Showing papers in "Journal of Socio-economics in 2002"
TL;DR: This article describe two fundamental modes of thinking: experiential and analytic, deliberative and reason based thinking, where the former is intuitive, automatic, natural, and based upon images to which positive and negative affective feelings have been attached through learning and experience.
Abstract: This paper describes two fundamental modes of thinking. The experiential mode, is intuitive, automatic, natural, and based upon images to which positive and negative affective feelings have been attached through learning and experience. The other mode is analytic, deliberative, and reason based. I describe recent empirical research illuminating “the affect heuristic” wherein people rapidly consult their affective feelings, when making judgments and decisions. This heuristic enables us to be rational actors in many situations. It works beautifully when experience enables us to anticipate accurately how we will like or dislike the consequences of our decisions. However, it fails miserably when the consequences turn out to be much different than we anticipated. In the latter circumstances, the rational actor may well become the rational fool.
546 citations
TL;DR: Although service activities now account for a greater share of wealth and employment in developed economies, they are still perceived negatively Once described as residual activities characterised by low productivity, low capital intensity, and low skill levels, service activities are now regarded as lacking in innovative capacity.
Abstract: Although service activities now account for the greater share of wealth and employment in developed economies, they are still perceived negatively Once described as residual activities characterised by low productivity, low capital intensity and low skill levels, they are now regarded as lacking in innovative capacity This article examines these myths and their origins Innovation in services exists, although it has to be accepted that it may possibly take different forms and be organised differently Nevertheless, against a background of convergence between a manufacturing sector that is becoming increasingly service-oriented and a service sector that is gradually becoming industrialised, it would be wrong to conclude that there is an irreconcilable opposition between goods and services when it comes to innovation; rather, there are opportunities for mutual enrichment
201 citations
TL;DR: In this paper, a conceptual framework for analysing cultural services and cultural capital is established, where cultural resources are defined ideally as joint merit-mixed good, on a multi-dimensional scenario.
Abstract: The purpose of the paper is to review critical issues concerning the economic dimensions of cultural heritage, in order to show that—tangible and intangible—“cultural economic” goods and services, as provided by cultural institutions, may be analysed and valued in a multi-dimensional, multi-attribute and multi-value socio-economic environment . On this multi-dimensional and multi-attribute setting, a conceptual framework for analysing cultural services and cultural capital is established. The paper is speculative in nature, suggesting new prospective for evaluation and empirical inquiry. The work is divided in three parts. The first part begins by surveying the literature on merit goods, re-examining how different paradigms, neo-classic and more unconventional, have dealt with the issue, and assessing why, and to what extent, merit good is a proper economic notion. The second part focuses on the role merit good theory should play in cultural economics, and specifically how it is possible to integrate the merit good and the mixed good theoretical and conceptual framework. Cultural resources are to be defined ideally as joint merit-mixed good, on a multi-dimensional scenario. Cultural capital offers and “produces” services and functions, providing private, public and merit good elements of benefit (value). The multi-dimensional framework also entails a multi-paradigmatic perspective, bringing together neo-classic and non-neo-classic elements. The last section summarises and concludes that such an established conceptual framework indicates and supports new routes for economic valuation and policy making concerning the cultural field and cultural institutions. Disaggregating cultural activities into many services and functions allows the analysis to focus on single components of “benefit” supplied by cultural institutions and demanded by users. Valuing culture as a non-holistic resource might help economic analysis and decision-making processes. The main emerging results are: (i) the notion of merit good is relevant for cultural economics and cultural policy, and it represents a relevant ideal “metaphor” and an important dimension of value associated to “cultural functions”; (ii) the inclusion of merit good theory gives the possibility to define cultural stock and services as a compelling case of multi-dimensional categorisation of private, public, mixed and collective services, where different theoretical perspectives are integrated with each other as far as possible; (iii) being intrinsically placed in a dynamic and uncertain setting, merit good theory demonstrates to be, in theoretical and policy term, the necessary a priori for the theory and policy of mixed good provision, both at macro and microeconomic level. Policies motivated by the merit good issue should aim at providing the necessary collective tangible and intangible investments on which long run effects of cultural policies rely; (iv) special effort should be devoted to the study of “demands” associated to cultural goods, emphasising the role of valuation analysis, supported by the conceptual framework here developed. The work intends to constitute a point of reference for future research, generating some controversy and stimulating further contributions.
