Economic competition and evolution: Are there lessons from ecology?

After generally discussing models in ecology and economics that combine competition, optimization, and evolution, this article concentrates on models of intraspecific competition. It demonstrates the importance of diversity/inequalities within populations of species and other environments for the sustainability of their populations, given the occurrence of environmental change. This is demonstrated both for scramble (open-access) and contest competition. Implications are drawn for human populations and industrial organization. The possibility is raised that within-industry competition may not always exist between firms in all stages of the development of a new industry. Policy implications are considered. For example, it is argued that policies designed to encourage intense business competition and maximum economic efficiency have the drawback of eventually making industries highly vulnerable to exogenous economic changes.

Some economic dimensions of the mental health jigsaw in Australia

The purpose of this paper is to demonstrate that, although there are some unique features associated with mental illness, such special features do not preclude economic analysis. As a mechanism for understanding how individual economic studies fit into the mental health sector, a conceptual framework of the components of mental health service provision is outlined. Emphasis is placed on, not simply institutional and market resources, but also on the services provided by relatives, self-help groups, etc. Australian data on parts of the mental health sector are employed to illustrate that some (and different) economic analyses can be undertaken in mental health. First, time-series data on public psychiatric hospitals are employed to demonstrate trends associated with deinstitutionalisation. Other data (for Queensland alone) indicate that there are state-based differences in the provision of such services. Second, attention is then directed to the analysis of time-series data on private fee-for-service psychiatric services. Various concepts and measures from industrial economics are applied to analyse the relative size of this service industry, the pricing behaviour of the profession, the service-mix of "the psychiatry firms" operating in Australia.

Evaluating corporate performance:a critique of economic value added

There has been a revival of interest in economic techniques to measure the value of a firm through the use of economic value added as a technique for measuring such value to shareholders. This technique, based upon the concept of economic value equating to total value, is founded upon the assumptions of classical liberal economic theory. Such techniques have been subject to criticism both from the point of view of the level of adjustment to published accounts needed to make the technique work and from the point of view of the validity of such techniques in actually measuring value in a meaningful context. This paper critiques economic value added techniques as a means of calculating changes in shareholder value, contrasting such techniques with more traditional techniques of measuring value added. It uses the company Severn Trent plc as an actual example in order to evaluate and contrast the techniques in action. The paper demonstrates discrepancies between the calculated results from using economic value added analysis and those reported using conventional accounting measures. It considers the merits of the respective techniques in explaining shareholder and managerial behaviour and the problems with using such techniques in considering the wider stakeholder concept of value. It concludes that this economic value added technique has merits when compared with traditional accounting measures of performance but that it does not provide the universal panacea claimed by its proponents.

Heterodox gazdaságpolitikák korszaka? (An Age of Heterodox Economic Policies?)

A világ fejlett pénzügyi piacainak válságát követően önvizsgálatra kényszerült a közgazdaságtudomány, amelyet nemcsak az alternatív és heterodox irányzatok képviselői, a média és a nagyközönség, hanem a gazdasági döntéshozók részéről is erős kritikák értek. Egyidejűleg gyors változásokon ment át a gazdaságpolitikai gyakorlat, különösen a válság által erősen érintett országokban, megszaporodtak a korábbi mérvadó kormányzati gyakorlat (best practice) ajánlásaitól távol álló, nem szokványos megoldások, heterodox politikák. Az esszé szerzője meghatározó személyiségek véleményének, vezető intézmények álláspontjának és kormányzati gazdaságpolitikáknak az áttekintése alapján egyfelől azt a kérdést vizsgálja, hogy körvonalazódik-e új gazdaságelméleti irányzat, amely doktrinális alapul szolgálhatna a gazdaságpolitikai döntéshozatalhoz, másodsorban pedig: átmeneti jelenség-e az egymástól alapvetően különböző felfogású, logikájú gazdaságpolitikák egyidejű megléte, avagy várható-e egy új konszenzus kialakulása. ______ In the wake of the recent financial turmoil emanating from top financial centers, the economic profession has been forced to conduct introspection due to harsh criticism from alternative and heterodox economists, the media, and the general public as well as from decision makers. Meanwhile, the economic policy making practice has profoundly changed, particularly in countries heavily affected in the crisis; decision makers increasingly apply non customary (heterodox) measures in defiance of former best practice of economic policy making. The author of this essay, having investigated the related views of leading economists and influential international institutions and having reviewed economic policy making practice, raises two questions. One: is there a new economic theory evolving that will provide doctrinal underpinning to post crisis economic policy making? Second: is the simultaneity of widely differing economic policy practices and policy orientations a transitional phenomenon, or are there signs of a new policy consensus emerging? It may be too early to give argued answers to the questions, but the present – rather technical – economic theory mainstream seems to maintain its central position, yet is becomes more open to research topics and methods acknowledging the complexity of economic processes and social institutions, and to impulses emanating from economic practice. As for economic policy making is concerned, continuous decline of the economic importance of leading Western nations prolongs the period of heterogeneity of non conventional, heterodox policies both in advanced and in emerging countries until new policy norms, a “new normal” emerges.

