Evolutionary economics and economic geography

This article attempts to explore how key notions from Evolutionary Economics, such as selection, path-dependency, chance and increasing returns, may be applied to two key topics in Economic Geography. The first issue is the problem of how to specify the (potential) impact of the spatial environment on new variety in terms of technological change. Evolutionary thinking may be useful to describe and explain: (1) the process of localized `collective' learning in a regional context, (2) the adjustment problems that regions may be confronted with in a world of increasing variation, and (3) the spatial formation of newly emerging industries as an evolutionary process, in which the spatial connotation of increasing returns (that is, agglomeration economies) may result in a spatial lock-in. The second issue is the problem of how new variety may affect the long-term evolution of the spatial system. We distinguish three approaches that, each in a different way, apply evolutionary notions to the nature of spatial evolution. This is strongly related to the issue whether mechanisms of chance and increasing returns, rather than selection and path-dependency, lay at the root of the spatial evolution of new technology.     

Darwinism in economics: from analogy to ontology

Several social scientists, including ‘evolutionary economists’, have expressed scepticism of ‘biological analogies’ and rejected the application of ‘Darwinism’ to socio-economic evolution. Among this group, some have argued that self-organisation is an alternative to biological analogies or Darwinism. Others have seen ‘artificial selection’ as an alternative to natural selection in the socio-economic sphere. Another objection is that Darwinism excludes human intentionality. It is shown that all these objections to ‘biological analogies’ and ‘Darwinism’ are ungrounded. Furthermore, Darwinism includes a broad theoretical framework for the analysis of the evolution of all open, complex systems, including socio-economic systems. Finally and crucially, Darwinism also involves a basic philosophical commitment to detailed, cumulative, causal explanations. For these reasons, Darwinism is fully relevant for economics and an adequate evolutionary economics must be Darwinian, at least in these fundamental senses. However, this does not undermine the need for auxiliary theories and explanations in the economic domain.     

Darwinism in economics: from analogy to continuity

Currently there is an ongoing discussion about how Darwinian concepts should be harnessed to further develop economic theory. Two approaches to this question, Universal Darwinism and the continuity hypothesis, are presented in this paper. It is shown whether abstract principles can be derived from Darwin’s explanatory model of biological evolution that can be applied to cultural evolution. Furthermore, the relation of the ontological basis of biological and cultural evolution is clarified. Some examples illustrate the respective potential of the two approaches to serve as a starting-point for theory development.

Making economics more useful: how technological eclecticism could help

ABSTRACT

Keynes thought it would be ‘splendid’ if economists became more like dentists. Disciplinary economics has instead become more like physics in focusing on concise, universal propositions verified through decisive tests. This focus, I argue, limits the practical utility of the discipline because universal propositions form only a part of new policy recipes. I further suggest that, as in engineering and medicine, developing economic recipes requires eclectic combinations of suggestive tests and judgement. Additionally, I offer a detailed example of how a simulation model can help evaluate new policy combinations that affect the screening of loan applications.     

Evolutionary models in economics: a survey of methods and building blocks

This paper assesses methods and components of formal evolutionary-economic modelling. Methods are broadly classified into evolutionary game theory and selection dynamics, evolutionary computation and multi-agent models, each with relevant subcategories. The components or building blocks are organized into diversity, innovation, selection, bounded rationality, diffusion, path dependency and lock-in, coevolution, multilevel and group selection, and mechanisms of growth. The number of alternatives that has been proposed for each category is vast, making it difficult to comprehend the variety of assumptions and formalizations underlying existing evolutionary-economic models. Our survey aims to clarify for each model component the choice range, formal expressions, associated assumptions, and possible techniques for formalization. Our study is unique in that it provides more information about the formal details of specific model components and is considerably more inclusive than earlier reviews.     

The economics of online dating: A course in economic modeling

The author discusses the development of a unique course, The Economics of Online Dating. The course is an upper-level undergraduate course that combines intensive discussion, peer review, and economic theory to teach modeling skills to undergraduates. The course uses the framework of “online dating,” interpreted broadly, as a point of entry, via Paul Oyer's popular economics book Everything I Ever Needed to Know about Economics I Learned from Online Dating. The author then explores an approach to teaching students how to not just solve models, but to create economic models from abstract ideas. This approach to teaching modeling is supported by Albert Bandura's work on self-efficacy as a bedrock pedagogical principle.     

The economics of production systems: Segmentation and skill-biased change

In this paper, the concept of production systems is introduced. I assume a standard thick-market externality together with the idea that higher quality goods also require higher skills from workers. Firms face a trade-off between low-quality goods with low skill-requirements for which the potentially abundant labour force generates strong thick-market externalities and higher quality goods with higher skill-requirements. In equilibrium, the economy is partitioned into production systems, i.e., clusters of firms producing the same quality. The distribution of skills determines the boundaries of the production systems, which in turn determine the wages. In this framework an increase in the supply of skilled workers can induce first higher wages for all workers and then higher wages for the skilled but lower wages for the unskilled. This is consistent with the late 20th century evolution of the US labour market.     

