Far from inspiring that paradigmatic shift in economics that was envisioned by its early proponents, ‘evolutionary’ economics today represents a patchwork of unconnected theories and topics. In other disciplines, evolutionary thinking has induced a paradigm shift, resulting from the adoption of the Darwinian paradigm extended by hypotheses about cultural evolution. Concerning economics, however, even a preliminary discourse on the potential of this paradigm for future theorizing remains controversial. The present paper therefore focuses on the methodological implications of the paradigm. It is shown that hitherto unnoticed common ground can be identified underlying the diversity of approaches to evolutionary economics. It rests in the modalities of causal explanations germane to the Darwinian paradigm. Understanding these modalities also makes it possible to distinguish evolutionary from non-evolutionary research irrespective of the specific theories and topics concerned. The argument is illustrated for the exemplary case of institutional economics.

People have rights to the degree that they are willing to claim them and are able to enforce them, either themselves or through a third-party enforcer. This economic theory of rights is based on the rights people actually do have and are able to exercise, not the rights they should have based on some normative criteria. Natural rights theories and contractual rights theories are examined and found to be ambiguous as to the actual rights they imply. Furthermore, there is no assurance that people will actually be able to exercise any natural rights or agreed-upon rights. People's actual ability to claim and enforce rights is based on the economic and political power they have, which in turn is based on their ability to provide benefits to others in exchange for others respecting the claimed rights, and in some cases being willing to use force to make others respect them.

How can we account for the persistence of inefficient policies? To answer that question, this paper focuses on the issue of food and energy subsidies in Egypt. In 2012, over 13 percent of Egyptian GDP – roughly one-third of the overall government spending – was allocated to subsidies of prices of consumer goods including fuels and food. This paper offers an explanation of the resilience of commodity subsidies to reform, which relies on the inability of the government to credibly commit to a reform path. As a dictatorship, Egypt had a small number of veto players, making policy reversals easy. When opened to a competitive political process after 2011, Egypt lacked political groups that could make credible promises about policy changes. The paper provides a discussion of how appropriately designed reforms can mitigate the lack of credibility.

In this paper, we emphasize the role of institutions as the underlying basis for economic and social activity. We describe and compare different institutional classification systems, which is rarely done in the literature, and show how to empirically operationalize institutional concepts. More than 30 established institutional indicators can be clustered into three homogeneous groups of formal institutions: legal, political and economic, which capture to a large extent the complete formal institutional environment of a country. We compute the latent quality of legal, political and economic institutions for every country in the world and for every year. On this basis, we propose a legal, political and economic World Institutional Quality Ranking, through which we can follow whether a country is improving or worsening its relative institutional environment. The calculated latent institutional quality measures can be especially useful in further panel data applications and add to the usual practice of using simply one or another index of institutional quality to capture the institutional environment. We make the Institutional Quality Dataset, covering up to 197 countries and territories from 1990 to 2010, freely available online.

This essay comments on discussions of the future of evolutionary economics by Winter (2014) and Witt (2014). I agree with their assessment of evolutionary economics as a theoretically fragmented field that has had little success in effecting a paradigm shift in mainstream economics. However, I question if such a paradigm shift should be the primary goal of evolutionary economists. I argue that evolutionary economists could increase their impact if they would be willing and able to recast themselves as evolutionary social scientists. This was the vision for economics that Veblen held out more than a century ago. I lay out the theoretical building blocks for realizing this vision available today.

We applaud the effort of Schubert and Cordes (2013, this journal) to contribute a model describing the social mediation of preferences and to apply their results to the more general context of economic welfare. Although we consider this topic to be of utmost importance and interest, we have found a problem in Schubert and Cordes’ argument that renders their statements in Section 3 invalid. After providing some basic intuition on the problem at hand, we present a short proof showing that the assumptions of the model always lead to a stable society. We also report on an interesting non-linear segregation effect that can occur within the Schubert-Cordes model.

Economic historians tend to explain the rise of the cooperative form in agriculture from the advantage of cooperative over private factories in reducing transaction costs with suppliers. This study provides a first test of this thesis using data on 1,130 dairy factories in The Netherlands. Indeed, we find that cooperative factories performed significantly better than private factories. The persistence of private factories in certain regions can be explained by first-mover advantages.

Gas sector liberalization is based on opening networks to different players, so they become common pool resources. Different players using the same resources can give rise to “commons’ dilemmas”. To avoid them, rules must be established to constrain players’ use of the network. We build on the concept of common's pool resources to analyze the logic for and consequences of different institutional settings governing the use of gas pipelines. We show that rules based on regulation imply ex ante decisions that preclude players to choose the preferred output. This limitation may be removed by rules designed by market players. We also show that the mechanism to define the rules is based on the definition of network use property rights. The practical implications of our approach are stressed by comparing the US mechanism (negotiated rules) and the EU mechanism (regulated rules).

In their comment “Modeling the evolution of preferences: an answer to Schubert and Cordes” (2013, this journal), Kapeller and Steinerberger claim to have identified some flaws in the formal argument developed in our paper “Role models that make you unhappy: light paternalism, social learning, and welfare” (2013, this journal). Specifically, they maintain that there is no runaway dynamic in consumption and preference values and that our model therefore always leads to a stable society. In their proof, Kapeller and Steinerberger show that their system is bounded by the highest and lowest preference and consumption levels in the population and can never escape them. Their argument does, however, not apply to the system of coupled dynamic equations we employed to model runaway consumption.