW TEDESCO, Intuitions and the Demands of Consequentialism

One response to the demandingness objection is that it begs the question against consequentialism by assuming a moral distinction between what a theory requires and what it permits. According to the consequentialist, this distinction stands in need of defense. However, this response may also beg the question, this time at the methodological level, regarding the credibility of the intuitions underlying the objection. The success of the consequentialist's response thus turns on the role we assign to intuitions in our moral methodology. After presenting the demandingness objection to consequentialism and revealing the underlying methodological stalemate, I break the stalemate by appealing to research in the cognitive neuroscience of intuitions. Given the evidence for the hypothesis that our moral intuitions are fundamentally emotional (rather than rational) responses, we should give our intuitions a modest (rather than robust) role in our moral methodology. This rescues the consequentialist's response to the demandingness objection.

EZEQUIEL SPECTOR, Do You Deserve To Be Talented?

Are inborn characteristics deserved or undeserved? Using Bertrand Russell's theory of descriptions and Peter Strawson's objection to this theory, I argue that this question does not make sense. In order to know whether a person deserves something she has, it is necessary to evaluate what she did before having it. But people did not exist before their birth, so they did not exist before having their inborn characteristics. Therefore, talking about people deserving their inborn characteristics does not make sense: these characteristics are neither deserved nor undeserved.

Martha Nussbaum on John Rawls's Political Liberalism

Mark D. White

In the latest issue of Ratio Juris (24/1, March 2011), Martha Nussbaum reconsiders several aspects of John Rawls's Political Liberalism:

"Rawls' Political Liberalism. A Reassessment"

Since Rawls's Political Liberalism is by now the subject of a wide and deep philosophical literature, much of it excellent in quality, it would be foolhardy to attempt to say something about each of the major issues of the work, or to sort through debates that can easily be located elsewhere. I have therefore decided to focus on a small number of issues where there is at least some chance that a fresh approach may yield some new understanding of the text: Rawls's distinction between “reasonable” and “unreasonable” comprehensive doctrines; the psychological underpinnings of political liberalism; and the possibility that political liberalism might be extended beyond the small group of modern Western societies that Rawls's historical remarks suggest as its primary focus. I also include a discussion of the much-debated issue of civility and public reason, which could hardly be avoided given its prominence in the book's reception. This paper should therefore be read not as a comprehensive account of the work but as one person's attempt to grapple, very incompletely and imperfectly, with a book that is as great as any philosophy has seen on this topic of great human urgency.

The Ethical Dimensions of International Institutions (in Politics, Philosophy & Economics)

Mark D. White

A symposium in the new issue of Politics, Philosophy & Economics (10/1, February 2011) brings

together leading thinkers in political philosophy, international relations and political theory to engage in an empirically informed discussion of some basic ethical issues regarding international institutions. These papers represent some of the most cutting edge work on ethically relevant features of international institutions. The first two papers are on the legitimacy of international institutions while the third is concerned with the normative implications of the structure of the international institutions. (from editor Thomas Christiano's introduction, p.3)

The first paper, "Reciprocal legitimation: Reframing the problem of international legitimacy," is by Allen Buchanan:

Theorizing about the legitimacy of international institutions usually begins with a framing assumption according to which the legitimacy of the state is understood solely in terms of the relationship between the state and its citizens, without reference to the effects of state power on others. In contrast, this article argues that whether a state is legitimate vis-a-vis its own citizens depends upon whether its exercise of power respects the human rights of people in other states. The other main conclusions are as follows. First, a state’s participation in international institutions can contribute to its legitimacy in several ways. Second, when international institutions contribute to the legitimacy of states, their doing so can contribute to their own legitimacy. Third, a theory of international legitimacy ought to recognize reciprocal legitimation between states and international institutions.

The second paper, "Legitimacy, humanitarian intervention, and international institutions," is by Miles Kahler:

The legitimacy of humanitarian intervention has been contested for more than a century, yet pressure for such intervention persists. Normative evolution and institutional design have been closely linked since the first debates over humanitarian intervention more than a century ago. Three norms have competed in shaping state practice and the normative discourse: human rights, peace preservation, and sovereignty. The rebalancing of these norms over time, most recently as the state’s responsibility to protect, has reflected specific international institutional environments. The contemporary legitimacy of humanitarian intervention is based on UN Security Council authorization of the use of force. Although the Security Council is often viewed as representative of great-power influence, international acceptance of its role is based on the role of non-permanent members and their support for the sovereignty norm. The current rebalanced norms supporting humanitarian intervention, institutional bias that protects state sovereignty, and the changing character of mass violence may undermine the tenuous contemporary legitimacy of humanitarian intervention. Normative adjustments and new institutional designs are required to insure the legitimacy of international action that protects populations against mass violence.

The final paper, "The distributive justice of a global basic structure: A category mistake?" is by Andreas Follesdal:

The present article explores ‘anti-cosmopolitan’ arguments that shared institutions above the state, such as there are, are not of a kind that support or give rise to distributive claims beyond securing minimum needs. The upshot is to rebut certain of these ‘anti-cosmopolitan’ arguments. Section 1 asks under which conditions institutions are subject to distributive justice norms. That is, which sound reasons support claims to a relative share of the benefits of institutions that exist and apply to individuals? Such norms may require strict equality, Rawls’ Difference Principle, or other constraints on inequality. Section 2 considers, and rejects, several arguments why existing international institutions are not thought to meet these conditions.