110 citations
TL;DR: In this article, a description of sampling, interviewing, and data analysis methods for surveys of business people and other business decision makers is given, and the advantages and disadvantages of these approaches and objections to any form of interviewing are discussed.
Abstract: This paper contains a description of sampling, interviewing, and data analysis methods for surveys of business people and other business decision makers. I stress an informal interviewing style and sampling through networking. I discuss the advantages and disadvantages of these approaches and objections to any form of interviewing.
79 citations
TL;DR: In this article, the authors investigated the dependence of suicides rates on real income per capita, real income growth and civil liberty, and concluded that the more liberty, the lower the suicide rates.
Abstract: Performing an international cross-section study for 30 countries, this paper investigates the dependence of suicides rates on real income per capita, real income growth and civil liberty. Suicide rates are transformed into logits, and weighted seemingly unrelated Zellner–Aitken estimates are obtained for both sexes and seven age groups, where the weights correspond to the size of the population in each of the subgroups of the different countries. All three variables have significant effects on the suicide rate. The economic variables have a positive influence: the higher real per capita income and/or real economic growth, the higher the suicide rate is. But these results vary between age groups: income plays a more important role for the middle age group, whereas economic growth is more important for the older people. Moreover, older women react stronger to income growth than older men. With respect to civil liberty, we get ‘expected’ results: the more liberty, the lower the suicide rates.
77 citations
TL;DR: In this paper, the relevance of endogenous preferences for the explanation of consumer behavior and its role for sustainable development is examined in a specific type of local food market (community supported agriculture groups, CSA).
Abstract: This paper focuses on the relevance of endogenous preferences for the explanation of consumer behavior and its role for sustainable development. The demand side has received far less attention in the sustainability discussion than the production side. There seems, however, little doubt that consumption is equally as important for achieving sustainability (e.g., F. Duchin, G.-M. Lange, The Future of the Environment: Ecological Economics and Technological Change, Oxford University Press, New York, 1994). While the influence of social interaction of preferences has been pointed out by economists for centuries, this link is generally submerged in the standard economic assumption of individual interest maximizing behavior. With reference to a specific type of local food market (community supported agriculture groups, CSA), this paper investigates consumer behavior and its relevance for sustainable development. Several studies have investigated CSAs’ contributions to different aspects of sustainable development and barriers to their expansion. One aspect usually left out is the change in preferences after interaction with the farmer/s and other market participants for several years. This learning aspect may, however, prove crucial to identify paths towards sustainable development.
70 citations
TL;DR: In this article, the authors start with two preliminary queries: is it a fact that power is neglected in economic theory? If it is, can such a neglect be justified? Only when the neglect is a fact and a fact cannot be justified can we search criti ally for the reasons of this absence.
Abstract: When we raise the question—or better still: the critique—about an absence of power in economic theory we should start with two preliminary queries. Firstly, is it a fact that power is neglected in economic theory? Secondly, if it is, can such a neglect be justified? Only when the neglect is a fact and a fact that cannot be justified can we search criti ally for the reasons of this absence. Is power neglected in contemporary economic theory? When we reduce the question to a mere investigation whether the term “power” has a place in economic literature—journals, text books, monographs, etc.—the answer would be negative. Reference to and treatment of power problems are ingredients of economic studies, but this is almost completely restricted to a narrowly defined economically hyphenated power, in particular monopoly power and bargaining power in goods and labor markets. This means it is restricted to specific and immediately marketand price-relevant power phenomena which can be easily endogenized into a theory of competitive markets as deviations from perfect competition. But many power phenomena reaching beyond the immediate price formation processes are connected with the economic sphere. Power can be and is used in fighting for profitable positions in the market and for maintaining them, for influencing the framework which determines the working of market mechanisms, and power is also important as an aim of economic activity. These types of power in a wider sense are rare birds in economic theory if we leave out some special theories
44 citations
TL;DR: The authors discusses Simon's work on organizations and his recent collaborations to understand the phenomenon of learning which have not yet been incorporated into economic analysis but which hold further promise for a behavioral approach.
