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Rechts- und Wirtschaftswissenschaftliche Fakultät

VWL I – Geld und Internationale Wirtschaft – Prof. Dr. Bernhard Herz

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Finance & Philosophy

Finance & Philosophy at the University of Bayreuth is concerned with policy issues at the intersection of finance and philosophy.

We believe that such an interdisciplinary approach is required to understand the most fundamental practical problems at the heart of our modern and globalized financial system. Getting to grips with the regulation or deregulation of global finance is not simply a matter of undertaking technical economic and institutional analysis but is partly a normative and epistemological project. We need answers not only about how to regulate but also what the aim of such regulation should be. How ought the European Union respond to unsustainably high debt levels in some member states? Are the underlying assumptions in the modelling of financial markets tenable? Why do we need financial stability and how should we measure it?

Finance & Philosophy at the University of Bayreuth is an initiative of the Departments of Philosophy & Economics at the University of Bayreuth and is supported by the Governance and Responsibility Emerging Field. We will be organizing regular international colloquia series for all members of the university and corresponding seminars for students studying Economics and Philosophy & Economics degrees.

Aktuelles Seminar

The Philosophy, Sociology and Economics of ClassEinklappen

Seminar Wintersemester 2021/22

Standard economics portrays people as representative households that respond effectively to economic incentives and available information. But decades of sociological and psychological research has shown that people are highly influenced by norms and their environment. From where we work and live to what we consume – our lives are highly influenced by our socioeconomic background or ‘class’. For example, many studies highlight that economic success in life in Germany still depends heavily on the circumstances in which people grow up.

This poses some important challenges to economics and philosophy. How much, if at all, do we need to adapt the homo economicus model in light of sociological findings? How shall we think of meritocracy if life prospects are indeed dependent on someone’s background and surroundings? What would policies to create a fairer and more inclusive society look like? 

In this seminar, we will explore these questions by analysing people’s lives from a sociological and economic perspective. We will dip into some classical sociological texts but mostly focus on readings and data on economic lives in Germany today. We will connect the empirical analysis of class to the philosophical literature about inequality.


The Ethics of CapitalismEinklappen

Seminar Summersemester 2021

In 1992, Fukuyama argued humanity might have reached the “end of history”, referring to the idea that capitalism is now the only viable economic system, being adopted by all countries. In this light, talking about ‘alternatives to capitalism’ can feel arcane and from another era. At the same time, rising inequality, poverty, polarisation and climate change raise some questions about this system. Indeed, surveys find that the majority of people now think that capitalism is doing more harm than good. 

In this seminar we will explore this conundrum. We will ask whether capitalism can have moral foundations and is it possible that is doing more harm than good? We will discuss how capitalist the German economy really is. And we will debate how a constructive criticism of capitalism could look like. To do so, we will retrace the key arguments of classical economists like Adam Smith, John Stuart Mill and Karl Marx and discuss to what extent their arguments for and against capitalism apply today. We develop a framework for comparing the economic systems of capitalism, feudalism, and socialism; and we will see if we can apply it to contemporary issues, such as unemployment, poverty, and social inequality. 

The key reading for this seminar are the first seven chapters of the book "The Ethics of Capitalism" by Daniel Halliday and John Thrasher -- OuP 2020.

Debt, inflation and employment after the pandemicEinklappen

Seminar Wintersemester 2020/21

Government spending and central bank actions are fundamental drivers of economic activity. These so-called macroeconomic policies influence every part of the economy, ranging from the labour market, to the housing market to business investment. For a long time, the core laws of macroeconomics seemed clear.

But the 2008/09 financial crisis and the COVID-19 pandemic upset the established consensus, triggering new and unconventional actions. Economies around the world grew slowly over the last decade, and the pandemic has plunged them into deep recessions. Mass unemployment is a real risk and many are worried good growth might not return. Governments have acted boldly to turn the tide. For instance, hitherto spendthrift governments like Germany have swapped the 'Schwarze Null' for large-scale government borrowing and investment programmes, resulting in huge increases in public debt. Central banks are not only buying a lot of this government debt. But they are also considering setting negative interest rates, which would in effect mean asking savers to pay for saving money. There is much disagreement about which approach is the right one, ow much borrow and when to stop.

