Positive Economic Theory Research Articles

Golfe como Inovação no Ensino de Finanças: Relato de uma Experiência Pioneira

ABSTRACT Objective to analyze the possibility of using golf as a metaphor for teaching finance. Study reports on a pilot experience of teaching finance using golf as a metaphor.Golf can be a means of promoting the engagement of finance students. Theoretical framework: a normative and positive economic decision theory is used as a framework. Sports can be a means of engaging students in finance education programs. Golf, in particular, can fulfill this role and serve as a powerful tool for building and maintaining social networks relevant to high-level professionals. Methods: thirty undergraduate students voluntarily participated in a pilot teaching program over five days. The program included sessions (in the field) on the fundamentals of golf and financial decisions, and students looked for synergies between these two domains. Participants showed a high level of interest in both the sports practice sessions and the finance activities. Results: the results suggest that psychological errors common to golf and financial behavior-for example, overoptimism, overconfidence, and emotional judgments-can be diagnosed and addressed through sports practice. In addition, the participants’ self-assessment indicates the possibility that the program can induce behaviors in line with the corporate environment. Conclusions: Despite golf’s contribution to the teaching of business subjects, it is still absent from formal curricula.

On the normativity of mainstream economics (what a positive economic theory may look like)

It is shown in the article that there is no fundamental difference between normative and positive theories either in terms of development methods or internal architecture. It is substantiated that the modern neoclassical theory as a whole is not positive. Another way of developing a positive microtheory based on the approach of Maurice Allais is proposed: the concept of searching for surplus within the framework of the cost approach.

The Use of New Data Sources in Archival Accounting Research: Implications for Research in Accounting Information Systems and Emerging Technologies

ABSTRACTWe explore the connections from phenomena to new data and from data to theories. While starting with philosophical perspectives from positive economic theory to positive accounting theory, we emphasize the relevance and importance of new data sources to archival research in accounting and the implications to research in accounting information systems and emerging technologies. We present a number of studies in accounting that exemplify the critical role of data in the discovery of theories from phenomena. We argue that data in conventional empirical studies limit methodology to require assumptions and complex econometric treatments for general business settings. Therefore, recent developments in “Big Data” and data analytics, particularly the improved data availability from a variety of new sources, have made strong research designs possible. We provide evidence that 88 percent of the JIS and 100 percent of the JETA empirical archival publications in the recent two years used new data sources.

Special interest groups and price-structure: An application to noise charging at Zurich Airport

In this paper we discuss the topic of noise related airport charges from the perspective of positive economic theory. We argue, that noise related airport charges reflect a political equilibrium, where decision makers will take into account both: The interests of airlines and the interests of the inhabitants at the vicinity of airports. The structure of noise charges at airports may thus include elements of symbolism and in many cases will fail to provide incentives for the use of less noisy aircraft. For this, we estimate a nested logit model for aircraft use for the case of Zurich Airport. Our findings show, that the probability for using a certain aircraft type does not change with the noise surcharge. This suggests that reasons for the existence of such charging schemes may only be found in the field of the political economy.

Economic Theory of Criminal Law

Economic theory of criminal law consists of normative and positive parts. Normative economic theory, which began with writings by Beccaria and Bentham, aims to recommend an ideal criminal punishment scheme. Positive economic theory, which appeared later in writings by Holmes and Posner, aims to justify and to better understand the criminal law rules that exist. Since the purpose of criminal law is to deter socially undesirable conduct, economic theory, which emphasizes incentives, would appear to be an important perspective from which to examine criminal law. Positive economic theory, applied to substantive criminal law, seeks to explain and to justify criminal law doctrine in economic terms – that is, in terms that emphasize the incentive effects created by the law. The positive economic theory of criminal law literature can be divided into three phases: classical deterrence theory, neoclassical deterrence, and modern synthesis. The modern synthesis provides a rationale for fundamental criminal law doctrines, and also more puzzling portions of the law such as the doctrines of intent and necessity. Positive economic theory also provides a rationale for the allocation of enforcement responsibilities.