Abstract: Herbert Simon’s contributions in several professional fields emphasized human decision making and provided the foundation for behavioral economics. They began with his work on bounded rationality and led to his own efforts and his support of the research of others to identify and further develop decision maker heuristics. The note also discusses Simon’s work on organizations and his recent collaborations to understand the phenomenon of learning which have not yet been incorporated into economic analysis but which hold further promise for a behavioral approach.
41 citations
TL;DR: In this paper, the authors investigate the impact of the availability of gambling facilities on personal bankruptcy rates and find a correlation between convenient access to gambling and high bankruptcy rates, suggesting that distressed communities are more receptive to the introduction of casinos.
Abstract: Both access to casino gambling and the personal bankruptcy rate have risen substantially in recent years. A reported correlation between greater access to gambling facilities and state and county bankruptcy rates suggests the increased availability of gambling might be an important factor explaining the increased national bankruptcy rate. A correlation between convenient access to gambling and high bankruptcy rates might also occur if distressed communities are more receptive to the introduction of casinos than prosperous communities. This paper utilizes panel data to investigate the impact of the
31 citations
TL;DR: In this article, it is argued that "unemployment" is defined against institutionalized norms of what kinds of work constitute “employment.” Changes in the boundaries of the concept of unemployment come about through changes in the ways that governments hold certain kinds of jobs as exemplary while granting other forms of work lesser recognition.
Abstract: This article is a first attempt at theorizing the differences in the political meaning of unemployment and how governments create these differences. It first reviews existing explanations about why unemployment is an especially pressing political threat to those in power. In lieu of a an existing literature on the sources of variation in this threat, the next section puts forward four alternative explanations based on related arguments about politics and the economy. These are the approaches of power resources, protest mobilization, deprivation, and ideology. Guided by the promises and pitfalls of these respective theories, the subsequent section argues for an alternative institutional-constructivist approach. Starting with the historical observation that the category of unemployment was invented alongside particular social institutions and employment practices, this approach seeks to explain how variation in these institutionalized practices is responsible for differences in the political salience of unemployment. The section that follows discusses how government policies can reconstruct the meaning of unemployment by reconfiguring the available set of institutional choices in the labor market and by designating what kinds of choices constitute involuntary joblessness. It is argued that “unemployment” is defined against institutionalized norms of what kinds of work constitute “employment.” Changes in the boundaries of the concept of unemployment come about through changes in the ways that governments hold certain kinds of work as exemplary while granting other forms of work lesser recognition. The final section considers how this reciprocal relationship between the construction of unemployment and employment both imposes political constraints for governments and creates opportunities. Governments face numerous conflicting incentives whether to expand or restrict the institutionalized definition of unemployment. While they must retain semblance with inherited conceptions of unemployment; they can redefine the problem of unemployment through the institutionalization of new solutions.
28 citations
TL;DR: In this paper, the authors argue that it is necessary and possible to experiment within a multi-agent system with bounded rational agents endorsed with explicit social behaviour, i.e., rationality as a process and as a product of learning.
Abstract: Game theory has provided a rigorous conceptual support to analyse strategic decisions and bargaining behaviour. But it shares with competitive equilibrium three basic assumptions. The players are fully rational; they comprehend the faced situation; and they know all the relevant institutional parameters. Thus disregarding the social dimension of bargaining. In this paper we advocate for a consilient focus of economics, psychology and sociology. We argue that it is necessary and possible to experiment within a Multi-Agent Systems (MAS) with bounded rational agents endorsed with explicit social behaviour. The observed behaviour is obtained from a laboratory experiment with human agents and can be captured in a cognitive multi-agent modelling with artificial agents. The approach can accommodate both declarative and procedural rationality; i.e., rationality as a process and as a product of learning.
TL;DR: In this article, the authors use data disaggregated by occupational categories and show that occupational distribution is critical for explaining the behavior of gender unemployment rates, and that women's rates are consistently higher than men's within occupations, the gender distribution across occupations favor lower rates for women.
Abstract: The men’s unemployment rate first exceeded the women’s during the recession of the 1980s, a pattern repeated in the 1990s recession. During non-recession years, this gender difference disappeared. We use data disaggregated by occupational categories and show that occupational distribution is critical for explaining the behavior of gender unemployment rates. Although women’s rates are consistently higher than men’s within occupations, the gender distribution across occupations favor lower rates for women. In recessions, the unemployment rates rise for both genders, but the occupational distribution shifts in favor of women’s employment. For expansionary periods, these two effects are offsetting.