In this seminar, we will try to make sense of this extraordinary situation. We will learn what different paradigms say about these policies, and how to choose. We will do some hands-on data analysis to help us in this quest and we will ask if social justice considerations ought to play a role in picking the right policies. Building on this, we will ultimately ask: what is pur policy advice to the German finance minister and the head of the Bundesbank to get the German economy back on track?

The Economics and the Design of Socially Just Climate PoliciesEinklappen

Seminar Summersemerster 2020

The findings from climate economics are clear: transitioning the economy to limit global warming - to 2 degrees or less - is possible. For decades, economists have built detailed models of the economy that estimate what individual countries and individual sectors of the economy would have to do, to prevent global warming. They also include recommendations for what policies are needed to do so (eg carbon taxes or efficiency regulations). These 'blueprints' for the climate transition are called 'transition pathways', most prominently summarised in the IPCC's WG 3 report.

In this seminar we will, first, understand the various transition scenarios and their core underlying assumptions (such as technology availability, growth, and consumption patterns). Second, given that clear plans for the transition exists, we will try to understand the deeper political economy causes of why countries are not implementing them. One core aspect of this will be to analyse the distirbute impacts of policies. That is: who are the economic winners and losers of climate policies? Third, we will discuss how to transition scenarios can be designed in a socially just way, in a given country. This includes reflecting on the moral underpinnings of consumption and economic growth.

The Future of Capitalism and Fiscal ReformEinklappen

Seminar Wintersemester 2019/20

Capitalist economies are undergoing rapid changes, leading to new grievances and the revival of old challenges in a new guise. Firstly, economic inequalities could approach the levels of the Belle Époque, injecting new life into questions about the justifiability of capitalism. Secondly, technology could fundamentally change the labour market, providing new opportunities but also raising doubts about the possibility of employment for all.

In this seminar, we explore recent proposals by political philosophers that addresses these challenges to capitalism. And we will quantitatively analyse fiscal reform proposals aimed at realising them. 

For instance, early defenders of capitalism, including David Hume and Adam Smith, saw capitalism as a tremendous improvement over feudalism. But critics today point out how current institutional structures are incompatible with social justice.  We will focus on this comparison to diagnose which type of reforms would be needed to achieve a just system.  Such proposals are those related to property owning democracy, including sweeping tax and expenditure reforms. 

Having established those reform proposals and their philosophical underpinnings, we will look at the fiscal forecasting and fiscal reform literature in order to quantitatively assess the financial impact of these policies. This will allow us to assess their feasibility and relate them to the current debate.  

​Big Corporations and Social JusticeEinklappen

Seminar Summersemerster 2019

Big corporations are on the rise. For instance, in ten percent of industries in the US, only four firms control the vast majority of the market. Some bigger corporations are more productive and innovative than some small ones. But big corporations also have more market power. They find it easier to set high prices, establish new practices, buy up competitors and influence policies that affect them. Some large corporations provide services and infrastructure that are more crucial than those provided by many government agencies, but are not necessarily held accountable in the same way. Finance is a sector where this has been explicitly acknowledged, with some institutions being labelled as “systemically important”, which are therefore under strong regulatory scrutiny.

In this seminar, we discuss, first, why companies in many sectors are getting bigger and more powerful, and whether this trend might continue. Second, we ask what is the impact of the concentration of power for employees, customers, and society at large? We will consider examples of big global banks, which are heavily regulated, and big tech firms, which aren’t. Third, what should be the role of corporations in society? Do large corporations currently fulfil these expectations? Fourth, which norms, rules, and policies should we pursue to better align the behaviour of big corporations with their social function?

​The Political Economy of European Economic PolicyEinklappen

Seminar Wintersemester 2018/19

In this seminar, we will explore European economic policy with a focus on the common currency, the Euro. We will employ political, economic and philosophical perspectives to discuss a variety of key aspects: why and how did the Euro come into being? What does sharing a common currency imply for the Member States? How is the euro area governed day to day? Is the economic governance just, or does it unduly disadvantage certain member states? Is the Eurozone’s governance legitimate? What exactly are the much-decried weaknesses of its institutional setup following the financial crisis? And what can be done to improve justice and legitimacy of European economic governance? Leading up to the European elections in 2019, this seminar will enable students to critically engage in a key debate of our time

