Given what we know about the ultimate goal of free markets (project A), this second part of our project (B) investigates what virtues are required from key market actors to make the positive relationship between markets and human flourishing come through.
The following questions are central to this research project:
B1. What are the views regarding virtues, free market institutions and their potential for human flourishing in different cultural zones in Northern Europe (Germany, the Netherlands and Denmark), Anglo-Saxon countries (UK and US) and Latin Europe (France, Spain, Italy)? How are these views related to influential discourses in economics as a science within these cultural zones?
B2. What can we learn from game theory, behavioral economics and experimental economics about the influence of virtues and vices on market efficiency and human flourishing in a market context?
B3. How do different indicators of economic freedom (e.g. size of government, quality of legal system and property rights, sound money, trade openness and government regulation) affect human flourishing and what is the role of virtues in this relationship?
Methodologies and approaches used in this project are:
- game theory
- behavioral economics
- critical assessment of state of he art insights in various fields of economics
- panel estimation using data of economic freedom and various indicators of human flourishing and virtues
- multilevel regression analysis of data from Eurobarometer, European Values Study
- archival research
- oral history
- prosopography
Resulting Publications
2020 | |
 | Graafland, Johan Vrijemarktinstituties, deugden en maatschappelijk verantwoord ondernemen Journal Article Management & Organisatie, 2020 (2/3), pp. 36-47, 2020. @article{Graafland2020c, title = {Vrijemarktinstituties, deugden en maatschappelijk verantwoord ondernemen}, author = {Johan Graafland }, year = {2020}, date = {2020-06-01}, journal = {Management & Organisatie}, volume = {2020}, number = {2/3}, pages = {36-47}, abstract = {In dit artikel onderzoekt de auteur of het effect van economische vrijheid op maatschappelijk verantwoord ondernemen afhankelijk is van de deugdzaamheid van bedrijven, zoals afgemeten aan hun intrinsieke motivatie voor MVO en hun langetermijngerichtheid. Dit onderzoek past daarmee in een groeiende literatuur waarin rekening wordt gehouden met meer gedragsmatige factoren van MVO-prestaties.}, keywords = {}, pubstate = {published}, tppubtype = {article} } In dit artikel onderzoekt de auteur of het effect van economische vrijheid op maatschappelijk verantwoord ondernemen afhankelijk is van de deugdzaamheid van bedrijven, zoals afgemeten aan hun intrinsieke motivatie voor MVO en hun langetermijngerichtheid. Dit onderzoek past daarmee in een groeiende literatuur waarin rekening wordt gehouden met meer gedragsmatige factoren van MVO-prestaties. |
 | Graafland, Johan; Wells, Thomas Journal of Business Ethics, 2020. @article{Graafland2020b, title = {In Adam Smith’s Own Words: The Role of Virtues in the Relationship Between Free Market Economies and Societal Flourishing, A Semantic Network Data‑Mining Approach}, author = {Johan Graafland and Thomas Wells}, url = {https://link.springer.com/content/pdf/10.1007/s10551-020-04521-5.pdf}, doi = {https://doi.org/10.1007/s10551-020-04521-5}, year = {2020}, date = {2020-04-29}, journal = {Journal of Business Ethics}, abstract = {Among business ethicists, Adam Smith is widely viewed as the defender of an amoral if not anti-moral economics in which individuals’ pursuit of their private self-interest is converted by an ‘invisible hand’ into shared economic prosperity. This is often justified by reference to a select few quotations from The Wealth of Nations. We use new empirical methods to investigate what Smith actually had to say, firstly about the relationship between free market institutions and individuals’ moral virtues, and secondly about the further relationship between virtues and societal flourishing. We show with more quantitative precision than traditional scholarship that the invisible hand reading dramatically misrepresents both the nuance and the sum of Smith’s analysis. Smith paid a great deal of attention to a flourishing society’s dependence on virtues, including the non-self-regarding virtues of justice and benevolence, and he worried also about their fragility in the face of the changed incentives and social conditions of commercial society.}, keywords = {}, pubstate = {published}, tppubtype = {article} } Among business ethicists, Adam Smith is widely viewed as the defender of an amoral if not anti-moral economics in which individuals’ pursuit of their private self-interest is converted by an ‘invisible hand’ into shared economic prosperity. This is often justified by reference to a select few quotations from The Wealth of Nations. We use new empirical methods to investigate what Smith actually had to say, firstly about the relationship between free market institutions and individuals’ moral virtues, and secondly about the further relationship between virtues and societal flourishing. We show with more quantitative precision than traditional scholarship that the invisible hand reading dramatically misrepresents both the nuance and the sum of Smith’s analysis. Smith paid a great deal of attention to a flourishing society’s dependence on virtues, including the non-self-regarding virtues of justice and benevolence, and he worried also about their fragility in the face of the changed incentives and social conditions of commercial society. |
