An alternative approach to income taxation

We take an alternative approach to income taxation in this paper. We view the income tax schedule as the outcome of a voting process, rather than the optimal choice of a “benevolent social planner”. We show that it is very likely for majority voting to lead to the adoption of a regressive income tax schedule, depending on the per capita government revenue requirement and the mean productivity of the population, which is in sharp contrast with the result derived from the traditional “benevolent social planner” approach to income taxation; and that given the adoption of a regressive income tax schedule, the income tax schedule would become less regressive as the ratio of the per capita government revenue requirement over the mean productivity of the population increases. Our work might shed some light on both the prevalent adoption of regressive state tax systems and the cross-state difference in terms of tax systems.     

Social evaluations when populations differ in size

Assessments of “social welfare” do not usually take into account population sizes. This can lead to serious social evaluation flaws, particularly in contexts in which policies can affect demographic growth. We develop in this paper a little‐known though ethically attractive approach to correcting the flaws of traditional social evaluations, an approach that is sensitive to population sizes and that is based on critical‐level generalized utilitarianism (CLGU). Traditional CLGU is extended by considering arbitrary orders of welfare dominance and ranges of “poverty lines,” as well as values for the “critical level” of how much a life must be minimally worth to contribute to social welfare. We apply these social evaluation methods to rank Canada across 1976, 1986, 1996 and 2006 and to estimate normatively and statistically robust lower and upper bounds of critical levels over which these rankings can be made.     

Can sustainable consumption be learned? A model of cultural evolution

This paper shows how sustainable consumption patterns can spread within a population via processes of social learning even though a strong individual learning bias may favor environmentally harmful products. We present a model depicting how the biased transmission of different behaviors via individual and social learning influences agents' consumption behavior. The underlying learning biases can be traced back to evolved cognitive dispositions. Challenging the vision of a permanent transition toward sustainability, we argue that “green” consumption patterns are not self-reinforcing and cannot be “locked in” permanently.     

Incomplete integration and contagion of debt distress in economic unions

This paper compares different fiscal integration schemes on the basis of their ability to finance public investments and resilience to debt distress and contagion. Complete integration schemes, where a central authority chooses the level of public investments with productivity‐enhancing externalities across different jurisdictions, are shown to be superior to incomplete integration schemes, where member governments choose public investments unilaterally. As a result, equilibrium income is greater for citizens of both member states under a complete integration scheme. Moreover, complete integration schemes are shown to be more resilient to idiosyncratic shocks and more effective in limiting contagion of debt distress. This is mainly because the central authority can credibly borrow more without risking default than member states taken together can and it can “transfer resilience” across them if needed. These findings inform discussions on structural aspects of secular stagnation in Europe by emphasizing a potential challenge in the institutional design of fiscal responsibilities.     

Viewpoint: The human capital approach to inference

The purpose of this essay is to discuss two approaches to inference and how “human capital” can provide a way to combine them. The first approach, ubiquitous in economics, is based upon the Rubin–Holland potential outcomes model and relies upon randomized treatment to measure the causal effect of choice. The second approach, widely used in the pattern recognition and machine learning literatures, assumes that choice conditional upon current information is optimal (or at least high quality), and then provides techniques to generalize observed choice to new cases. The “human capital” approach combines these methods by using observed decisions by experts to reduce the dimensionality of the feature space and allow the categorization of decisions by their propensity score. The fact that the human capital of experts is heterogeneous implies that errors in decision making are inevitable. Moreover, under the appropriate conditions, these decisions are random conditional upon the propensity score. This in turn allows us to identify the conditional average treatment effect for a wider class of situations than would be possible with randomized control trials. This point is illustrated with data from medical decision making in the context of treating depression, heart disease and adverse childbirth events.     

