ECONOMICS AS A SCIENCE OF HUMAN BEHAVIOUR

Transcription

1 ECONOMICS AS A SCIENCE OF HUMAN BEHAVIOUR

2 Economics as a Science of Human Behaviour Towards a New Social Science Paradigm, Extended Second Edition by Bruno S. Fray University of Zurich SPRINGER-SCIENCE+BUSINESS MEDIA, B.V.

3 Library of Congress Cataloging-in-Publication Data ISBN ISBN (ebook) DOI / Printed an acid-free paper AII Rights Reserved 1999 Springer Science+Business Media Dordrecht Originaily published by Kluwer Academic Publishers Boston in 1999 Softcover reprint of the hardcover 2nd edition 1999 No part of the material protected by this copyright notice may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without written permission from the copyright owner.

4 Contents Preface Acknowledgments vii xi Part A: Human Behaviour Economics as a Social Science: Approach, Applications and Interdisciplinarity 3 Part B: Applications to Various Areas 21 2 Natural Environment: Fair Siting Procedures 23 3 Politics: Unemployment and National Socialism 49 4 Arts: Investments in Paintings 71

5 5 Family: Patriarchy in China 85 6 Conflict: Fighting Political Terrorism by Refusing Recognition 99 7 History: Prisoners of War Academia: American and European Economics and Economists 133 Part C: Extensions Limits and Further Developments of Homo Oeconomicus The Price System and Morals The Sound of Silence in Prisoner's Dilemma and Dictator Games An Ipsative Theory of Human Behaviour 195 References 213 Author Index 241 Subject Index 247

6 Preface This book champions the view that economics is a social science, and that, moreover, it may serve as a new paradigm for the social sciences. Economics is taken to be part of those sciences which deal with actual problems of society by providing insights, improving our understanding and suggesting solutions. I am aware that the way problems are addressed here has little in common with economics as it is generally understood today; most economists make strong efforts to imitate the exact sciences. Economics tends to become a branch of applied mathematics; the majority of all publications in professional journals and books are full of axioms, lemmas and proofs, and they are much concerned with purely formal deductions. Often, when the results are translated into verbal language, or when they are applied empirically, disappointingly little of interest remains. The book wants to show that another type of economics exists which is surprisingly little known. This type of economics has its own particular point of view. It centres on a concept of man, or a model of human behaviour, which differs from those normally used in other social sciences such as sociology, political science, law, or psychology. I do not, however, claim that economics is the only legitimate social science. On the contrary, economics can provide useful insights only in collaboration with the other social Vll

7 Vlll PREFACE sciences-an aspect which has been disregarded by mathematically oriented economics. What insights can this economic way of thinking provide? This question will be answered in the book by offering selected applications. The value of a specific approach cannot be assessed by theoretical argument only; its usefulness is revealed in conjunction with the analysis of specific problems. Part A discusses the economic approach, human behaviour and institutions being the focal point. Part B applies the economic approach the seven different areas which are outside the scope of topics dealt with in conventional economics: natural environment politics art family conflict history academia The characteristics of the approach used here becomes particularly clear when it is applied to such areas which are not normally looked at from the economic point of view. Part C deals with the limits of this approach and discusses possible further developments. In particular, ethical and psychological aspects are illuminated. This book is suitable for both beginners and advanced students of economics who are looking for an introduction into behaviourally oriented economics, also known under such terms as "Non-Market Economics," "New Political Economy," or "New Institutionalism." The book is also written for sociologists, political scientists, lawyers and psychologists who want to know more about what is sometimes called "Economic Imperialism." Finally, the book may serve the general reader who wants to know what insights modern applied economics may bring him or her. I have tried to keep the text as easy to understand as possible, and where forced to use professional terms, I have explained them. In chapter 4, which deals with the influence of economic conditions on election outcomes, an econometric (statistical) approach is used. I have attempted to show that the "economic view of the world" is not speculative and remote from reality, but is amenable to empirical analysis. The

8 PREFACE IX basic data and estimation results are shown in an appendix to the chapter, and are carefully explained in verbal terms. The individual chapters are based on articles which have been published in various languages in European and American academic journals. They have been completely rewritten, supplemented and brought up to the level of present day discussion. The first and ninth chapters were especially written for this volume. The initial articles were the result of many years of joint work with former assistants and now colleagues. I am grateful to Professor Iris Bohnet, Professor Hannelore Weck-Hannemann, Professor Felix Oberholzer-Gee, the late Professor Werner W. Pommerehne, Professor Barbara Krug, lic oec. Heinz Buhofer and Professor Reiner Eichenberger for permission to draw on jointlywritten articles. This second edition deletes three articles from the first edition which appeared in 1992, and adds revised versions of three articles which appeared thereafter. I am grateful to Margaret Ho-Schiitz and Matthias Benz for the support in preparing the second edition.

9 Acknowledgments Several chapters draw on material contained in, or are the thoroughly revised and updated versions of, articles published in various scientific journals, and are partly coauthored. I am grateful for permission to use this material. Chapter 2 uses material contained in an article written jointly with Felix Oberholzer-Gee entitled "Fair Siting Procedures: An Empirical Analysis of Their Importance and Characteristics" and published in the Journal of Policy Analysis and Management 3 (1996): , Copyright 1996, John Wiley & Sons Inc., reprinted with permission. Chapter 3 is based on "A Statistical Study of the Effect of the Great Depression on Elections: The Weimar Republic " which was jointly written with Hannelore Weck-Hannemann and published in Political Behaviour 5 (1983): Chapter 4 partly draws on material jointly written with Werner W. Pommerehne: "Art Investment: An Empirical Enquiry" was published in the Southern Economic Journal 56 (1989): Chapter 6 includes parts of the article "Fighting Political Terrorism by Refusing Recognition" which appeared in the Journal of Public Policy 7 (1988): Chapter 7 draws on an article written jointly with Heinz Buhofer entitled "Prisoners and Property Rights" and which was published in the Journal of Law and Economics 31 (1988): Xl

10 xii ACKNOWLEDGMENTS Chapter 8 is based on an article written jointly with Reiner Eichenberger entitled "American and European Economics and Economists" which appeared in the Journal of Economic Perspectives 7 (1993): Chapter 11 uses material contained in an article written jointly with Iris Bohnet entitled "The Sound of Silence in Prisoner's Dilemma and Dictator Games", forthcoming in the Journal of Economic Behaviour and Organization. Chapter 12 includes parts of an article jointly written with Beat Heggli: "An Ipsative Theory of Business Behaviour" was published in the Journal of Economic Psychology 10 (1989): 1-20.

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