从经济学再到政治经济学:理解包容性增长

胡锦涛主席在亚太经合组织的两次会议上倡导包容性增长,其理论与现实意义深远。经济增长自经济学诞生以来就一直是经济研究的核心问题,经济学史上从政治经济学到经济学,再到最近新政治经济学的兴起实际上反映了人们对经济发展中的繁荣与公正、市场与政府的认知的深入过程。强调机会平等的包容性增长正是当下中国的政治经济学。从经济学发展过程审视政治与经济离合的演变有助于我们深入理解和研究包容性增长。     

Dealing with the Duhem-Quine thesis in financial economics: can causal holism help?

Acceptance of the Duhem–Quine thesis implies a recognitionthat empirical tests of individual hypotheses are in fact testsof individual hypotheses in conjunction with the networks fromwhich those hypotheses are derived. This leads to a problemin the evaluation of disconfirming evidence: is it the individualhypothesis or the network that is refuted? This paper examineshow financial economists deal with this ‘joint-testing’problem in their empirical evaluation of the efficient marketshypothesis. Causal holists argue that the holistic testing theyespouse circumvents the difficulties surrounding joint-testingproblems. This paper assesses whether a causal holist approachcan resolve the ambiguity surrounding the evidence against theefficient markets hypothesis. It concludes that, without a resolutionof the ontological–epistemological tension in causal holismidentified by Fleetwood (Cambridge Journal of Economics, 2002,vol. 26, 27–45) and a clearer outline of the nature ofholistic testing, causal holism cannot help financial economistsdeal with the implications of the Duhem–Quine thesis forempirical testing.     

Agreeing on generalised Darwinism: a response to Pavel Pelikan

Pelikan (J Evol Econ 21:341–366, 2011) develops an interesting conceptual framework that adds to prior work on generalised Darwinism. Despite claims to the contrary we show that it is similar to the approach developed by Hodgson and Knudsen (J Evol Econ 16(4):343–366, 2006a, J Econ Behav Organ 75(1):12–24, 2010a, b), Aldrich et al. (J Evol Econ 18(5):577–596, 2008) and others. Pelikan also mischaracterises the Hodgson–Knudsen position over Lamarckism. We show why the term is misleading (rather than strictly wrong) when applied to social evolution.     

Antonio Genovesi and Italian economic thought: when ethics matters in economics

Abstract

The renewed interest in studies of Italian Enlightenment after the Second World War has enabled a complex new understanding of the Italian contribution to political economy. In particular, a new line of research that brings together the analysis of commercial society developed by Italian economists, and the canon of « civil life » elaborated within classical civic humanism and the natural legal tradition, has explained the deep ethical and social concerns inherent in the Italian approach to economic studies. This collection of articles takes stock of some of these achievements in scholarship and, at the same time, offers some new elements about the hermeneutical role played by these fundamental relationships between economics and ethics in identifying a more complex and multidimensional structure of scientific discourse. The articles are a selection of those presented at three conferences held in 2013, thanks to the support of the Luigi Sturzo Institute and Milan-Bicocca University, in Naples (Banco di Roma Foundation), Rome (Lumsa University) and Milan (Istituto Lombardo - Accademia di Scienze e Lettere), and they explore the thought of Antonio Genovesi as well as Eighteenth-Century Italian economic thought.     

Evolutionary economics and the counterfactual threat: on the nature and role of counterfactual history as an empirical tool in economics

Counterfactual conditional statements are ubiquitous in any scientific endeavour. This paper contains an analysis of the nature of counterfactual conditionals and the conditions under which they are considered assertable by scientists. The paper then applies this analysis to the use of counterfactuals in evolutionary economics, arguing that because evolutionary economics is inherently concerned with historical processes it cannot avoid the use of counterfactual history as one of its tools of empirical analysis. We discuss the strengths and pitfalls of counterfactual history. We argue that because evolutionary economics starts from the foundation that randomness may be inherent in any economic system, the very aspects of evolutionary economics that make counterfactual history a desirable empirical tool also make that tool difficult to employ. RID="*" ID="*" We thank the participants of the International Seminar on Evolutionary Economics as a Research Programme in Stockholm, May 1997, for many helpful comments. We also thank Lorri Baier for many helpful substantive and textual comments. Correspondence to: R. Cowan     

Evolutionary economics goes mainstream: A review of the theory of learning in games

The Theory of Learning in Games by Fudenberg and Levine surveys a key branch of evolutionary economics from a mainstream perspective. Its publication provides an opportunity to reassess the prospects and goals for evolutionary economics.     

Understanding economic change: the impact of emotion

In this paper we aim to conceptualize the involvement of emotion in the processes of institutional emergence and change. The starting point of our proposal is the theory of change that has been developed by Douglass North since the 1990s and has recently culminated in the publication of “Understanding the process of economic change” (2005). We agree with North in considering change as an endogenous process which starts in the individual mind through a modification of mental models and beliefs. However, notwithstanding the value that North attributes to the cognitive components of change, his approach assigns no specific role to emotion. Based on recent findings on emotions and their contribution to the process of thought, we will suggest how North’s approach may be extended in order to explore some basic mechanisms of the interaction between institutions and feelings.     

Revisiting the economics of climate change: the role of geoengineering

Technically simple measures to directly reduce mean global temperatures could be available in the near future. We introduce “geoengineering” into a simple analytical model of climate change. We model the technical and economic characteristics of geoengineering in line with the recent literature from physical and environmental management sciences. We investigate: (i) under which circumstances geoengineering can substitute, partly or completely, for traditional abatement strategies, (ii) under which conditions and at what level geoengineering is optimally employed, and (iii) whether geoengineering can mitigate free-riding problems.