American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Distinguished Lecture on Economics in Government: The New Economy: Post Mortem or Second Wind? Martin NeilBailyInstitute for International Economics, Washington, D. C., USA 3 22 There was an acceleration of U.S. productivity after 1995. Investment in information technology hardware and software contributed importantly to this, but was not its sole cause. In part, heavy IT investment, perhaps overinvestment, was the result of the booming economy and cheap capital. Besides IT, the expansion of productive firms boosted productivity, together with the competitive pressure this put on other firms to innovate and improve. Productivity growth has been surprisingly strong in 2001, and the likely trend for the future is in the range of 2.2 to 2.7 percent a year. The economy should get a second wind. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=1&issue_date=Spring 2002 10.1257/0895330027184 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Evolutionary Theorizing in Economics Richard R.NelsonColumbia University, New York, New York, USA Sidney G.WinterWharton School, University of Pennsylvania, Philadelphia, Pennsylvania, USA 23 46 This paper reviews the case for an evolutionary approach to problems of economic analysis, ranging from the details of individual firm behavior in the short run through industrial dynamics to the historical evolution of institutions and technologies. We draw upon a substantial body of recent research contributions. We characterize micro behavior as governed by skills and routines that are shaped by learning and selection. We then consider major areas of application of evolutionary thinking, including the analysis of competitive processes in technologically dynamic industries and the evolution of institutions and technologies. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=2&issue_date=Spring 2002 10.1257/0895330027247 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Evolution and Game Theory LarrySamuelsonUniversity of Wisconsin, Madison, Wisconsin, USA 47 66 Research in noncooperative game theory has focused attention on two questions: Should we expect equilibrium play? If so, which of the multiple equilibria that arise in many games should we expect? This paper summarizes recent approaches to these questions that have been based on evolutionary models. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=3&issue_date=Spring 2002 10.1257/0895330027256 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Evolution of Social Behavior: Individual and Group Selection Theodore C.BergstromUniversity of California at Santa Barbara, Santa Barbara, California, USA 67 88 How selfish does our evolutionary history suggest that humans will be? We explore models in which groups are formed and dissolved and where reproduction of individuals is determined by their payoffs in a game played within groups. If groups are formed "randomly " and reproductive success of group founders is determined by a multiperson prisoners' dilemma game, then selfish behavior will prevail over maximization of group payoffs. However, interesting models exist in which "group selection "sustains cooperative behavior. Forces that support cooperative behavior include assortative matching in groups, group longevity and punishment-based group norms. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=4&issue_date=Spring 2002 10.1257/0895330027265 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Evolution and Human Nature Arthur J.RobsonUniversity of Western Ontario, London, Ontario, Canada 89 106 This paper considers how biological evolution shaped the elements of a simple but complete model of economic decision making. These elements are preferences, beliefs and rationality. Whereas Nature might impose preferences over consumption on the individual, Nature might optimally allow beliefs to be influenced by local knowledge and final choice to be flexible. This reinforces the usual approach. On the one hand, evolution also suggests that some extensions of this model are implausible; on the other, it suggests unexpected directions of generalization. In any case, evolution provides a basis for an overarching economic theory and maintains restrictions on this theory. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=5&issue_date=Spring 2002 10.1257/0895330027274 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article The Role of Economics in Climate Change Policy Warwick J.McKibbinResearch School of Pacific and Asian Studies, Australia National University, Canberra, Australia and Brookings Institution, Washington, D.C., Peter J.WilcoxenUniversity of Texas, Austin, Texas and Brookings Institution, Washington, D.C., USA 107 129 The most important characteristic of climate change as a policy problem is uncertainty. From climatology to economics, uncertainties are pervasive, large and difficult to resolve. However, the economic theory of environmental policy under uncertainty provides a clear guide to the design of an appropriate policy. An efficient and practical approach would be a hybrid that incorporates the best features of tradable permits and emissions taxes. Unfortunately, international negotiations have taken a different approach, focusing on rigid targets and timetables for emissions reductions. The result has been the Kyoto Protocol, an agreement with no real chance of reducing greenhouse gas emissions. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=6&issue_date=Spring 2002 10.1257/0895330027283 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article The Economics of Patents: Lessons from Recent U.S. Patent Reform Nancy T.GalliniCentre for Innovation Law and Policy, University of Toronto, Toronto, Ontario, Canada. 