TL;DR: In this paper, the extent of wage differentials between men and women and the impact of mathematics and verbal skills on the wages of adults across different levels of education and occupations was analyzed using the National Longitudinal Survey of Youth (NLSY).
Abstract: Using data from the National Longitudinal Survey of Youth (NLSY; 1993), this paper analyzes the extent of wage differentials between men and women and the impact of mathematics and verbal skills on the wages of men and women across different levels of education and occupations. The results show that mathematics skills lead to significant wage premiums across all groups of workers. Separate analyses by gender show that women with superior mathematics skill experience wage gains that are comparable to or higher than the wage premiums enjoyed by men. Although women earn significantly lower wages than men do across all levels of education and occupational categories, the gender wage gap is not significant among professional men and women with above-average mathematics skills. One way of reducing the gender wage gap would be to encourage girls to invest more in high school mathematics courses in order to improve their quantitative skills.
TL;DR: This paper found that the general ratings of government-provided goods were closer to public-interest ratings than to selfinterest ratings, suggesting valuation of such goods is not solely determined by self-interest.
Abstract: Respondents in two studies rated the value of goods and services generally, according to their perceived self-interest, and according to their perception of the public-interest. Study 1 found that the general ratings of government-provided goods were closer to public-interest ratings than to self-interest ratings, suggesting valuation of such goods is not solely determined by self-interest. Study 2 found a similar phenomenon applied for some market-supplied goods.
TL;DR: The authors showed that economic agents in professional basketball, where player statistics are less intuitive and not historically tabulated, fail to process information in a fashion consistent with the precepts of instrumental rationality.
Abstract: The professional team sports industry is characterized by an abundance of information, defined objectives, and clear consequences. Given these characteristics, researchers have generally assumed that economic actors follow the dictates of instrumental rationality. The purpose of this research is to present evidence that in professional baseball, where player statistics have historically been tabulated and utilized, information is employed efficiently. However, economic agents in professional basketball, where player statistics are less intuitive and not historically tabulated, fail to process information in a fashion consistent with the precepts of instrumental rationality.
TL;DR: This paper reviewed behavioral studies to understand the power and limits of rational economic rules used to guide environmental policy and found that rational choice is a poor guide to environmental policy, and that these anomalies disappear once people must make choices within reach of others who can punish irrational choices.
Abstract: Environmental policy is made in a complex confluence of markets, missing markets, and no markets. Despite this messy mixture, economists offer working rules to help guide policy based on classic rational choice theory. But numerous behavioral studies suggest that rational choice is a poor guide—anomalous behavior like preference reversals and unexpected gaps in measures of value undercut the rational underpinnings of environmental policy. Other studies find, however, that these anomalies disappear once people must make choices within reach of others who can punish irrational choices. This paper reviews these conflicting behavioral views to better understand the power and limits of the rational economic rules used to guide environmental policy
TL;DR: In this article, the authors model the evolution of professional codes and dialects using Wittgenstein's idea of a language game and argue that certain codes, such as those based on the real number system, lead to more reliable strategies in language games.
Abstract: How do social values come about and gain legitimacy? Starting from the premise that discourses of social analysis affect the ways in which social norms develop and proliferate, this article models the evolution of professional codes and dialects using Wittgenstein’s idea of a language game. A language game is formalized as a repeated game of tacit coordination played among participants with informational asymmetries. The informational asymmetries model the different meanings that people assign to the same word used in a conversation. A language is formalized as a code that emerges as a result of repeated interactions in a language game. The paper argues that certain codes—such as those based on the real number system—lead to more reliable strategies in language games. The result is used to argue that professional dialects based on axiomatizable codes—such as physics, mathematics and economics—are less likely to experience fragmentation into intra-disciplinary ‘sects,’ camps and incommensurable paradigms than are professional dialects that are not based on an axiomatizable code—such as sociology, psychology, organization studies, and strategic management studies. The idea of a language game is extended to explore ways in which certain disciplines can establish cognitive jurisdiction over particular phenomena, starting from a particular set of codes, and thereby claim ‘cognitive monopolies.’ A rudimentary theory of the market for ideas is advanced.
TL;DR: This paper developed a simple economic model of divorce by incorporating the labeling effect into rational choice theory, and explored theoretically the relationship between the experience of having divorced and the likelihood of divorce, and showed that a once-divorced person is not necessarily more likely to divorce.
