Reconciling sustainability and discounting in Cost–Benefit Analysis: A methodological proposal

The incorporation of the intergenerational equity objective has rendered the traditional Cost–Benefit Analysis (CBA) approach obsolete for the evaluation of projects presenting an important number of environmental externalities and for those whose impacts extend throughout a long period of time.Based on the assumption that applying a discount rate rewards current consumption and, therefore, that it is only possible to introduce a certain intergenerational equity in a Cost–Benefit Analysis, in this work we propose an approach to discounting based on a different rationale for tangible and intangible effects. We designed two indicators of environmental profitability: a) the Intergenerational Transfer Amount (ITA), which quantifies in monetary units what the current generation is willing to pass on future generations when an environmental restoration project is carried out, and b) the Critical Environmental Rate (CER), measures the implicit environmental profitability.These concepts were tested through an empirical case study pertaining to the assessment of an Erosion Control Project in the southeast of Spain. The results yield traditional profitability indicators that are higher — and probably closer — to the real values set by the contemporary society. The information provided by the environmental profitability indicators proposed renders more transparency to the quantification of the levels of intergenerational equity applied, thereby facilitating the difficult reconciliation of the CBA technique with the objective of sustainability.     

Freedom,barriers to entry,entrepreneurship, and economic progress

While entrepreneurs benefit from unrestricted free entry into markets, they have a time-inconsistent incentive to lobby for government entry restrictions once they become successful. Bad political institutions yield to these demands, and growing barriers are placed on domestic and international competition. Good institutions do not, and this effort is instead channeled toward further wealth creation. We find that productive entrepreneurship depends on both the freedom to succeed and discipline of failure that free markets provide. Trade barriers result in fewer combinations of goods and inputs attempted, and less productive entrepreneurial resource use. We also provide evidence on the value of business failure.

Quasi-hyperbolic discounting and social security systems

Hyperbolic discounting has become a common assumption for modeling bounded rationality with respect to individual savings decisions. We examine the effects of hyperbolic discounting on the comparison of alternative social security systems. We show that this form of bounded rationality breaks the equivalence between funded and pay-as-you-go (PAYG) systems established in Sheshinski and Weiss [Sheshinski, E., Weiss, Y., 1981. Uncertainty and optimal social security. Quarterly Journal of Economics 95, 189-206]. Intergenerational transfers within a PAYG economy are usually secured by the social security system and independent of longevity, whereas this is not the case for the funded economy. The savings level under hyperbolic discounting is lower than under exponential discounting [Laibson et al., 1998], but the ratio between the savings level under hyperbolic discounting within a funded economy and a PAYG economy depends on the effectiveness of the commitment devices. It is shown that if individuals are hyperbolic discounters, then in a PAYG economy any change in the mandated level of intergenerational transfers is neutralized by individuals’ voluntary bequests. This does not apply to a funded system.     

组织结构演化的效率与适应悖论

基于演化理论的观点认为,在企业成长的过程中,组织内部会形成大量的惯例与流程,表现出组织结构惰性.本文认为,这种惰性的实质即企业过于重视内部效率而忽视了对外部环境的适应,结果导致企业战略演化形成路径锁定,而阻碍了战略的及时更新,这时企业陷入了“战略演化陷阱”.本文对组织演化中效率与适应的悖论进行了解释,探讨了组织结构惰性的成因,并提出了一个实证的理论框架.     

Reconciling Kuznets and Habbakuk in a unified growth theory

Economic historians have debated the relative labor productivity of the United States agricultural and nonagricultural sectors during the nineteenth century. David (Discussion papers in economic and social history, University of Oxford, 1996) offers a reconciliation of the opposing views by suggesting that while productivity per hour worked in agriculture was comparable to productivity in other sectors, the number of hours worked per year was relatively low, creating a large gap in annual output per worker across sectors. We model and extend a version of Davis’s reconciliation within a unified growth theory that makes connections between the decline in traditional agriculture and several other features of United States development. The dynamic general equilibrium model is consistent with the structural transformation having minor direct and indirect effects on aggregate labor productivity per hour, but substantial effects on aggregate labor productivity per worker. The model also provides a close match to the trends in schooling, fertility, rates of return to physical capital, and labor productivity growth in the nineteenth century.      