Lessons in Monetary Economics from Playing Monopoly

Mark D. White

The New York Times has a great little piece today on Monopoly (the game), Milton Friedman, and monetary economics, which ends with this description of a particular game which took place in a University of Chicago dorm in the late 1970s:

Monopoly friedman The precise details of our classic game are blurred by the alcohol consumed that night and the years that have passed since then, but this much is recalled. We decided that Monopoly was hostile to a free market because it restricted the number of houses or hotels one could buy. We voted that a player could buy as many hotels as a property could physically bear and rents would be raised proportionally.

But the bank soon began to run out of money. So we did what any government would do. We began printing more of it, by scribbling $500 on scraps of paper. We printed a lot of money.

Prices shot up, which we all knew, even in that inebriated state, was the consequence of expanding the money supply. (After all, the great economist [Friedman] told us, “Inflation is always and everywhere a monetary phenomenon.”)

The inflation became so extreme that we eventually voted to alter the rules again: we’d cut the money supply. Any money we printed that came back to the bank would be taken out of circulation.

A severe depression kicked in, of course. Prices plummeted and it was a race to liquidate assets. One by one the players quickly went bankrupt, and sometime around 4 that morning the game was over.

EEA 2011 Sessions: Alternative Perspectives of a Good Society

Mark D. White

Another pair of sessions at next weekend's Eastern Economic Association meetings are definitely worth highlighting, both organized by Steve Pressman and derived from John Marangos' "Alternative Perspectives of a Good Society" project, from which a volume is in preparation for the Perspectives in Social Economics series through Palgrave:

Saturday, February 26 3:45 p.m.


Session Organizer and Chair: Steven Pressman, Monmouth University

Not Just Fun & Games: Re-conceptualizing the Role of Young People in Economic Development (K. Maeve Powliek, Skidmore College)

The Ideology of Sustainability in Indonesia, Australia and the U.S. (Janet Spitz, The College of St. Rose)

Does the Field of Comparative Economic Systems Care About the Good Society? (Lynn Duggan, Indiana University, Bloomington; Barbara Hopkins, Wright State University)

Discussants: Michael Murray, Central College; Danièle Meulders, Université de Bruxelles; Sile
O’Dorchai, Université de Bruxelles


Sunday, February 27 8:00 a.m.


Session Organizer and Chair: Steven Pressman, Monmouth University

Freedom for Whom? The Double-Sided Nature of Economic Freedom and Societal Consequences (Michael Murray, Central College)

Divided We Stand, United We Fall—The Implications of Measuring Poverty Based on Individual
Rather than Household Income (Danièle Meulders and Sile O’Dorchai, Université Libre de Bruxelles)

Obesity, Evolutionary Psychology and the Good Society (Steven Pressman, Monmouth University)

Discussants: Lynn Duggan, Indiana University, Bloomington; Barbara Hopkins, Wright State
University; Janet Spitz, The College of St. Rose

Are We All the Same? WEIRD Science

Jonathan B. Wight

The January/February issue of Foreign Policy has an article by Joshua E. Keating summarizing the state of experiments in psychological sciences (“WEIRD Science”).  Over the period 2003 to 2007 a "whopping 96% [of studies came] from Western, industrialized countries.”   That is, psychological experiments were performed largely on students from Western, educated, industrialized, rich, and democratic (WEIRD) societies.

Keating points out that “WEIRDos tend to be more individualistic and more competitive than people from non-industrialized Asian and African societies…. Westerners -- and Americans in particular -- are far more likely to look out for themselves.”  Cultural differences apparently affect even studies of visual perception, with Westerners doing more poorly on some dimensions. 

Are we victims of WEIRD science?

New book: Looking Beyond the Individualism and Homo Economicus of Neoclassical Economics

Mark D. White

Danner A new book published by Marquette University Press titled Looking Beyond the Individualism and Homo Economicus of Neoclassical Economics, edited by Edward J. O'Boyle, pays tribute to Peter L. Danner, a tireless advocate of social economics and past president of the Association for Social Economics.

From the publisher:

The financial meltdown of 2008 exposed major flaws in the way mainstream economists think about economic affairs. According to former Federal Reserve Chair Alan Greenspan, “the whole intellectual edifice collapsed.” His reaction was one of “shocked disbelief.”

Looking Beyond the Individualism and Homo Economicus of Neoclassical Economics addresses the need to reconstruct that edifice principally by re-examining the way economists represent the economic agent.

This collection of essays examines in detail the basic defects in homo economicus who, according to the mainstream way of thinking, is a simple machine employing a pleasure-pain calculus to maximize personal net advantage—a never-changing and predictable economic agent essential to the mainstream’s claim that economics is a precise science.

Following Danner, the economic agent is a living, breathing, existential actuality, a complex human person actively engaging in economic affairs in ways that we do not always understand— an ever-changing economic agent who is not at all times predictable. For that reason, economics is not a precise science but one in which we hope to know enough about economic affairs to re-construct an intellectual edifice that will not collapse in the next economic crisis.