Abstract: We develop a simple economic model of divorce by incorporating the labeling effect into rational choice theory. In our model, we provide an explanation of the process through which a divorced person is being stigmatized and explore theoretically the relationship between the experience of having divorced and the likelihood of divorce. Contrary to a widely held belief, our theoretical model predicts that a once-divorced person is not necessarily more likely to divorce, as is the case in Asian countries. This is because a divorced person may hesitate more to divorce one more time for fear of being labeled as pathological or abnormal.
TL;DR: In this article, the role of status-induced biases regarding an agent's beliefs about her abilities and those of others was examined using the theory of status characteristics and expectation states, where individuals who perceive themselves as low in the social hierarchy are less confident in their abilities when grouped with higher status individuals.
Abstract: Using ideas from status characteristics theory, this essay examines the role of status-induced biases regarding an agent’s beliefs about her abilities and those of others. According to the theory of status characteristics and expectation states, individuals who perceive themselves as low in the social hierarchy are less confident in their abilities when grouped with higher status individuals. The model is applied to a simple agency setting to characterize when tournaments (compensation based on relative performance) are less efficient than team-based incentives.
TL;DR: The human mind is everywhere active and imaginative and we need to understand the routes of this activity if we are to grasp how the human mind works This is true whether the mind is trying to come to grips with painful reality, reacting to trauma, coping with the everyday or just making things up as discussed by the authors.
Abstract: “… Economics is supposed to be concerned with real people It is hard to believe that real people could be completely unaffected by the reach of the self-examination induced by the Socratic question, ‘How should one live?’—a question that is, also a central motivating one for ethics Can people whom economics studies really be so unaffected by this resilient question and stick exclusively to the rudimentary hard-headedness attributed to them by modern economics?” Amartya Sen, On Ethics & Economics “… Apart from a few exceptions, the international consensus view within sociology, anthropology, political science and psychology seems to be that agents are not irrational in the way that neoclassical economists presume The orthodox economic canons of rationality are thus widely rejected elsewhere,” Geoffrey M Hodgson, Economics and Institutions “Once we realize that the human mind is everywhere active and imaginative, then we need to understand the routes of this activity if we are to grasp how the human mind works This is true whether the mind is trying to come to grips with painful reality, reacting to trauma, coping with the everyday or just making things up Freud called this imaginative activity phantasy, and he argued both that it functions unconsciously and that it plays a powerful role in the organization of a person’s experience This surely, contains the seeds of a profound insight into the human condition; it is the central insight of psychoanalysis … a pervasive aspect of mental life … Are we to see humans as having depth—as complex psychological organisms who generate layers of meaning which lie beneath the surface of their own understanding? Or are we to take ourselves as transparent to ourselves?” Jonathan Lear, Open Minded: Working Out the Logic of the Soul
TL;DR: In this paper, the interactions among cognitive skills, maximization, and feedback are explored using students of economics and industrial engineering. But the results show that clear constructive feedback is a partial substitute for cognitive skills in decision-making.
Abstract: Compelling evidence exists that behavior is inconsistent with the assumptions of expected-utility maximization. However, if learning occurs, then maximization may take place asymptotically (albeit slowly). But a series of experiments by Herrnstein and his associates show that under very general conditions, feedback and experience lead people away from maximization, rather than toward it—a phenomenon termed “melioration.” In this paper, we describe two experiments designed to explore the interactions among cognitive skills, maximization, and feedback. Using students of Economics and Industrial Engineering, we show that clear constructive feedback is a partial substitute for cognitive skills in decision-making.
TL;DR: In this article, the authors apply the general propositions that Elster (1998) advanced with regard to the relationship between the emotions and decision making in a theory which explains the inspirational dimension of leadership in terms of the way leaders rhetoric strengthens the hopes and counters the disappointments of followers.
Abstract: Hermalin’s (1998) model of leadership by example makes leadership amenable to conventional economic analysis by excluding the possibility that leader rhetoric can have an inspirational effect that induces followers to increase the effort they exert in team situations. This effect is also ignored by Casson (1991) who demonstrates that leader rhetoric can reduce opportunism through the moral manipulation of shame and guilt. The general propositions that Elster (1998) advanced with regard to the relationship between the emotions and decision making are applied in a theory which explains the inspirational dimension of leadership in terms of the way leaders rhetoric strengthens the hopes and counters the disappointments of followers.