Quantifying economic sustainability: Implications for free-enterprise theory, policy and practice

In a previous paper (Ulanowicz, Goerner, Lietaer, and Gomez, 2009), we combined thermodynamic, network, and information theoretic measures with research on real-life ecosystems to create a generalized, quantitative measure of sustainability for any complex, matter/energy flow system. The current paper explores how this metric and its related concepts can be used to provide a new narrative for long-term economic health and sustainability. Based on a system's ability to maintain a crucial balance between two equally essential, but complementary factors, resilience and efficiency, this generic explanation of the network structure needed to maintain long-term robustness provides the missing theoretical explanation for what constitutes healthy development and the mathematical means to differentiate it quantitatively from mere growth. Matching long-standing observations of sustainable vitality in natural ecosystems and living organisms, the result is a much clearer, more accurate understanding of the conditions needed for free-enterprise networks to produce the kind of sustainable vitality everyone desires, one which enhances and reliably maintains the health and well-being of all levels of global civilization as well as the planet.     

A new method for assessing the sustainability of land-use systems (II): Evaluating impact indicators

In the past decade, numerous indicators and indicator sets for sustainable agriculture and sustainable land management have been proposed. In addition to their interest in comparing different management systems on an indicator by indicator basis, land managers are often interested in comparing individual indicators against a threshold, or, in order to study trade-offs, against each other. To this end it is necessary to (1) transform the original indicators into a comparable format, and (2) score these transformed indicators against a sustainability function.This paper introduces an evaluation method for land-use-related impact indicators, which was designed to accomplish these tasks. It is the second of a series of two papers, and as such it links into a larger framework for sustainability assessment of land use systems.The evaluation scheme introduced here comprises (1) a standardisation procedure, which aims at making different indicators comparable. In this procedure indicators are first normalised, by referencing them to the total impact they contribute towards, and then they are corrected by a factor describing the severity of this total impact in terms of exceeding a threshold. The procedure borrows conceptually from Life Cycle Assessment (LCA) Impact Analysis methodology; (2) a valuation procedure, which judges the individual standardised indicators with regard to sustainability.This methodology is then tested on an indicator set for the environmental impact of a spinach production system in Northwest Germany. The method highlights mineral resource consumption, greenhouse gas emission, eutrophication and impacts on soil quality as the most important environmental effects of the studied system.We then explore the effect of introducing weighting factors, reflecting the differing societal perception of diverse environmental issues. Two different sets of weighting factors are used. The influence of weighting is, however, small compared to that of the standardisation procedure introduced earlier.Finally, we explore the propagation of uncertainty (defined as a variable's 95% confidence limits) throughout the standardisation procedure using a stochastic simulation approach. The uncertainty of the analysed standardised indicator was higher than that of the non-standardised indicators by a factor of 2.0 to 2.5.     

消费文化、认知偏差与消费行为偏差

本文放松了理性经济人假设,在行为经济学双曲线贴现模型框架下,以"自我控制"认知偏差及相应的模型参数设定对东西方消费文化差异进行了技术表达,进而阐明了消费过度(欧美国家)和消费不足(东亚国家)这两类消费行为偏差的形成机制。本文采用全球48个国家和地区1978—2007年的面板数据,以儒家虚拟变量和性生活指数作为消费文化的替代变量检验了文化与消费的关系。结果表明,在解释东西方消费率差异时,预防性储蓄等传统理论的解释力远低于不可观测的国家个体效应。儒家虚拟变量和性生活指数能分别解释国家个体效应的28%和58%。这表明消费文化等不随时间改变的个体因素比传统变量更能解释各国居民的消费差异。实践层面上,双曲线贴现模型中锁定技术能有效纠正"自我控制"认知偏差,从而消解儒家文化对消费的深度抑制,可为扩大内需政策创新提供思路启发和技术支撑。     

Land use, biodiversity, and sustainability

We focus on the effects of deforestation for agricultural purposes on biodiversity. This topic has been dealt with in the recent literature where forested land and biodiversity are treated as synonyms. In contrast to that, this paper distinguishes between forested land and forest itself, the latter being interpreted as a measure of biodiversity. The regenerative capacity of forests is modeled as a function of the own stock and of the habitat size. In particular, the threat of a given minimum viable population to be achieved in the course of the reduction of habitats is taken into account. The corresponding structure of a sustainability indicator is elaborated.     