 | Lous, Bjorn On free markets, income inequality, happiness and trust PhD Thesis Tilburg University, Center for Economic Research (CentER), 2020, ISBN: 978 90 5668 620 8. @phdthesis{Lous2020, title = {On free markets, income inequality, happiness and trust}, author = {Bjorn Lous}, url = {https://pure.uvt.nl/ws/portalfiles/portal/32241440/Lous_PhD_Thesis_final.pdf}, isbn = {978 90 5668 620 8}, year = {2020}, date = {2020-01-31}, school = {Tilburg University, Center for Economic Research (CentER)}, abstract = {Even though on average Western countries are richer than ever before, an undercurrent of widespread discomfort and uncertainty has been revealed in recent years. This has led to renewed critical interest in the foundations and assumptions of the capitalist economic model. This thesis focuses on the role of inequality in the functioning of the economy. Specifically, three relationships are investigated. The first empirical chapter sets the general context, looking at the effect of economic freedom on (country-level) life satisfaction through income inequality. The second research chapter analyzes the effect of income inequality on trust and inequality in life satisfaction. The third and fourth chapters zoom in on the microeconomic level, discussing how national income inequality relates to individual life satisfaction, and to individual inclination to trust other people. In addition, the differences between different income groups are investigated, as well as between other socio-demographically defined groups.}, keywords = {}, pubstate = {published}, tppubtype = {phdthesis} } Even though on average Western countries are richer than ever before, an undercurrent of widespread discomfort and uncertainty has been revealed in recent years. This has led to renewed critical interest in the foundations and assumptions of the capitalist economic model. This thesis focuses on the role of inequality in the functioning of the economy. Specifically, three relationships are investigated. The first empirical chapter sets the general context, looking at the effect of economic freedom on (country-level) life satisfaction through income inequality. The second research chapter analyzes the effect of income inequality on trust and inequality in life satisfaction. The third and fourth chapters zoom in on the microeconomic level, discussing how national income inequality relates to individual life satisfaction, and to individual inclination to trust other people. In addition, the differences between different income groups are investigated, as well as between other socio-demographically defined groups. |
2019 | |
 | Graafland, Johan When Does Economic Freedom Promote Well Being? On the Moderating Role of Long-Term Orientation Journal Article Social Indicators Research, 2019, ISSN: 1573-0921. @article{Graafland2019d, title = {When Does Economic Freedom Promote Well Being? On the Moderating Role of Long-Term Orientation}, author = {Johan Graafland}, url = {https://doi.org/10.1007/s11205-019-02230-9}, doi = {10.1007/s11205-019-02230-9}, issn = {1573-0921}, year = {2019}, date = {2019-11-30}, journal = {Social Indicators Research}, abstract = {An increasing volume of literature has shown that economic freedom is related to life satisfaction. However, life satisfaction may not fully describe well-being because of its subjective nature. This study contributes to previous literature by extending analysis of the relationship between economic freedom and life satisfaction to other dimensions of well-being as measured by the better life index of the OECD that includes both objective and subjective measures. A second innovation of this paper is that, in explaining the differences in well-being between countries, we conjecture that the relationship between free market institutions as measured by economic freedom and well-being is moderated by the cultural dimension of long-term orientation. This hypothesis is supported for six out of 11 dimensions of well-being: income, community, health, life satisfaction, safety, and work---life balance. Our study shows that looking at interdependencies between culture and formal institutions can increase the explanatory power of internationally comparative research into well-being.}, keywords = {}, pubstate = {published}, tppubtype = {article} } An increasing volume of literature has shown that economic freedom is related to life satisfaction. However, life satisfaction may not fully describe well-being because of its subjective nature. This study contributes to previous literature by extending analysis of the relationship between economic freedom and life satisfaction to other dimensions of well-being as measured by the better life index of the OECD that includes both objective and subjective measures. A second innovation of this paper is that, in explaining the differences in well-being between countries, we conjecture that the relationship between free market institutions as measured by economic freedom and well-being is moderated by the cultural dimension of long-term orientation. This hypothesis is supported for six out of 11 dimensions of well-being: income, community, health, life satisfaction, safety, and work---life balance. Our study shows that looking at interdependencies between culture and formal institutions can increase the explanatory power of internationally comparative research into well-being. |