TL;DR: In this paper, a critical reconsideration of the concept of equilibrium within the framework of socio-economics (or economic sociology) as an analysis of the social nature, composition, and co-determination of the economy is presented.
Abstract: Equilibrium is one of the most venerable concepts of neoclassical economics. In this paper we undertake a critical reconsideration of the concept of equilibrium within the framework of socio-economics (or economic sociology) as an analysis of the social nature, composition, and co-determination of the economy. The concept of market-economic equilibrium is critically reconsidered on the following grounds: its static implications, its spurious equation with optimum, its complex relations to social equilibrium, and its social co-determination. The conclusion is that the concept of (especially general) market equilibrium is of questionable explanatory value from the perspective of socio-economics.
TL;DR: In this article, a theory of investor/consumer behavior is suggested, in a context of a symbiotic relationship between two quasi-bio-systems, and the model offers predictions about likely outcomes in capital market interaction with the underlying economy and consumption in particular.
Abstract: This study examines the existence of a stock market wealth effect on aggregate private consumption in the economy. A theory of investor/consumer behavior is suggested, in a context of a symbiotic relationship between two quasi-bio-systems. The model offers predictions about likely outcomes in capital market interaction with the underlying economy in general and consumption in particular. These predictions are validated empirically. Specifically, the paper finds that investors/consumers do not respond immediately to a stock market rise (fall). Rather, they wait at first and thereafter gradually accelerate their ‘wealth spending’ on consumption only after they are convinced that the gain is permanent (a variation of the ‘income smoothing’ that was suggested many years ago by Friedman (1957) ). The paper suggests that the capital markets and the economy interact like two bio-systems symbiotically responding to each other. This study presents evidence that the consumption wealth spending peaks at approximately 2.5% of the stock market wealth CUMULATIVE gain in the previous 12–24-month period, with some effects lingering on up to 36 months. For example, it shows that over 40% of the growth in consumer spending in 1999 was attributable to gains in the stock market in previous years, contributing to a strong GDP in that year.
TL;DR: In this article, the authors investigate the effort and reporting decisions of an individual subject to the risk of a monetary loss, and find that the decision to over-report the loss suffered is sensitive to the probability of obtaining compensation.
Abstract: Compensation for income losses may create a problem of double moral hazard: the party at risk may not undertake any risk-reducing effort, and if the extent of the loss suffered is unobservable to the party liable for compensation, the size of claim may be exaggerated. This paper uses experimental methods to investigate the effort and reporting decisions of an individual subject to the risk of a monetary loss. We find that the decision to over-report the loss suffered is sensitive to the probability of obtaining compensation, as intuition suggests. However, most subjects chose to expend effort ex ante although it would have been rational not to do so.
TL;DR: It is argued that government policy is needed to increase the supply of mental health care, through nonprofit agencies, and that the role of nonprofit providers should be expanded for three major reasons.
Abstract: This paper argues that mental health care is underprovided, and that the role of nonprofit providers should be expanded for three major reasons. First, a positive externality exists since society, as a whole, benefits when those in need of mental health care consume care. External benefits include lower crime rates, lower unemployment, and less homelessness. Second, consumers of mental health care are mentally ill and often do not believe that they need care, underestimate their need, or believe that care is not worth the time or expense. Third, common law, to a large extent, is based on individual liberty, largely ignoring the benefits individuals receive from treatment. It is argued that government policy is needed to increase the supply of mental health care, through nonprofit agencies.
TL;DR: The authors examined the relationship between the reduction of discouragement after job displacement and social support and found that displaced workers are less likely to be discouraged if they receive a referral from their employer, if they are encouraged by family members to seek employment, and if they spend time while unemployed in a productive manner.
Abstract: The authors extrapolate from social-science and medical-science research to examine the relationship between the reduction of discouragement after job displacement and social support. Using data from a unique data set, they showed that displaced workers are less likely to be discouraged if they receive a referral from their employer, if they are encouraged by family members to seek employment, and if they spend time while unemployed in a productive manner. Discouragement, in contrast, is positively related to the number of part-time jobs. Implications of the results span both organizational practice and public policy.