Path dependence, its critics and the quest for ‘historical economics’
AbstractThe concept of path dependence refers to a property of contingent, non- reversible dynamical processes, including a wide array of biological and social processes that can properly be described as 'evolutionary.' To dispell existing confusions in the literature, and clarify the meaning and significance of path dependence for economists, the paper formulates definitions that relate the phenomenon to the property of non-ergodicity in stochastic processes; it examines the nature of the relationship between between path dependence and 'market failure,' and discusses the meaning of 'lock-in.' Unlike tests for the presence of non-ergodicity, assessments of the economic significance of path dependence are shown to involve difficult issues of counterfactual specification, and the welfare evaluation of alternative dynamic paths rather than terminal states. The policy implications of the existence of path dependence are shown to be more subtle and, as a rule, quite different from those which have been presumed by critics of the concept. A concluding section applies the notion of 'lock-in' reflexively to the evolution of economic analysis, suggesting that resistence to historical economics is a manifestation of 'sunk cost hysteresis' in the sphere of human cognitive development.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Economic History with number 0502003.
Length: 25 pages
Date of creation: 10 Feb 2005
Date of revision:
Note: Type of Document - pdf; pages: 25
Contact details of provider:
Web page: http://188.8.131.52
path dependence; non-ergodicity; irreversibility; lock-in; counterfactual analysis;
Other versions of this item:
- Paul A. David, . "Path Dependence, its critics, and the quest for 'historical economics'," Working Papers 00011, Stanford University, Department of Economics.
- N - Economic History
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-04-16 (All new papers)
- NEP-CBE-2005-04-16 (Cognitive & Behavioural Economics)
- NEP-HIS-2005-04-16 (Business, Economic & Financial History)
- NEP-HPE-2005-04-16 (History & Philosophy of Economics)
- NEP-PKE-2005-04-16 (Post Keynesian Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading lists or Wikipedia pages:
- Talk:Path dependence in Wikipedia English ne '')
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.