Understanding Economic Change: The Impact of Emotion

An interesting looking paper in Constitutional Political Economy by Roberta Patalano.

Abtract: In this paper we aim to conceptualize the involvement of emotion in the processes of institutional emergence and change. The starting point of our proposal is the theory of change that has been developed by Douglass North since the 1990s and has recently culminated in the publication of “Understanding the process of economic change” (2005). We agree with North in considering change as an endogenous process which starts in the individual mind through a modification of mental models and beliefs. However, notwithstanding the value that North attributes to the cognitive components of change, his approach assigns no specific role to emotion. Based on recent findings on emotions and their contribution to the process of thought, we will suggest how North’s approach may be extended in order to explore some basic mechanisms of the interaction between institutions and feelings.

I think Northian cognitive institutionalism is going to produce some very interesting stuff in years to come as our understanding of the human mind improves. Economists and other social scientists have produced some great insights taking perceptions and preferences as given, but endogenizing the mental opens up a whole lot of new possibilities in advancing our understanding of how humans interact to produce social outcomes.

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