ТРУДОВІ ВІДНОСИНИ ЯК ОБ'ЄКТ РИНКОВОГО РЕФОРМУВАННЯ ЕКОНОМІКИ

Formulation of the problem. The article is devoted to the analysis of labor relations in the context of the cost of labor in a market economy. The aim of the research is to justify the doctrine of choosing social tax policy guidelines, based on the current requirements of democratic transformation in Ukraine. The object of the research is labor relations in terms of market reform of the economy. The methods used of the research: methods of systematization and generalization methods; induction and deduction; interdisciplinary analogy. The hypothesis of the study was the assumption that bringing the salary into line with the cost of labor requires significant improvement of labor relations, the adoption of the new Labor Code in the context of market subjection of industrial relations, which is part of the relationship with labor services. The statement of basic materials. It is substantiated that the labor market is a market of imperfect competition, with dominant positions of employers, because of the important role in regulating prices for labor services is played by the mechanism of collective-contractual regulation of labor relations. In Ukraine, during market reforms, wages are underestimated. The originality and practical significance of the research. In the context of effective economic development, ensuring conditions for qualitative reproduction of human capital, achieving compromises in society requires a radical improvement of the nature of labor relations. This improvement involves the adoption of a number of legislative decisions. This is a legislative solution to the problem of subjection of industrial relations as a market form of economic development and addressing issues of effective employment. Subjection of industrial relations is a process of transformation of participants of economic activity into subjects of a modern market economy, which should be equal, have rights, social duties and mechanisms of protection. Conclusions of the research. In the organization of economic activity, the practice of economic activity, as well as in other spheres of society life should actively use the conceptual development of a positive and normative economic theory to create a partnership model of labor relations on a market basis. The biggest disadvantage of the market reform of the Ukrainian economy was the ignoring at the level of legislation of the conclusions and formulated requirements of economic theory, which caused a significant understatement of wages in relation to the cost of labor and caused the emergence of a number of negative phenomena.

A Science of Markets: The Moral Dimension of the Invisible Hand

Classical, neoclassical and Austrian economists assume that self-interest in exchanges is alone sufficient to make markets work, because of the invisible hand of Adam Smith. This assumption has motivated market deregulation. On the contrary, we argue that Adam Smith was not assuming or explaining that markets always work (or exist). Rather, when markets happen to work apparently through self-interest, Adam Smith was hypothesizing the possible existence of an invisible hand. Similarly, Christians of the Enlightenment who observed the orderly wonders of nature, believed in the invisible hand of God. This paper argues that the invisible hand behind the social order in markets observed by Adam Smith must have a moral dimension in addition to self-interest alone. We suggest that Adam Smith’s philosophy of functioning markets presupposed the influence of morality which economists have overlooked over the centuries, leading to a mistaken conflation of free markets with free-for-all markets. A scientific theory of markets is introduced to describe and classify different functions and types of markets, including market failures or collapses. In particular, we indicate that markets do more than allocate resources – they also distribute the benefits of exchange. This latter function is a social one which makes morality or fairness an essential ingredient in social interactions, as well-functioning markets distribute the benefits of exchange mutually, equitably and sustainably. We provide the rationale for an explicit role for morality in positive economic theory.

Expropriation and foreign direct investment in a positive economic theory of foreign aid

This paper articulates a positive economic theory of foreign aid and presents a novel analysis of the nexus between institutions, foreign direct investment (FDI), and aid. In the model, aid is motivated by non-altruistic economic considerations, namely the desire of the donor country to protect FDI from expropriation. We first identify the conditions under which aid will be granted and characterize how the quantity of aid varies with the host country’s development stage. We then endogenize the host country’s institutions and identify the conditions under which institutional reform (adoption of a commitment technology) will be carried out, as well as the conditions that give rise to an expropriation trap—a situation where neither will the host country reform its institutions voluntarily nor will the donor country provide incentives for the institutional reform.