 | Graafland, Johan Contingencies in the relationship between economic freedom and human development: the role of generalized trust Journal Article Journal of Institutional Economics, pp. 1–16, 2019. @article{graaflandm, title = {Contingencies in the relationship between economic freedom and human development: the role of generalized trust}, author = {Johan Graafland}, url = {https://www.cambridge.org/core/journals/journal-of-institutional-economics/article/contingencies-in-the-relationship-between-economic-freedom-and-human-development-the-role-of-generalized-trust/455C6214E32F50EF20C3F7BFA83E675A}, doi = {10.1017/S1744137419000705}, year = {2019}, date = {2019-11-07}, journal = {Journal of Institutional Economics}, pages = {1–16}, publisher = {Cambridge University Press}, abstract = {An increasing volume of literature has shown that human development is related to economic institutions. But previous literature has not considered that the effects of economic institutions on human development are contingent on culture. In this study, we contend that the effects of economic freedom (as an indicator of economic institutions) on human development are dependent on generalized trust (as an indicator of culture). Using panel analysis on a sample of 29 OECD countries during 1990–2015, we find that generalized trust positively moderates the relationship between economic freedom and human development. The policy implication is that free market institutions foster human development only in high trust societies, not in low trust countries.}, keywords = {}, pubstate = {published}, tppubtype = {article} } An increasing volume of literature has shown that human development is related to economic institutions. But previous literature has not considered that the effects of economic institutions on human development are contingent on culture. In this study, we contend that the effects of economic freedom (as an indicator of economic institutions) on human development are dependent on generalized trust (as an indicator of culture). Using panel analysis on a sample of 29 OECD countries during 1990–2015, we find that generalized trust positively moderates the relationship between economic freedom and human development. The policy implication is that free market institutions foster human development only in high trust societies, not in low trust countries. |
 | Graafland, Johan; Lous, Bjorn Income Inequality, Life Satisfaction Inequality and Trust: A Cross Country Panel Analysis Journal Article Journal of Happiness Studies, 20 (6), pp. 1717–1737, 2019, ISSN: 1573-7780. @article{Graafland2019c, title = {Income Inequality, Life Satisfaction Inequality and Trust: A Cross Country Panel Analysis}, author = {Johan Graafland and Bjorn Lous}, url = {https://doi.org/10.1007/s10902-018-0021-0}, doi = {10.1007/s10902-018-0021-0}, issn = {1573-7780}, year = {2019}, date = {2019-08-01}, journal = {Journal of Happiness Studies}, volume = {20}, number = {6}, pages = {1717--1737}, abstract = {Literature has argued that income inequality crowds out trust. However, whether income inequality makes people less trusting depends on how they perceive income inequality within their personal social context and social cognition. In this paper we therefore conjecture that the relationship of income inequality to trust depends on how income inequality affects inequality of life satisfaction. If life satisfaction inequality is high, distrust is generated among the least happy. This will increase polarization and the risk of rebellion, thereby also affecting trust among the happier people. Thus, life satisfaction inequality may be an essential factor in the relationship between income inequality and trust. In previous literature, the potential mediating role of life satisfaction inequality in the relationship between income inequality and social trust has not yet received attention. We test our model by panel analysis on 25 OECD countries in the period 1990--2014. The panel analysis shows that income inequality increases life satisfaction inequality and that both income inequality and life satisfaction inequality have a significant negative impact on social trust. Mediation tests show complementary mediation: besides the direct negative effect of income inequality on trust, we find an indirect effect mediated by life satisfaction inequality. This indirect effect counts for 20% of the total effect of income inequality on trust. Our results imply that policy options for increasing trust are not limited to countering income inequality, but can also include policy measures that directly reduce inequality of life satisfaction.}, keywords = {}, pubstate = {published}, tppubtype = {article} } Literature has argued that income inequality crowds out trust. However, whether income inequality makes people less trusting depends on how they perceive income inequality within their personal social context and social cognition. In this paper we therefore conjecture that the relationship of income inequality to trust depends on how income inequality affects inequality of life satisfaction. If life satisfaction inequality is high, distrust is generated among the least happy. This will increase polarization and the risk of rebellion, thereby also affecting trust among the happier people. Thus, life satisfaction inequality may be an essential factor in the relationship between income inequality and trust. In previous literature, the potential mediating role of life satisfaction inequality in the relationship between income inequality and social trust has not yet received attention. We test our model by panel analysis on 25 OECD countries in the period 1990--2014. The panel analysis shows that income inequality increases life satisfaction inequality and that both income inequality and life satisfaction inequality have a significant negative impact on social trust. Mediation tests show complementary mediation: besides the direct negative effect of income inequality on trust, we find an indirect effect mediated by life satisfaction inequality. This indirect effect counts for 20% of the total effect of income inequality on trust. Our results imply that policy options for increasing trust are not limited to countering income inequality, but can also include policy measures that directly reduce inequality of life satisfaction. |
2017 | |
