Knowledge that Transforms

What is law and why do people obey it? This question from jurisprudence has recently been tackled using the tools of economics. The field of law and economics has long studied how fines and imprisonment affect behavior. Nobody believes, however, that all compliance is motivated by penalties, and it is questionable whether that is even the typical motivation. Two books published in 2015, Frederick Schauer's The Force of Law and Richard McAdams's The Expressive Powers of Law: Theories and Limits, consider alternative motivations—Schauer skeptically and McAdams more sympathetically. While coercion, either directly or in support of internalized norms, seems to dominate law qua law (and not as a mere expression of morality), a considerable portion of law serves other uses such as coordination, information provision, expression, and reduction of transaction costs. (JEL C72, D23, D83, K00, K40, Z13)

In his Bottlenecks: A New Theory of Equal Opportunity, Joseph Fishkin claims he presents an entirely new way of thinking about equality of opportunity. The core of the new theory is the call for opportunity pluralism, which consists in enlarging the range of opportunities available to people at every stage in life. In this essay, we discuss how successful Fishkin is at shaking the way economists think about equality of opportunity. We identify two aspects of Fishkin's theory that deeply conflict with economic theories of equality of opportunity. Those aspects have to do with the way economists interpret the ethical values of respect for preferences and responsibility. We also argue that the way Fishkin suggests to look at opportunities can help economists fill gaps in the way they define well-being and social justice. (JEL A13, D63, I31).

Stephen S. Cohen and J. Bradford DeLong view US economic policy extending up to 1980 as pragmatically fostering growth. This they interpret as the Hamiltonian tradition, and their intent is to rescue policy debate from the data- and logic-free quagmire into which they believe it has fallen. Following an introduction, section 2 of this essay describes methods and evidence that permit statements about the historical influence of ideological thinking more empirically grounded than those essayed by the authors. Section 3 examines specific aspects of their narrative. Section 4 considers what we mean by ideological thinking, and why it might be deleterious. (JEL D72, E61, L52, N41, N42)

Climbing Mount Laurel, authored by a group of sociologists led by Douglas S. Massey, is about the efforts by Mount Laurel Township, NJ, residents to have affordable housing built in their community. From when it was first proposed in 1969 and until the first units were completed in 2000, the project faced extraordinary political opposition, caused a number of landmark court decisions, and motivated affordable-housing legislation by other US states. This review evaluates, from an economics perspective, the lessons learned, as argued by Massey et al., about the impact of affordable housing within the host community and on surrounding communities. (JEL J15, R21, R23, R31, R38, Z13)

Lars Peter Hansen and Thomas J. Sargent's book, Recursive Models of Dynamic Linear Economies, exposits, extends, and applies methods for solution and analysis of dynamic stochastic linear quadratic models. The book, which can be used as a monograph or in a graduate course, integrates theory, econometrics, and computation. This essay provides a summary and offers some mild complaints about material not included in what is already a remarkably comprehensive book. (JEL C32, C61, D40, D50, E10)

Sawhill and Steinberg approach risky behavior among youth from two different angles: Steinberg argues for intervention during the adolescent years to alter behavior in ways that prioritize patience and self-regulation, while Sawhill advocates interventions that mitigate the negative effects of risky behavior. Both argue that disadvantaged youth suffer worse consequences as a result of risky behavior and therefore stand to gain the most from interventions. While the authors develop strong arguments for adolescent interventions, the existing evidence on their effectiveness is less compelling. To reconcile the promise with the reality, I argue that growing up in environments of significant uncertainty reduces the returns to forward-thinking behavior in the daily lives of disadvantaged youths. Interventions to develop adolescent decision-making skills so as to reduce risky behavior will not be effective if they are inconsistent with the incentives generated by a local environment that is often characterized by uncertainty. (JEL J12, J13)

This essay compares the Great Depression to the Great Recession in light of Barry Eichengreen's new book Hall of Mirrors. Eichengreen discusses these two episodes from a historical, Keynesian perspective, and concludes that policies that increase aggregate demand, such as larger fiscal deficits, would have promoted a much stronger and faster recovery from the Great Recession. I review these episodes from a neoclassical approach, which provides a very different perspective on why recoveries from these episodes were so slow and incomplete. I also argue that supply-side policies, rather than demand-side policies, are more likely to restore prosperity today. (JEL E32, E52, E62, F44, G01, N12, N22)

Thomas Leonard's 2016 book Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era argues that exclusionary views on eugenics, race, immigration, and gender taint the intellectual legacy of progressive economics and economists. This review essay reconsiders that legacy and places it in the context within which it developed. While the early generations of scholars who founded the economics profession in the United States and trained in its departments did indeed hold and express retrograde views on those subjects, those views were common to a broad swath of the intellectual elite of that era, including the progressives' staunchest opponents inside and outside academia. Moreover, Leonard anachronistically intermingles a contemporary critique of early-twentieth-century progressive economics and the progressive movement writ large, serving to decontextualize those disputes—a flaw that is amplified by the book's unsystematic approach to reconstructing the views and writing it attacks. Notwithstanding the history Leonard presents, economists working now nonetheless owe their progressive forebears for contributions that have become newly relevant: the “credibility revolution,” the influence of economic research on policy and program design, the prestige of economists working in and providing advice to government agencies and policy makers, and the academic freedom economists enjoy in modern research-oriented universities are all a part of that legacy. (JEL A11, B15, D82, J15, N31, N32)

Foragers, Farmers, and Fossil Fuels: How Human Values Evolve is a large-scale history of the world through the different modes of production humanity has adopted over time and their implications in terms of moral values. Morris argues that the predominant value systems of human societies are cultural adaptations to the organizational structures of the societies themselves, their institutions, and ultimately to their modes of production. In particular, the book contains a careful analysis of how the hunting–gathering mode of production induces egalitarian values and relatively favorable attitudes toward violent resolution of conflicts, while farming induces hierarchical values and less favorable attitudes toward violence, and in turn the fossil fuel (that is, industrial) mode of production induces egalitarian values and nonviolent attitudes. The narrative in the book is rich, diverse, and ultimately entertaining. Morris's analysis is very knowledgeable and informative: arguments and evidence are rooted in history, anthropology, archeology, and social sciences in general. Nonetheless, the analysis falls short of being convincing about the causal nature of the existing relationship between modes of production and moral value systems. ( JEL A13, D02, N30, N60, Z13)

In response to the question in the title, Does Altruism Exist?, David Sloan Wilson argues forcefully that altruism exists and that the biological mechanism of group selection is responsible. He argues that group selection should be taken especially seriously for humans, since cultural evolution is especially important for us. Economists' view of basic human motivations should then include altruism. Wilson promotes a strong form of pervasive altruism, which seems bound to be inconsistent with many economic phenomena. Although a moderate version of the position he advocates is not easily dismissed, it is unclear what such an extended theory would look like. (JEL D64, Z13)