Showing papers by "Kaushik Basu published in 2010"
TL;DR: This article developed a simple model which suggests the possibility of an inverted-U relationship between land holdings and child labor and found that the turning point beyond which more land leads to a decline in child labor occurs around 4 ac of land per household.
140 citations
Book•
25 Oct 2010
TL;DR: Basu as discussed by the authors argues that mainstream economics and its conservative popularizers have misrepresented Smith's insight and hampered our understanding of how economies function, why some economies fail and some succeed, and what the nature and role of state intervention might be.
Abstract: One of the central tenets of mainstream economics is Adam Smith's proposition that, given certain conditions, self-interested behavior by individuals leads them to the social good, almost as if orchestrated by an invisible hand This deep insight has, over the past two centuries, been taken out of context, contorted, and used as the cornerstone of free-market orthodoxy In Beyond the Invisible Hand, Kaushik Basu argues that mainstream economics and its conservative popularizers have misrepresented Smith's insight and hampered our understanding of how economies function, why some economies fail and some succeed, and what the nature and role of state intervention might be Comparing this view of the invisible hand with the vision described by Kafka--in which individuals pursuing their atomistic interests, devoid of moral compunction, end up creating a world that is mean and miserable--Basu argues for collective action and the need to shift our focus from the efficient society to one that is also fairUsing analytic tools from mainstream economics, the book challenges some of the precepts and propositions of mainstream economics It maintains that, by ignoring the role of culture and custom, traditional economics promotes the view that the current system is the only viable one, thereby serving the interests of those who do well by this system Beyond the Invisible Hand challenges readers to fundamentally rethink the assumptions underlying modern economic thought and proves that a more equitable society is both possible and sustainable, and hence worth striving forBy scrutinizing Adam Smith's theory, this impassioned critique of contemporary mainstream economics debunks traditional beliefs regarding best economic practices, self-interest, and the social good
85 citations
TL;DR: In this article, a Prisoner's Dilemma game among randomly picked individuals is used to show how our selfish rationality interacts with our innate sense of cooperation and how sub-groups of a society can form cooperative blocks, whether to simply do better for themselves or exploit others.
Abstract: Much of economics is built on the assumption that individuals are driven by self-interest and economic development is an outcome of the free play of such individuals. On the few occasions that the existence of altruism is recognized in economics, the tendency is to build this from the axiom of individual selfishness. The aim of this paper is to break from this tradition and to treat as a primitive that individuals are endowed with the ‘cooperative spirit’, which allows them to work in their collective interest, even when that may not be in their self-interest. The paper tracks the interface between altruism and group identity. By using the basic structure of a Prisoner's Dilemma game among randomly picked individuals and building into it assumptions of general or in-group altruism, the paper demonstrates how our selfish rationality interacts with our innate sense of cooperation. The model is used to outline circumstances under which cooperation will occur and circumstances where it will break down. The paper also studies how sub-groups of a society can form cooperative blocks, whether to simply do better for themselves or exploit others.
30 citations
TL;DR: In this paper, it is argued that the common practice of giving stock options to employees can be a factor behind financial crashes and that understanding this can help create a better regulatory structure.
7 citations
Posted Content•
TL;DR: The authors argued that if the Chinese economy had failed, mainstream economics would have described this as completely predictable, given the extent and nature of involvement of the Chinese state in the functioning of markets and the economy.
Abstract: The paper argues that if the Chinese economy had failed, mainstream economics would have described this as completely predictable, given the extent and nature of involvement of the Chinese state in the functioning of markets and the economy. The fact that China has succeeded therefore should lead us to question our textbook doctrines of development. Much of this paper is presented as a comparative study of India, China and, briefly, other Asian nations.
4 citations
TL;DR: In this article, a model of an O-ring production function is used to demonstrate how certain communities can get caught in a low-literacy trap in which each individual finds that it is not worthwhile investing in higher skills because others are not high-skilled.
Abstract: Using a model of an O-ring production function, the present paper demonstrates how certain communities can get caught in a low-literacy trap in which each individual finds that it is not worthwhile investing in higher skills because others are not high-skilled. The model sheds light on educational policy. It is shown that policy for promoting human capital has to take the form of a mechanism for solving the coordination failure in people's choice of educational strategy.
3 citations
TL;DR: This paper investigated behavior in the Traveler's Dilemma game and isolates deviations from textbook predictions caused by differences in welfare perceptions and strategic miscalculations, and found that expected claims are inconsistent with actual claims in the asymmetric treatments.
Abstract: This paper investigates behavior in the Traveler's Dilemma game and isolates deviations from textbook predictions caused by differences in welfare perceptions and strategic miscalculations. It presents the results of an experimental analysis based on a 2x2 design where the own and the other subject's bonus-penalty parameters are changed independently. We find that the change in own bonus-penalty alone entirely explains the effect on claims of a simultaneous change in one's own and the other's bonus-penalty. An increase in the other subject's bonus-penalty has a significant negative effect on claims when the own bonus-penalty is low, whereas it does not have a significant effect when the own bonus-penalty is high. We also find that expected claims are inconsistent with actual claims in the asymmetric treatments. Focusing on reported strategies, we document substantial heterogeneity and show that changes in choices across treatments are largely explained by risk aversion.
2 citations
Posted Content•
TL;DR: The fourth and the final volume of Basu's collected essays corpus as mentioned in this paper is a collection of inter-discliplinary essays straddling several of the social sciences and also the philosophical foundation of economics.
Abstract: The fourth and the final of Basu's collected essays corpus, this volume is a collection of his inter-discliplinary essays straddling several of the social sciences and also the philosophical foundation of economics. This is a collection of relatively less technical papers and should be of interest to students of not just economics but also sociology and politics. Most of the essays have a development slant and several make explicit reference to India, making the book especially relevant for scholars and policymakers in India. The essays deal with wide-ranging issues-from philosophical questions, to social custom and culture, to questions that have traditionally been of interest to the sociologist and political scientist (gender, household behaviour, politics of globalization, etc.). The volume includes the author's most cited papers, such as 'Gender and Say' and 'The Growth and Decay of Custom'. An introductory chapter surveys and connects the terrain spanned by these essays. This volume illustrates how economics can, with careful handling, be taken to concerns beyond its traditional disciplinary boundaries.
1 citations