Essays on the political economy of trade policy and economic *development

This dissertation studies the political economy of trade policy in a developing country, namely Turkey, under different economic and political regimes. The research analyzes the effects of these different regimes on the import structure, the trade policy and the industrialization process in Turkey and derives implications for aggregate welfare. ^ In the second chapter, the effects of trade liberalization policies on import demand are examined. Using disaggregated industry-level data, import demand elasticities for various sectors have been computed, analyzed under different economic regimes, and compared with those of developed countries. The results are statistically significant and reliable, and conform to the predictions of economic theory. Estimation of these elasticities is also a necessary ingredient for the third chapter of the dissertation. ^ The third chapter examines the predictions of the state-of-the-art “Protection For Sale” model of Grossman and Helpman (1994). Employing advanced econometric methods and a unique data set, strong support is found for the fundamental predictions of the model in the context of Turkey. Specifically, the government is found to attach a much higher weight to social welfare than to political contributions. This weight is higher under the democratic regime than under the dictatorship, a result potentially of interest to all researchers in the area of political economy. ^ The fourth chapter looks at the effects of industry concentration and import price shocks on protection, promotion and the choice of policy instruments in Turkey. In this context, it examines and finds support for the predictions of some well-known models in the literature. ^

Knowledge Protection in Firms : Theory and Evidence from HP Labs

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Economic Fluctuations and Crime : Temporary and Persistent Effects

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False Economy : Financialization, Crises and Socio-Economic Polarisation

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Economic Fluctuations and Crime : Temporary and Persistent Effects

Peer reviewed

False Economy : Financialization, Crises and Socio-Economic Polarisation

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Building an alternative economic network? Consumer cooperation in Scotland from the 1870s to the 1960s

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A Study of How Economic Attitudes Are Shaped by Environmental Shocks and Life Experiences

Social attitudes, attitudes toward financial risk and attitudes toward deferred gratification are thought to influence many important economic decisions over the life-course. In economic theory, these attitudes are key components in diverse models of behavior, including collective action, saving and investment decisions and occupational choice. The relevance of these attitudes have been confirmed empirically. Yet, the factors that influence them are not well understood. This research evaluates how these attitudes are affected by large disruptive events, namely, a natural disaster and a civil conflict, and also by an individual-specific life event, namely, having children.

By implementing rigorous empirical strategies drawing on rich longitudinal datasets, this research project advances our understanding of how life experiences shape these attitudes. Moreover, compelling evidence is provided that the observed changes in attitudes are likely to reflect changes in preferences given that they are not driven just by changes in financial circumstances. Therefore the findings of this research project also contribute to the discussion of whether preferences are really fixed, a usual assumption in economics.

In the first chapter, I study how altruistic and trusting attitudes are affected by exposure to the 2004 Indian Ocean tsunami as long as ten years after the disaster occurred. Establishing a causal relationship between natural disasters and attitudes presents several challenges as endogenous exposure and sample selection can confound the analysis. I take on these challenges by exploiting plausibly exogenous variation in exposure to the tsunami and by relying on a longitudinal dataset representative of the pre-tsunami population in two districts of Aceh, Indonesia. The sample is drawn from the Study of the Tsunami Aftermath and Recovery (STAR), a survey with data collected both before and after the disaster and especially designed to identify the impact of the tsunami. The altruistic and trusting attitudes of the respondents are measured by their behavior in the dictator and trust games. I find that witnessing closely the damage caused by the tsunami but without suffering severe economic damage oneself increases altruistic and trusting behavior, particularly towards individuals from tsunami affected communities. Having suffered severe economic damage has no impact on altruistic behavior but may have increased trusting behavior. These effects do not seem to be caused by the consequences of the tsunami on people’s financial situation. Instead they are consistent with how experiences of loss and solidarity may have shaped social attitudes by affecting empathy and perceptions of who is deserving of aid and trust.

In the second chapter, co-authored with Ryan Brown, Duncan Thomas and Andrea Velasquez, we investigate how attitudes toward financial risk are affected by elevated levels of insecurity and uncertainty brought on by the Mexican Drug War. To conduct our analysis, we pair the Mexican Family Life Survey (MxFLS), a rich longitudinal dataset ideally suited for our purposes, with a dataset on homicide rates at the month and municipality-level. The homicide rates capture well the overall crime environment created by the drug war. The MxFLS elicits risk attitudes by asking respondents to choose between hypothetical gambles with different payoffs. Our strategy to identify a causal effect has two key components. First, we implement an individual fixed effects strategy which allows us to control for all time-invariant heterogeneity. The remaining time variant heterogeneity is unlikely to be correlated with changes in the local crime environment given the well-documented political origins of the Mexican Drug War. We also show supporting evidence in this regard. The second component of our identification strategy is to use an intent-to-treat approach to shield our estimates from endogenous migration. Our findings indicate that exposure to greater local-area violent crime results in increased risk aversion. This effect is not driven by changes in financial circumstances, but may be explained instead by heightened fear of victimization. Nonetheless, we find that having greater economic resources mitigate the impact. This may be due to individuals with greater economic resources being able to avoid crime by affording better transportation or security at work.

The third chapter, co-authored with Duncan Thomas, evaluates whether attitudes toward deferred gratification change after having children. For this study we also exploit the MxFLS, which elicits attitudes toward deferred gratification (commonly known as time discounting) by asking individuals to choose between hypothetical payments at different points in time. We implement a difference-in-difference estimator to control for all time-invariant heterogeneity and show that our results are robust to the inclusion of time varying characteristics likely correlated with child birth. We find that becoming a mother increases time discounting especially in the first two years after childbirth and in particular for those women without a spouse at home. Having additional children does not have an effect and the effect for men seems to go in the opposite direction. These heterogeneous effects suggest that child rearing may affect time discounting due to generated stress or not fully anticipated spending needs.