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Praiseworthiness and Endogenous Growth

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  • David M. Levy
  • Dalibor Roháč

Abstract

This paper demonstrates that increasing returns to scale can be sustained when agents care about praiseworthiness of their conduct. Unlike the desire to attain approbation from external sources, the notion of praiseworthiness seems to have been neglected by contemporary economic literature. Yet the relevance of praiseworthiness as an internal motivational force was stressed by a number of classical economists. We construct an endogenous growth model in which agents derive utility not only from their consumption but also from praiseworthiness of their action. In such a setting, the motivation by praiseworthiness is able to generate positive and accelerating growth of output per labourer in steady state. The main implication of our model is that the existence of increasing returns depends critically on presence of sufficient approbation attributed to creativity. Furthermore, the presence or the absence of these rewards may be susceptible to explain the cross-sectional differences in growth rates, growth miracles and growth disasters.

Suggested Citation

  • David M. Levy & Dalibor Roháč, 2009. "Praiseworthiness and Endogenous Growth," Prague Economic Papers, University of Economics, Prague, vol. 2009(3), pages 220-234.
  • Handle: RePEc:prg:jnlpep:v:2009:y:2009:i:3:id:351:p:220-234
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    References listed on IDEAS

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    1. McCleary, Rachel & Barro, Robert, 2003. "Religion and Economic Growth across Countries," Scholarly Articles 3708464, Harvard University Department of Economics.
    2. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    3. E. S. Phelps, 1966. "Models of Technical Progress and the Golden Rule of Research," Review of Economic Studies, Oxford University Press, vol. 33(2), pages 133-145.
    4. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 503-530.
    5. Cowen, Tyler & Sutter, Daniel, 1997. "Politics and the Pursuit of Fame," Public Choice, Springer, vol. 93(1-2), pages 19-35, October.
    6. Cowen, Tyler & Glazer, Amihai, 2007. "Esteem and ignorance," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 373-383, July.
    7. Levy, David M., 1999. "Adam Smith's Katallactic Model of Gambling: Approbation from the Spectator," Journal of the History of Economic Thought, Cambridge University Press, vol. 21(01), pages 81-91, March.
    8. Roland Bénabou & Jean Tirole, 2002. "Self-Confidence and Personal Motivation," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 871-915.
    9. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    10. David M. Levy, 1988. "The Market for Fame and Fortune," History of Political Economy, Duke University Press, vol. 20(4), pages 615-625, Winter.
    11. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
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    Cited by:

    1. Pavel Kuchař, 2012. "Dan Št’astný: The Economics of Economics," European Journal of Law and Economics, Springer, vol. 34(1), pages 3-7, August.

    More about this item

    Keywords

    endogenous growth; approbation; praiseworthiness; research and development;

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • N00 - Economic History - - General - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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