131 154 U.S. patent reform over the past two decades has strengthened the legal enforcement of patent rights and has extended protection to new subject matter, such as genetically engineered life forms and business methods. This paper highlights these and other policy changes and the debate that this apparent increase in protection has sparked. While the case for stronger patents as a spur to innovation is a weak one, as revealed by recent theoretical and empirical research, evidence that they encourage disclosure and technology transfer is persuasive. The paper discusses the social costs and benefits of these effects from the policy changes and proposals for alleviating the costs through further patent reform. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=7&issue_date=Spring 2002 10.1257/0895330027292 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Oligopsony and Monopsonistic Competition in Labor Markets V.BhaskarUniversity of Essex, Colchester, United Kingdom AlanManningCentre for Economic Performance, London School of Economics, London, United Kingdom TedToBureau of Labor Statistics, Washington, D.C., USA 155 174 We argue that models of oligopsony or monopsonistic competition provide insights and explanation for many empirical phenomena in labor markets. Using a simple model with job differentiation and preference heterogeneity, we illustrate how such models can be employed to explain the existence of wage dispersion, the persistence of labor market discrimination, market failures in the provision of training and the anomalous employment effects of minimum wages. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=8&issue_date=Spring 2002 10.1257/0895330027300 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Deposit Insurance Around the Globe: Where Does It Work? AslıDemirgüç-KuntDevelopment Research Group, World Bank, Washington, D.C., USA Edward J.KaneCarroll School of Management, Boston College, Chestnut Hill, Massachusetts, USA 175 195 Explicit deposit insurance has been spreading rapidly in recent years, even to countries with low levels of financial and institutional development. This paper documents the extent of cross-country differences in deposit insurance design and reviews empirical evidence on how particular design features affect private market discipline, banking stability, financial development and the effectiveness of crisis resolution. This evidence challenges the wisdom of encouraging countries to adopt explicit deposit insurance without first stopping to assess and remedy weaknesses in their informational and supervisory environments. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=9&issue_date=Spring 2002 10.1257/0895330027319 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Retrospectives: Captains of Industry RobertDixonUniversity of Melbourne, Melbourne, Australia 197 206 This paper traces the origin and use of the term "captains of industry." Introduced by the Scottish historian and essayist Thomas Carlyle in the mid-nineteenth century, its meanings and associations were very different from today. For Carlyle, they were ferocious instruments of social control who would force the unemployed and idle to work and, if necessary, discipline them. The term, if not the meaning, rapidly entered the popular lexicon. It was brought into economics by Francis Walker, the first president of the AEA, who argued that the captain of industry was a fourth factor of production and the engine of industrial progress. While many other writers shared this view, Veblen did not. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=10&issue_date=Spring 2002 10.1257/0895330027193 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Policy Watch: The Federal Employees Health Benefits Plan RogerFeldmanDivision of Health Services Research and Policy, School of Public Health, University of Minnesota, Minneapolis, Minnesota, USA Kenneth E.ThorpeDepartment of Health Policy and Management, Rollins School of Public Health, Emory University, Atlanta, Georgia, USA BradleyGrayInstitute for Government and Public Affairs, School of Public Health, University of Illinois at Chicago, Chicago, Illinois, USA 207 217 This short feature describes the Federal Employees Health Benefits Plan (FEHBP), which provides health insurance benefits to active and retired federal employees and their dependents. The article discusses the FEHBP as a touchstone for research on employment-based health insurance and as a touchstone for health policy reform. http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=11&issue_date=Spring 2002 10.1257/0895330027201 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Recommendations for Further Reading BernardSaffranSwarthmore College, Swarthmore, Pennsylvania, USA 219 226 http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=12&issue_date=Spring 2002 10.1257/0895330027210 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Comments RichardWattUniversidad Autónoma de Madrid Madrid, Spain MatthewRabinUniversity of California, Berkeley, California, USA Richard H.ThalerUniversity of Chicago, Chicago, Illinois, USA 227 230 http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=13&issue_date=Spring 2002 10.1257/0895330027229 American Economic Association Nashville, TN 0895-3309 Journal of Economic Perspectives http://www.aeaweb.org/jep/ 16 2 Spring 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=JEP&volume=16&issue=2&issue_date=Spring 2002 Journal Article Notes 231 233 http://www.aeaweb.org/articles/article_detail.php?journal=JEP&volume=16&issue=2&article=14&issue_date=Spring 2002 10.1257/0895330027238