Institutions are a popular theme in the Gazette. The present column discusses two currents of the new economic institutionalism. Oliver Williamson takes the neoclassical paradigm as his starting-point, and Douglas North develops an evolutionary theory. Both analyze the transaction costs. Cases are studied of adverse selection, self-enforcing contracts, and moral hazard. Time-inconsistency, the principal-agent problem, sunk investments and learning-processes (innovation, immitation) are discussed .... Read more
12-06-2020: Economic networks and groups (2)
Author: E.A. Bakkum
About three years ago the Dutch economics P. Frijters presented an economic theory, which combines a group model with the concept of the homo economicus, who is capable of love. The present column tests the theory with the help of knowledge from sociology and psychology. It turns out that these two disciplines indeed support the hypotheses in the theory of Frijters. The insights are applied to reality, namely the enterprise, the bilateral transaction, the cartel, and the branch organization .... Read more
07-06-2020: Economic networks and groups
Author: E.A. Bakkum
Although group processes are often ignored in economics, it is known from sociology and psychology that they do exert influence. The economist R.H. Coase has already pointed to the costs of the operation of markets and organizations. Recently, among others the economist P. Frijters and the sociologist J.S. Coleman have elaborated on this phenomenon. The present column describes the group dynamics with the help of the book of D.R. Forsyth. Discussed are leadership, the influence of group norms, decisions, and conflicts within the group and between groups .... Read more
01-06-2020: The protestant trade union movement (2)
Author: E.A. Bakkum
It is controversial among economists and sociologists, how much weight must be attached to morals in socio-economic processes. The present column tries to answer this question by studying the history of the trade union federation CNV. The position of the protestant trade union movement is studied for the periods of, successively, the social rebellion around 1918, the corporatism in the interbellum, the reconstruction after 1945, and the rise of New Left after 1966. Although morals are quite flexible, and often do do not live up to their pretensions, they yet do exert influence .... Read more
Happiness economics is still in full development. The present column elaborates on several controversial points in this discipline. Various types of utility are studied, among others of the cognitive and affective type. The phenomenon of unemployment is an illustration of this. All in all the monistic utility seems yet to be most useful. Observations of feelings have a rate-scale, with a fixed reference point. Happiness increases with the individual income, also at the national level. So there is no reason for state paternalism, such as a policy of braking growth .... Read more