Four Methodenstreits between behavioral and mainstream economics
The concept of Methodenstreits is used to analyse the relationship between behavioral and mainstream economics. A Methodenstreit is understood by the authors as a dispute between the more abstract and the less abstract canons of the economic science. It undergoes several necessary stages: discovery of a new research instrument, an exaggerated debate between the canons, and mutual enrichement after the debate. The article reviews the following Methodenstreits: empirical investigations of Hall, Hitch, and Lester vs neoclassical theory of the firm (the ‘full cost controversy’ and the ‘marginalist controversy’); Katona’s consumer research vs Keynesian macroeconomics; Simon’s bounded rationality approach vs neoclassical maximization; and experiments of Allais and others vs expected utility theory.
Neoclassical economics is built around static concepts of efficiency and welfare that can only be applied with great care to a dynamic and inherently imperfect world . And economists, including most neoclassical economists, have long understood that the fact that perfect competition yields an allocatively optimal outcome in the purely hypothetical world of perfect competition, does not mean that competition is always a spur to efficiency in the real world. But the neoliberal revolution that has engulfed the world over the past thirty years has consisted mainly of creating a climate in which the benefits of competition were confidently asserted under an ever widening range of circumstances. Indeed, in this new world, market solutions have become the default option, so that the onus of proof lies squarely with those arguing for market interference in the public interest. But in a complex, dy-namic and highly contentious world this is an almost unsupportable burden, since it is impossible to make a genuinely compelling case for intervention in such a world. Of course, it would be equally impossible to make a compelling case for market forces, but this fact is effectively obscured by such an asymmetrical – and deeply ideological – perspective. As a result demands for the further empowerment of market actors are frequently asserted in the absence of good evidence to support the claims made on their behalf, with potentially serious consequences for the economy and for society. And the labour market is one area in which demands for the empowerment of market forces have been strong even though the supporting evidence has been weak and ambiguous. Moreover, if these demands for reform were not evidence driven, then it would be reasonable to assume that they were primarily driven by interests and ideology in which case one would not expect them to be deterred by contrary evidence. And that appears to be the case today as rising costs to labour and society in many countries are ignored, while those who benefit most from these policies seek to divide the losers by pitting the poor against the very poor, women against men, im-migrants against nationals, young against old. And for the moment they appear to have been rather successful, but we are a long way from the end of history. Meanwhile the human, social and economic costs of neoliberal labour market reform have been large and are likely to grow, while the promised benefits have been fitful and extremely unevenly allocated. But the task of building an effective opposition to these policies, in the spirit of Polanyi’s «double movement» , has been hampered by a range of forces that have reduced the scope for social solidarity and state action at the level of the nation state but without creating any international power centre that could seriously address the task of protect labour or society against an excessive empowerment of market forces and market actors. But the costs are real and they are growing. And they are far larger and more threatening than has been fully understood by many of those currently celebrating their short term gains. Indeed, in time, these processes will generate contradictions that must eventually be resolved, though sometimes in ways that will threaten the very fabric of society.
The article examines the international experience of using behavioral tools for increasing the effectiveness of public administration and assesses the prospects of their implementation in the Russian rulemaking practice. The first part provides a brief overview of the development of the theoretical framework of “nudge” and examines differences between the behavioral economy and the classical and neoclassical economic theory. Then, the authors describe practical cases of the application of behavioral «nudging» in various areas of regulation. The third part of the article concerns the experience of institutionalization of «nudging» at the state level in selected OECD countries and emerging countries, including a description of the specifics of the development and performance of specialized bodies (units) in leading states. The conclusion summarizes the prospects for, firstly, enriching the public administration theory with behavioral approaches, and, secondly, for institutionalization of behavioral insight unit within the Russian government.
The Handbook of Behavioral Industrial Organization integrates behavioral economics into industrial organization. Chapters cover concepts such as relative thinking, salience, shrouded attributes, cognitive dissonance, motivated reasoning, confirmation bias, overconfidence, status quo bias, social cooperation and identity. Additional chapters consider industry issues, such as sports and gambling industries, neuroeconomic studies of brands and advertising, and behavioral antitrust law. The Handbook features a wide array of methods (literature surveys, experimental and econometric research, and theoretical modelling), facilitating accessibility to a wide audience.
The author teaches to awaken creativity in oneself, using emotions as a factor of motivation, explains the concept of critical thinking, gives the reader tools to add / edit publications to increase the clarity and rationality of their own judgments, and also shows where a particular theory is applicable
Introduction to new Russian book on the theory of reproduction
The paper analyzes the classical and neoclassical assumptions concerning the effect of the natural and the institutional environments on the comparative welfare of various countries. The distinction is considered between the preindustrial and industrial societies as to their natural and institutional conditions.
In his article Alexander Pavlov investigates a phenomenon of the porno-industry called ‘porno chic’, emphasizing American cinema of the 1970s. His hypothesis is that porno chic is an attempt to present pornography as high art, and analyzes crucial fi lms of this movement, pointing out changes that occurred to the notion in time, and, by pointing out its weaknesses he shows why this genre didn’t take a signifi cant place among other phenomena of high and mass culture.
The paper examines the structure, governance, and balance sheets of state-controlled banks in Russia, which accounted for over 55 percent of the total assets in the country's banking system in early 2012. The author offers a credible estimate of the size of the country's state banking sector by including banks that are indirectly owned by public organizations. Contrary to some predictions based on the theoretical literature on economic transition, he explains the relatively high profitability and efficiency of Russian state-controlled banks by pointing to their competitive position in such functions as acquisition and disposal of assets on behalf of the government. Also suggested in the paper is a different way of looking at market concentration in Russia (by consolidating the market shares of core state-controlled banks), which produces a picture of a more concentrated market than officially reported. Lastly, one of the author's interesting conclusions is that China provides a better benchmark than the formerly centrally planned economies of Central and Eastern Europe by which to assess the viability of state ownership of banks in Russia and to evaluate the country's banking sector.
The paper examines the principles for the supervision of financial conglomerates proposed by BCBS in the consultative document published in December 2011. Moreover, the article proposes a number of suggestions worked out by the authors within the HSE research team.