КОНЦЕПЦІЯ ЕКОНОМІЧНОГО ПІДХОДУ ДО ПРАВА

The article deals with the theorem of Posner and Becker on the economic analysis of law. Economic positive and normative analyses are studied. It is noted that the methods of positive economic theory focused on studying the legal consequences of the application of law. It is proved that the normative economic theory deals with the effectiveness of legal regulation. The relationship of economic and legal systems is justified by neoinstitutionalism.

University Education Fees, Economic Rents and Distributive Justice

AbstractIn this article I defend the claim that subsidies for university education should be substantially reduced. The normative justification for this conclusion derives from a theory of distributive justice called the Compensation Theory of Income Justice, which is most easily understood as a normative version of the positive economic theory of compensating differentials. Relying on the distinction between incentives and economic rents, and after considering two ‘received opinions’ about why large income differentials exist in modern societies, I note that substantial portions of above‐average incomes are likely to be artificial monopoly rents, rather than incentives or natural monopoly rents. Under the Compensation Theory of Income Justice the earning of artificial monopoly rents is not justified. Since subsidisation of university education fees increases lifetime artificial rents, the theory would recommend such subsidies be substantially reduced. I defend this conclusion against objections, the most notable of which is the view that university subsidies help to improve equality of opportunity to university education. I explain how it is possible to maintain the laudable aim of providing equality of opportunity while reducing the subsidisation and, as a consequence, the lifetime artificial rents.

James Buchanan's Contributions to Constitutional Political Economy, Institutional Analysis, and Self-Governance

We outline the work of James Buchanan and his influence and contributions to political economy, institutional analysis, and self-governance. In addition to pioneering the public choice movement, we argue that Buchanan’s greatest contribution to political economy was initiating the constitutional level of analysis in economics. In doing so, we highlight Buchanan's main emphasis on the elementary principles of economics and how they fit into the broader agenda of economist as teacher and enabler of improving the democratic process; the role of economists as studying exchange; the reconciliation of the economists’ zeal for reform with positive economic theory and how this notion advances the importance of constitutional-making from the bottom-up; and finally, the introduction of the main puzzle in political economy regarding constitutional constraint. We argue that it is in the broader field of development economics and self-governance research that his ideas concerning the “rules level of analysis” can have its deepest impact.

Dois métodos ou duas antropologias?

This is a commentary to a well-known paper of Bresser-Pereira: The two methods and the hard core of economics. Therefore, it target a very suggestive article that seeks to examine the conceptions of man of classical political economy and Keynesian economics in contrast to the reductive conception of man found in positive economic theory, especially in neoclassical theory. It shows that both conceptions at large think with abstracts economic men. However, the first one reasons with individuals who are determined by the historical and social structures of the capitalistic economic system. The second one seeks to present them in a formal way, as if they were mere pieces of a large automaton, i.e., the mercantile system as a large and standardized mechanism. In the end, Marx is distinguished because he does not reflect based on a static anthropological foundation. For him, men are subjects that become because they can realize themselves only in the course of history.

Positive Economics and the Normativistic Fallacy: Bridging the Two Sides of CSR

ABSTRACT:In response to criticism of empirical or “positive” approaches to corporate social responsibility (CSR), we defend the importance of these approaches for any CSR theory that seeks to have practical impact. Although we acknowledge limitations to positive approaches, we unpack the neglected but crucial relationships between positive knowledge on the one hand and normative knowledge on the other in the implementation of CSR principles. Using the structure of a practical syllogism, we construct a model that displays the key role of empirical knowledge in fulfilling a firm’s responsibility to society, paying special attention to the implications of the “ought implies can” dictum. We also defend the importance of one particular class of empirical claims; namely, claims from the field of economics. Even positive economic theory, which is often criticized for endorsing profits rather than values, can cooperate in intriguing ways with non-economic concepts in the implementation of CSR goals.

Duty in Tort Law: An Economic Approach

Theories of tort law have focused on the breach and causation components of negligence, saying little if anything about duty. This paper provides a positive economic theory of duty doctrine. The theory that best explains duty doctrines in tort law is the same as the theory that explains strict liability doctrine. The core function of both sets of doctrines is to regulate the frequency or scale of activities that have substantial external effects. Strict liability aims to suppress or tax activities that carry unusually large external costs. Duty doctrines, especially those relieving actors of a duty of care, serve several functions, but one important class encourages or subsidizes activities that carry substantial external benefits. Another class of duty-relieving doctrines serves as complements to property rules. Still another class of duty-relieving doctrines serves to permit markets to function without distortions created by liability.

