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Complexity and Evolutionary Modeling

Paper Session

Saturday, Jan. 7, 2017 5:30 PM – 7:15 PM

Swissotel Chicago, St Gallen 2
Hosted By: Association for Evolutionary Economics
  • Chair: Wolfram Elsner, University of Bremen

The Complementary Relationship Between Evolutionary-Institutional and Complexity Economics

Claudius Grabner
,
University of Bremen

Abstract

Analyzing economic systems from an evolutionary-institutional or a complexity perspective are two complementary approaches to economic inquiry. Three arguments in favor of this hypothesis are discussed: (i) eminent institutional economists have considered the economy as what today could be considered a complex system; (ii) complexity economists lack meta-theoretical foundations which could be provided by institutionalist theory; (iii) institutional economists could benefit from using methods of complexity economics.

In this context I argue that scholars considering the economy to be complex should seek to explain it by discovering social mechanisms instead of focusing on prediction. For the discrimination between alternative explanations, scholars should refer to the deepness of an explanation, rather than to Occam’s razor.

The Narrow and the Broad Approach to Evolutionary Modeling in Economics

Torsten Heinrich
,
University of Bremen

Abstract

One of the first scholars to call for an evolutionary approach in economics was likely Thorstein Veblen. He notes both the lack of adaptiveness of economics as a field of scholarship itself (which he contrasts with psychology and anthropology) and the ignorance in economics towards any realistic conception of human decision making beyond that of “a lightning calculator of pleasures and pains”' (Veblen, 1898). He insisted that human nature and psychology should be taken into account; that these were the dominant forces shaping the development of human society. More formal-mathematical aspects were introduced by later generations of institutional-evolutionary economists.<br />
<br />
Some evolutionary models rely on direct analogies to genetic evolution: Assuming a population of firms with routines, technologies and strategies on which forces of diversity generation (akin to mutation) and selection act. One advantage of this narrow conception is that previous findings from evolutionary biology can be taken into account and built upon.<br />
<br />
This narrow conception of evolutionary models can, however, easily be generalized to allow either many or just one entity (instead of requiring a population) that are adaptive and interact with their environment. This allows a much more general conception of the evolutionary entity which can then also be an institution or a society.Both approaches have been extensively used in the literature, albeit in somewhat different literature traditions.<br />
<br />
The paper gives an overview over the conception and the development of both the narrow (population and selection) and the broad (adaptive entity) approach to evolutionary modeling.

Evolutionary Dynamics of the Obesity-Socioeconomic Status Paradox: A Veblenian Explanation

Kuochih Huang
,
University of Massachusetts-Amherst
Weikai Chen
,
University of Massachusetts-Amherst

Abstract

In the traditional society, obesity is associated with high socioeconomic status (SES), while in the modern society, especially among women, it is associated with low SES, accompanying with the weight discrimination. We find these patterns consistent with the evolutionary dynamics based on a Veblenian hypothesis, in which body weight is used as the means of social class division. Given the changing incomes and relative costs of calories intake and expenditure, high-SES individuals choose a body weight to distinct themselves from the low-SES, and low-SES individuals try to imitate the high-SES while competing with each other. Our game-theoretical analysis predicts patterns supported by statistical and literature evidence of obesity-SES associations and social perceptions toward obesity. This is the first paper analyzing the evolution of obesity-SES paradox and the endogenous formation of the inter-class social norm within an integrated framework.

Inequality and Income Distribution in Global Value Chains

Carlos Aguiar de Medeiros
,
Federal University of Rio de Janeiro
Nicholas Trebat
,
Federal University of Rio de Janeiro

Abstract

Global Values Chains (GVC) led by transnational corporations (TNC) have reshaped the world division of labor over the past two decades. GVCs are pervasive in low technology manufacturing such as textiles and apparel as well as in medium and high-tech industry like automobiles, electronics, and machinery. Value along these supply chains is appropriated unequally as tangible activity (manufacturing and assembly) takes place in developing countries under regimes of fierce competition and low wages while intangible intellectual work (R&D, design, finance and marketing), mainly in services, is concentrated in developed countries and subject to relatively mild competition. The “core business” of every TNC is to create economic rents through the control of these intangible assets. As Thorstein Veblen noted in 1920, the control over “valuable good-will, monopoly rights, or outstanding corporation securities” form the most significant source of vested interests and unearned income. Trade and investment agreements promoted by the US government and signed with developing countries have strengthened corporate control over intangible assets—and the rents derived from them—through patent and property rights provisions, while at the same time weakening laws created to protect internal markets in developing countries. This process explains much of the social and economic polarization between developed and developing countries as well as that taking place within these countries.
JEL Classifications
  • B4 - Economic Methodology
  • B5 - Current Heterodox Approaches