Linking forestry, sustainability and aesthetics

In forest planning, little research has been devoted towards examining how visual-impact assessment can improve the public acceptance of forest activities and augment forest sustainability. The objective of the present work is to review the methods of aesthetic assessment of forest landscapes, which will help the implementation of visual-impact assessment in sustainable forestry. From the numerous techniques of landscape evaluation that have been devised in recent years, the expert approach techniques have dominated in environmental management practices and the perception-based approach in research. The non-market economic valuation techniques are essentially trade-off methods and not aesthetic assessments by themselves. Revealed preference methods, such as hedonic-price, use actual market choices of individuals to get their preferences towards non-market attributes, and stated preference methods, such as contingent valuation method, rely on surveys to get directly the individual's willingness to pay for the non-market attributes. Psychophysical preference modelling is a popular quantitative holistic technique of landscape evaluation and if used in combination with indirect aesthetic evaluation methods might create new standards and protocols for techniques of objectively estimating public perception of aesthetic quality and thus to enhance social sustainability in forest space.     

A model with endogenously determined cycles, discounting and growth

Summary. This article reexamines the role of consumption in growth and emphasises the external effects of aggregate consumption, viewed as consumption standards, as an additional impediment in the growth process. These external effects raise the productivity of the individuals and are positively related to their valuation of the future. Conditions are established under which this results in a marginal value of wealth that is an increasing function of consumption. This brings new types of multiple steady states, local indeterminacies and cyclical motions. Imposing extra homogeneity restrictions, balanced growth solutions with endogenous impatience emerge. The possibility of multiple convergent paths is univocally related to endogenous discount effects. A comparison with a benchmark planning economy indicates an excessive value for the rate of time preference and emphasises its insufficient adaptation to future utility in a stationary setting. Discrepancies along the transition path that rest on endogenous impatience versus fixed discount appear in a non-stationary environment when the competitive balanced growth solution is indeterminate. Received: May 5, 1996; revised version: May 19, 1997     

Environmental sustainability, nonlinear dynamics and chaos

Summary. This paper studies the possibility of nonlinear dynamics in a simple overlapping generations model with the environment – the John-Pecchenino (1994) model. We show that if people's concerns towards greener preferences and the maintenance efficiency relative to degradation are not sufficiently high, cyclically or chaotically fluctuating equilibria are more likely to exist; moreover, under a specific condition, a complicated topological structure might emerge. Our short-run analysis complements John and Pecchenino's long-run analysis and our findings suggest that the associated transition towards an environmentally sustainable state is not trivial. Received: September 10, 1996; revised version: October 2, 1997     

Roy Harrod and traditional theory

In 1926 and 1936 Sraff and Keynes attacked the methodological core of traditional economic theory by showing that the premises of partial equilibrium analysis were mutually inconsistent.

this paper aims to show that Harrod neglected Sraffa and Keynes's logical arguments, and only admitted that the tacit assumptions under discussion restricted the domain of validityof the theory to special cases: perfect competition and statics. He then proceeded to generalize the theory to imperfect competition and dynamics by applying the principles (but not the instruments) of traditional analysis. The definition of these domains thus aimede at rescuing as mush as possible from the orthodox approach.     