State of confidence,overborrowing and macroeconomic stabilization in out-of-equilibrium dynamics

We model macroeconomic instability as the outcome of the dynamic interaction between debt accumulation and the “state of confidence” in a small open economy with a super-fixed exchange-rate arrangement. We use a system dynamic approach and show that instability is a likely feature when macroeconomic behaviour is characterized by out-of-equilibrium dynamics with balance-sheet effects and deviation amplifying expectation formation rules that interact endogenously. We address the issue of the macroeconomic stabilization puzzle and carry out a quantitative evaluation based on sensitivity analysis with reference to Argentina, during the currency-board arrangement. We find that a tight fiscal policy is likely to be destabilizing inasmuch as it adds to the fall in expenditure, output and the “state of confidence”. On the other side, a traditional monetary policy can fail in switching off macroeconomic instability if the reduction in interest rates does not compensate for the fall in the “state of confidence”, whilst a direct stimulus to aggregate expenditure is required to avoid an economic collapse.     

The National State and Identity Politics: State Institutionalisation and “Markers” of National Identity

Nationality has been a key identity in international relations for much of the modern period, and the marriage of “nation” and “state” produced a powerful polity – the national state – that dominated global politics. This article investigates the forces that “pushed” and “pulled” nations and states together and explores the factors associated with violent identity politics. It argues that while recent decades have witnessed increasing instances of divorce between “nation” and “state” and a simultaneous proliferation of identity conflicts, the likelihood that identity conflicts will be expressed violently depends both on the character of the state (the timing of state institutionalisation relative to the construction of national consciousness, the democratic or non-democratic nature of the state, and the national or non-national basis for the legitimation of state authority) and on the principal “marker” used to construct national identity (blood, language, culture, religion, or citizenship).     

Whose opinion counts? Implementation by sortition

Sortition is the process of selecting decision makers or senators by a lottery. We introduce sortition in implementation theory by augmenting a mechanism with a kleroterion or lottery machine p that selects the senators. An outcome is implemented after consulting only the opinions of the senators. We call the corresponding notion of implementation as “p-implementation”, and provide necessary and sufficient conditions for p-implementation. Our main result is that in “economic” environments, every Nash implementable social choice rule (SCR) is also p-implementable if p selects every quartet of players with positive probability and always selects at least three senators. We apply this result to two kleroteria: “oligarchic democracy” and “random sampling”. In economic environments, every Nash implementable SCR can be implemented by oligarchic democracy of three oligarchs. In economic environments, every Nash implementable SCR can be implemented by randomly selecting four senators.     

新冠肺炎疫情冲击下企业生存韧性研究——来自中国上市公司的证据

新冠肺炎疫情冲击下如何识别、测度和提升微观企业生存韧性,是及时应对突发事件和推动经济高质量发展面临的热点问题。本文基于2018-2021年中国沪深A股上市公司数据,将疫情冲击下企业生存指标降幅与恢复增长所需时长作为企业生存韧性的观测指标,首次运用断点回归与双重差分模型相结合的方法对疫情冲击下企业生存韧性进行了定量研究。研究发现,受突发疫情影响,反映上市公司生存韧性的指标呈现出“V”型波动,疫情影响在2~3个季度之后基本得到恢复,表明企业生存具有强大韧性;从地区看,疫情冲击对湖北影响最大,部分疫情轻度地区疫情防控存在“层层加码”现象;从行业看,疫情对交通运输、仓储和邮政业、住宿和餐饮业产生的冲击最大;从产权主体看,疫情影响程度由大到小依次为外资企业、国有企业和民营企业;从规模看,疫情冲击对大型企业成长能力指标负向影响大于中型企业,而对中型企业盈利能力指标负向影响大于大型企业,疫情冲击对小型企业净利润同比增长率产生了显著促进作用,表明小型上市公司具有更大的灵活性和较强的生存韧性。本文认为,应根据企业生存韧性和企业特征选取差异化帮扶政策,科学统筹推进常态化疫情防控和经济社会发展。     

Integer programming on domains containing inseparable ordered pairs

Using the integer programming approach introduced by Sethuraman et al. (2003), we extend the analysis of the preference domains containing an inseparable ordered pair, initiated by Kalai and Ritz (1978). We show that these domains admit not only Arrovian social welfare functions “without ties,” but also Arrovian social welfare functions “with ties,” since they satisfy the strictly decomposability condition introduced by Busetto et al. (2015). Moreover, we go further in the comparison between Kalai and Ritz (1978)’s inseparability and Arrow (1963)’s single-peak restrictions, showing that the former condition is more “respectable,” in the sense of Muller and Satterthwaite (1985).     