How (Not) to Do Decision Theory

We discuss the goals and means of positive decision theory and the implications for how to do decision theory. We argue that the goal of positive economic theory generally is to provide predictions and understanding and that representation theorems and other results of decision theory should be seen as ways to achieve these goals. We also argue that the interpretation of a model is relevant to whether and how we use the model, that psychological considerations are not necessary for useful decision theory but can be helpful, and that nonchoice data, interpreted properly, can be valuable in predicting choice and therefore should not be ignored.

Endogenous Regulatory Constraints and the Emergence of Hybrid Regulation

Models of public utility regulation are often framed, alternatively, as rate-of-return or price-cap regulation. In practice, however, regulators have increasingly adopted a variety of hybrid regulatory constraints that embody elements of both these, and other, regulatory forms. In this paper, we draw upon elements of both the positive economic theory of regulation and standard efficiency-based economic analysis of regulation to develop a model that endogenously yields hybrid regulatory constraints as a regulatory optimum. In this context, the paper further demonstrates that a commonly observed side payment–profit sharing–enhances regulator welfare. The results provide a plausible basis for understanding the pattern of modern regulatory constraints.

Property Rules and Liability Rules, Once Again

In recent years, new articles presenting rigorous analyses of bargaining incentives have overturned some of the fundamental claims made by Calabresi and Melamed in their seminal article on property rules and liability rules published in 1972. In particular, the proposition that property rules are socially preferable to liability rules when transaction costs are low appears to be either no longer valid or severely weakened under the new analyses. This paper reexamines the property rule versus liability rule question in light of the contributions of the recent bargaining theory literature. In contrast to this literature, I find that the fundamental propositions of Calabresi-Melamed remain valid, and I extend the framework to provide a more detailed positive economic theory of common law rules. The key contribution of this paper is pointing out the importance of subjective valuations in the analysis of property and liability rules. This allows for a synthesis of Calabresi-Melamed and the bargaining theory literature within an expanded framework.

Property Rules and Liability Rules, Once Again

Calabresi and Melamed published the seminal article on property rules and liability rules in 1972. In recent years new articles presenting rigorous analyses of bargaining incentives have overturned some of the fundamental claims of the Calabresi-Melamed analysis. In particular, the proposition that property rules are socially preferable to liability rules when transaction costs are low appears to be either no longer valid or severely weakened under the new analyses. This paper reexamines the property rule versus liability rule question in light of the contributions of the recent bargaining theory literature. In contrast to this literature, I find that the fundamental propositions of Calabresi-Melamed remain valid, and I extend the framework to provide a more detailed positive economic theory of common law rules. The key contribution of this paper is pointing out the importance of subjective valuations in the analysis of property and liability rules. This allows for a synthesis of Calabresi-Melamed and the bargaining theory literature within an expanded framework.

(Why) are economists different?

After presenting casual evidence of the difference between economists and the rest of the population, I review the survey and experimental evidence on this topic during the last 20 years. I then ask whether these results are applicable to real world situations. To consider this, examples of referenda results in Switzerland are presented where the citizens decided against recommendations of most economists. What is particular in economic theory that causes these differences in convictions? Explanations can point to aspects of positive economic theory and to normative convictions of economists. I conclude with consequences that economists might draw.

(Why) are Economists Different?

After presenting some casual evidence about the difference between economists and the rest of the population, first the survey and experimental evidence which has been presented on this topic during the last 20 years is discussed. But can these results really be transferred to real world situations? To show this, examples of referenda results in Switzerland are presented where the citizens decided against recommendations of most economists. But what is so particular in economic theory that causes these different convictions? Some explanations are given with respect to positive economic theory and with respect to the normative convictions of economists. The paper concludes with possible consequences which economists might draw.