Accounting for the business cycle: Nominal rigidities, factor heterogeneity, and Austrian capital theory

An Austrian interpretation of the New Keynesian small menu cost model of the business cycle is proposed. Austrian and New Keynesian business cycle theories share the feature that the cycle is generated by rigidities which prevent the economy from adapting instantaneously to changing conditions. Austrian business cycle theory is capital-based, focusing on credit expansion which artificially lowers interest rates and causes an investment boom and unsustainable business expansion. In contrast, the New Keynesian small menu cost model of the business cycle is based on nominal rigidities which prevent markets from clearing. Small menu costs introduce dichotomous behavior, where firms find it locally optimal to avoid instantaneous output price adjustments in the face of the cost, but this local optimum results in economy-wide output and employment fluctuations which are much greater in relative magnitude. The small menu cost model of the business cycle is extended and reinterpreted in light of Austrian business cycle theory with heterogeneous, multiply-specific capital, thus providing a rigorous formalization of the Austrian business cycle. The Austrian interpretation of this New Keynesian model fortuitously addresses several of its shortcomings. JEL classification B53, E12, E23, E32     

Institutional Resource Regimes: Towards sustainability through the combination of property-rights theory and policy analysis

Although the concept of sustainable development is gaining increasing political acknowledgement, despite the implementation of environmental policies specifically intended to solve problems in this area, environmental degradation resulting from the recurrent problems associated with the over-exploitation of natural resources remains an important concern for most countries. How can this situation be explained? This article postulates that a combination of approaches from the political sciences (in particular policy analysis) and institutional economics would enable the identification of the most relevant regulatory dimensions which can explain the (un)sustainable uses of resources. Based on this starting point, it develops an innovative theoretical framework, i.e. that of the Institutional Resource Regime (IRR).The adopted approach facilitates the analysis of the regulatory measures and resource management practices associated with complex and competitive heterogeneous use situations from a perspective of sustainability. Indeed, the two dimensions of “extent” and “coherence” enable the definition and categorization of the IRR of a given resource. The extent of an IRR refers to the total number of goods and services in use that are actually regulated by the regime at a given time, while the coherence measures the degree of coordination of the various user-actors within the regime. One of the major contributions of the IRR framework is its ability to describe the different configurations of regimes, both theoretically and empirically, and to predict their effect on the sustainability of a resource based on the hypothesis that high levels of regime extent and coherence are necessary preconditions for sustainability.By doing this, the IRR framework also enables the analysis of the actual use rights to the goods and services provided by resources as the result of the political strategies of actors who mobilize different legal provisions, which stem either from formal property rights to resources or from policies that regulate the use and protection of these resources.Having developed the central research hypotheses and the empirical research procedure, we present the lessons drawn from the first campaign of field research which was mainly conducted in Switzerland from 1999. Based on the evidence from these initial findings, it is suggested that the scope of the IRR framework could be far broader than evidenced by its application in the case of Switzerland where it was initially developed.     

Knowledge, hierarchy and the selection of routines: an interpretative model with group interactions

The aim of this paper is to analyze the selection of routines inside an organizational structure characterized by different cognitive representations and facing hierarchical pressure leading to either truce or conflict. After a brief discussion of the role of hierarchy and the related problems of organizational practice selection in the evolutionary literature, we model the interactions between different groups within a firm trying to interfere with its coordination mechanisms in order to support their own practices. Numerical simulations highlight the different learning abilities present in various organizational set-ups and their related knowledge distribution. It is shown that networking designs are the most profitable organizational configurations because of their dynamics of learning, though they are very sensitive to the truce problem.JEL Classification: L14, L20, L22, B52, D83Correspondence to: Nathalie Lazaric     

创新、创造性破坏与内生经济变迁——熊彼特主义经济理论的发展

熊彼特曾试图建立一个以创新为动力的内生经济变迁理论。在沉寂多年以后,熊彼特的这一经济理论在20世纪90年代以后复活。演化新熊彼特主义借用生物学隐喻构建了企业的行为模式,使创新得以内生化,并类比生物学中的自然选择过程描述了经济动态过程。新古典熊彼特主义增长理论则将熊彼特"创造性破坏"思想模型化,通过引入研发生产函数和对创新组织的探讨将技术创新内生化,深入地研究了与经济增长相关的市场结构问题。三支理论在方法论和学术传统上的差别导致了它们对创新机制以及经济变迁的不同理解。文章系统地梳理了熊彼特主义经济理论的主要发展并对之进行了比较、评价和展望。