Nonparametric learning rules from bandit experiments: The eyes have it!

How do people learn? We assess, in a model-free manner, subjectsʼ belief dynamics in a two-armed bandit learning experiment. A novel feature of our approach is to supplement the choice and reward data with subjectsʼ eye movements during the experiment to pin down estimates of subjectsʼ beliefs. Estimates show that subjects are more reluctant to “update down” following unsuccessful choices, than “update up” following successful choices. The profits from following the estimated learning and decision rules are smaller (by about 25% of average earnings by subjects in this experiment) than what would be obtained from a fully-rational Bayesian learning model, but comparable to the profits from alternative non-Bayesian learning models, including reinforcement learning and a simple “win-stay” choice heuristic.     

Social Economics and Evolutionary Institutionalism Today

This paper discusses theoretical and methodological elements that constitute social economics. It also considers those elements for evolutionary (Veblenian) institutional economics. It investigates how these “heterodoxies” may further converge. Such convergence would probably not trigger a complete unification, but lead to a broadly defined common research program and a strategy for joint “heterodox” survival, in face of the ranking game of the neoclassical “mainstream” and of the dominant powers supporting it as the discipline providing ideological legitimization. A common denominator of “heterodoxies” in terms of real-world orientation, direct interdependency and interaction of agents (social decision situations), appropriate complexity, and the treatment of values is drafted. Theoretical concepts discussed include complex and open systems, individual agency, institutions, embeddedness, networks, social reform, and process orientation. Formal methodological developments considered are complex modeling, game theory, or computer simulations. We arrive at a more formal common basis, which we term socio-economics. We also consider the relations of evolution and institutions, the institutional dichotomy, and the theory of institutional change. The monism of the “market” of the “mainstream” turns out to dissolve into the institutional diversity of real-world network forms, which helps explaining real-world forms of markets, hierarchies, or spatial clusters. Focuses of “heterodox” convergence will have to be the related “microfoundations” and “macrofoundations” projects, integrating an interdisciplinary “naturalistic” approach to genetic-cultural co-evolution of cooperation, and social reform. While modern socio-economics makes “heterodoxies” leading in economic research, their future still appears open between ideological cleansing and extinction through the mainstream, and proactive paradigmatic pluralism.     

Inflation,a disease of society

This paper focuses on financing the welfare state expenditures in the UK. It offers a comprehensive analysis of social expenditures and taxes paid by the working population families, and an estimation of the net benefits received by them. While the subsequent analysis of the welfare state and its development primarily concentrates on the British experience, it has a broader application to other OECD countries. The UK as the most egalitarian “liberal market economy,” offers an interesting case for the study of the interaction between the welfare state expansion and economic growth. In terms of her capitalist economic structure, (interaction between market and economy) she is relatively closer to the USA and other Angelo-Saxon (liberal market) economies. In terms of her level of social expenditures, she is much closer to the European “social market economies” than the USA and other more egalitarian “liberal market economies.”     

A Rawlsian Defense of the Individual Mandate: The “Collective Asset” Approach

The Patient Protection and Affordable Care Act requires individuals to get coverage or pay a fine (or “shared responsibility payment”) starting in 2014. This mandate had been at the center of a contentious political and legal debate. Although the Mandate is key to ending discriminations based on pre-existing conditions in the individual insurance market, its constitutionality had been challenged. We argue that the Obama administration's legal argument for the constitutionality of the Mandate by invoking conventional economic categories such as “negative externalities” is inadequate in addressing the economic and moral significance of the Mandate. As an alternative, we suggest a Rawlsian approach. Specifically, we will borrow the Rawlsian notion of “collective asset” to articulate the moral appeal of the Mandate and its social insurance logic.     

The Interaction of Legal and Social Norm Enforcement

Although legal sanctions are often nondeterrent, we frequently observe compliance with “mild laws.” A possible explanation is that the incentives to comply are shaped not only by legal, but also by social sanctions. This paper employs a novel experimental approach to study the link between legal and social norm enforcement. We analyze whether the two institutions are complements or substitutes. Our results show that legal sanctions partially crowd out social norm enforcement. Mild laws nevertheless give scope for a potentially large, positive welfare effect, as a higher level of compliance is achieved at lower social enforcement costs.     