 | Ballor, Jordan J Reformation Protestantism and the “Spirit” of Capitalism Book Chapter Melloni, Alberto (Ed.): Martin Luther; A Christian between Reforms and Modernity (1517-2017), pp. 965–982, De Gruyter, Berlin, 2017, ISBN: 9783110499025. @inbook{Ballor2018, title = {Reformation Protestantism and the “Spirit” of Capitalism}, author = {Jordan J. Ballor}, editor = {Alberto Melloni}, doi = {doi.org/10.1515/9783110499025-055}, isbn = {9783110499025}, year = {2017}, date = {2017-12-01}, booktitle = {Martin Luther; A Christian between Reforms and Modernity (1517-2017)}, pages = {965–982}, publisher = {De Gruyter}, address = {Berlin}, abstract = {Appearing at the dawn of the twentieth century, the German sociologist and philosopher Max Weber attempted to define a religious basis for economic life in his essays on "The Protestant Ethic and the Spirit of Capitalism." The argument in these essays came to be known as “The Weber Thesis,” which held that in the development of the modern world there was an intimate connection between religious doctrines and ethos on the one hand, and economic life and practice on the other. After a summary of Weber’s basic argument, we will proceed to examine more closely the figure of Martin Luther (1483-1546) in Weber’s study. Then we shall examine the significance of Protestant rhetoric as it influenced both Protestant ethics and the cultural spirit underpinning modern economic life. As this survey approaches the contemporary era, we will find that there are good reasons to question Weber’s identification of specifically Protestant, and particularly Puritan, backgrounds for the spirit of modern capitalism. We will conclude with an evaluation of Weber’s thesis, which must be judged to be insightful even as it is incomplete and in some ways mistaken. In highlighting the doctrine of predestination as the dogmatic ground for the Puritan ethic and in turn the spirit of modern economic life, Weber displays an erroneous understanding of both this doctrine and its historical role. At the same time, however, Weber does rightly identify important features of capitalism and its grounding in Christian ethics, and these insights continue to have relevance and insight today.}, keywords = {}, pubstate = {published}, tppubtype = {inbook} } Appearing at the dawn of the twentieth century, the German sociologist and philosopher Max Weber attempted to define a religious basis for economic life in his essays on "The Protestant Ethic and the Spirit of Capitalism." The argument in these essays came to be known as “The Weber Thesis,” which held that in the development of the modern world there was an intimate connection between religious doctrines and ethos on the one hand, and economic life and practice on the other. After a summary of Weber’s basic argument, we will proceed to examine more closely the figure of Martin Luther (1483-1546) in Weber’s study. Then we shall examine the significance of Protestant rhetoric as it influenced both Protestant ethics and the cultural spirit underpinning modern economic life. As this survey approaches the contemporary era, we will find that there are good reasons to question Weber’s identification of specifically Protestant, and particularly Puritan, backgrounds for the spirit of modern capitalism. We will conclude with an evaluation of Weber’s thesis, which must be judged to be insightful even as it is incomplete and in some ways mistaken. In highlighting the doctrine of predestination as the dogmatic ground for the Puritan ethic and in turn the spirit of modern economic life, Weber displays an erroneous understanding of both this doctrine and its historical role. At the same time, however, Weber does rightly identify important features of capitalism and its grounding in Christian ethics, and these insights continue to have relevance and insight today. |
 | Graafland, Johan; Lous, Bjorn Economic Freedom, Income Inequality and Life Satisfaction in OECD Countries Journal Article Journal of Happiness Studies, online first , pp. 1-23, 2017. @article{Graafland2017, title = { Economic Freedom, Income Inequality and Life Satisfaction in OECD Countries}, author = {Johan Graafland and Bjorn Lous}, doi = {10.1007/s10902-017-9905-7}, year = {2017}, date = {2017-08-12}, journal = {Journal of Happiness Studies}, volume = {online first}, pages = {1-23}, abstract = {Since \emph{Piketty’s Capital in the 21st Century} in 2014, scientific interest into the impact of income inequality on society has been on the rise. However, little is known about the mediating role of income inequality in the relationship between market institutions and subjective well-being. Using panel analysis on a sample of 21 OECD countries to test the effects of five different types of economic freedom on income inequality, we find that fiscal freedom, free trade and freedom from government regulation increase income inequality, whereas sound money decreases income inequality. Income inequality is found to have a negative effect on life satisfaction. Mediation tests show that income inequality mediates the influence of fiscal freedom, free trade and freedom from government regulation on life satisfaction. }, keywords = {}, pubstate = {published}, tppubtype = {article} } Since Piketty’s Capital in the 21st Century in 2014, scientific interest into the impact of income inequality on society has been on the rise. However, little is known about the mediating role of income inequality in the relationship between market institutions and subjective well-being. Using panel analysis on a sample of 21 OECD countries to test the effects of five different types of economic freedom on income inequality, we find that fiscal freedom, free trade and freedom from government regulation increase income inequality, whereas sound money decreases income inequality. Income inequality is found to have a negative effect on life satisfaction. Mediation tests show that income inequality mediates the influence of fiscal freedom, free trade and freedom from government regulation on life satisfaction. |
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