Alliances versus Federations: An Extension of Riker's Analysis of Federal Formation

This essay explores the distinction between federations and alliances and asks the question: When will states choose to federate rather than ally? William Riker argues that a necessary condition for a federal state's formation is that those offering the federal bargain must seek to “expand their territorial control, usually either to meet an external military or diplomatic threat or to prepare for military or diplomatic aggression and aggrandizement.” This argument, though, does not tell us why states sometimes respond to threats by forming federations and at other times by forming alliances. Here we address this issue directly and use a formal model of alliance formation to illustrate our arguments. Briefly, that model assumes states have initial endowments of military and economic resources, where economic resources enter utility functions directly and military capability influences preference only insofar as it determines a state's ability to counter or make threats. State can divert economic resources to military spending, and alliances, in turn, are self-enforcing coalitions designed to augment a state's offensive or defensive capabilities. Federations, which serve the same ends as alliances, are coalitions that need to be enforced by the “higher authority” established when the federation is formed. Our assumption is that states form federations in lieu of alliances if and only if (1) a stable alliance partition does not exist or, if one exists, it is dominated by an unstable partition and (2) if the cost of the loss of sovereignty to each state in the federation is offset by the gains from joining it, relative to what that state secures as its security value.     

An experimental investigation of Hobbesian jungles

Hobbes's state of nature serves as the analytical starting point for much of what economists have written on anarchy and the formation of government. Unfortunately little historical evidence exists about how men behaved in a “state of nature”, if such a situation ever even existed. We conducted a laboratory experiment to create a Hobbesian state of nature and observe the level of economic efficiency subjects achieve. We also investigate Buchanan's conjecture that people would unanimously agree to a social contract against theft.     

Comparing Care Regimes in Europe

Throughout Europe, the family is still an important provider of care, but welfare state policies of individual countries may support and/or supplement the family in different ways, generating different social and economic outcomes. This article compares and categorizes care strategies for children and elderly persons in different member states of the European Union, while also taking into account the varied modalities for providing care, like leave arrangements, financial provisions, and social services. In EU countries, care regimes function as “social joins” ensuring complementarity between economic and demographic institutions and processes. As these processes and institutions change, they provide impetus for care regimes to change as well. However, because ideas and ideals about care are at the core of individual national identities, care regimes also act as independent incentive structures that impinge on patterns of women's labor market participation and fertility.     

Online Discussion and Learning Outcomes

This paper describes how we used Facebook as a discussion tool in the instruction of a principles level economics course and reports empirical estimates of the affect of that use on learning outcomes. Social media as a tool for promoting classroom discussion has advantages and disadvantages. For example, its omnipresence and flat learning curve can promote academic discourse. However social media can promote nonacademic “chatting”, and its omnipresence means the user needs more than a passing knowledge of the privacy settings to have control of their “digital identity”. For a Principles of Microeconomics taught in 2011 we collected data, with permission from our institution’s Institutional Review Board, on student use of Facebook, academic and demographic characteristics, learning style preferences and learning outcomes. Our research hypothesis is that an empirical analysis will find a positive correlation between student in-class use of Facebook and learning outcomes. Among our findings are that students should receive more coaching on the use of privacy settings, and qualified evidence that there is a positive net effect on learning outcomes of using Facebook as a discussion tool.     

Cornelius Castoriadis on the Scope and Content of Neoclassical and Marxian Economics

The paper presents the thought of the political philosopher Cornelius Castoriadis on economic methodology and the neoclassical and Marxian traditions. Castoriadis suggested that the scope of economic theory includes the identification of “local” regularities and not the search for invariant “laws.” He criticized the use of equilibrium and the utilitarian framework in the neoclassical tradition and proposed to approach human agency based on the Aristotelian concept of the “social individual.” In addition, he criticized the deterministic nature of the Marxian “laws.” According to Castoriadis, the use of concepts such as the “production function” and “capital” presents a number of caveats.