​Capital, finance and justiceEinklappen

Seminar Summersemester 2018

What is capital and income, and how have they evolved over time? How unequally are they distributed?  And what are the moral implications of this? To answer these questions, in this seminar, we will study Thomas Piketty’s ‘Capital in the 21st Century’ and will put it into the context of the modern financial system.  We will consider Piketty’s evidence which shows that ownership of capital and income is increasingly concentrated and his theory explaining why this is happening. And we will consider prominent criticisms of Piketty’s arguments.  We assess the moral implications of these developments in the light of current theories of distributive justice. In particular, we will discuss the normative underpinnings of Piketty’s critique of income and wealth inequality. Finally, we will study what policies could be considered to bring about a more just outcome.  Throughout the seminar we will put an emphasis on students working with data first hand.

More information here.

​​What to believe now? Applied epistemology, information markets, and networksEinklappen

Seminar Wintersemester 2017/18

​In this seminar, we will use epistemology, the study of knowledge and justified belief, to investigate decision making in social, political and financial situations. Against the backdrop of debates about financial bubbles, fake news and populism, we investigate what we can know and what we are justified in believing. We approach applied epistemology through two lenses: epistemic virtues (individual), and social epistemology (social). And we will look at models of collective belief formation and information diffusion in markets and networks. This will include hands-on exercises, in which we run diffusion simulations. 

First, we will start by looking at individual belief formation, discussing theories of epistemic virtues and contrasting them economic models of belief formation. Epistemic virtues are traits guiding the way we deal with information, form beliefs, and acquire knowledge. We will explore philosophical questions about the nature of epistemic virtue. And, turning to empirics, we will look at research that shows which epistemic virtues make individuals better forecasters, how they impact social media behavior and people's ability to detect financial fraud. Second, we turn to belief formation in groups. Social epistemology starts from the insight that we all rely on others for almost everything we know. Groups face the challenge of how to best elicit and aggregate the information held by their individual members. While the ‘wisdom of the crowds’ can lead to better outcomes than individual deliberation, it can also lead the amplification of errors (for example, rumours), cascade effects (such as financial bubbles), and polarization. We discuss these effects using the network economics literature and we explore what virtues groups should have in order to overcome such group-level biases. We will look at empirical case studies and simulations on price formation in financial markets, voting behaviour and online ratings.

More information here.

The Ethics and Governance of Algorithmic Decision MakingEinklappen

Seminar Summersemester 2017

Human decision makers are increasingly replaced by self-learning computer algorithms in economic decision making. Such algorithms use personal data (ranging from one’s post code to medical history and Facebook friends) to score and rank people. Such rankings, in turn, can determine who gets offered a job, who gets offered a loan and under what conditions people can insure themselves against illness. Algorithms hold the promise of overcoming human bias and make smarter and more informed decisions. But can we really leave a large number of economic decisions to algorithms? How can we make sure they make good decisions? And how do we ensure they make fair decisions?  

In this seminar, we investigate how machine learning algorithms work and explore the novel ethical questions raised by these algorithms. Our aim is to develop a framework to think through the merits and dangers of using algorithms in decision making, and to decide how the use of algorithms should be governed. We start by developing a model of human decision making, differentiating between the phases of information gathering, belief-formation, and judgement. In a second step, we investigate how self-learning computer algorithms function, and compare our model of human decision making to the way algorithms process information. We will investigate in detail how scoring algorithms in finance, health care, and human resources already inform critical decisions. This allows us to weed out ethical concerns based on misunderstandings of how algorithms work, and to identify truly new problems raised by algorithmic decision making, in contrast to problems that are raised by any kind of decision maker. 

Key issues discussed in the seminar:
1. How does artificial intelligence make decisions?
2. How can machine learning algorithms be held accountable?
​3. How to evaluate fairness in algorithmic decision making?

Finance and Social Justice Einklappen

Seminar Wintersemester 2016/17

Access to finance has an important role in determining what goods a market economy produces, and how they are distributed. Yet before the global financial crisis of 2007/8, states were often thought to have at most a minimal role in shaping financial markets. Political debates largely ignored the role of the financial system. The more prominent role of public intervention has put new questions on the political agenda. Where is public intervention required to create optimal aggregate and individual outcomes? And where can social justice be achieved through private initiative and the market mechanism? An important role in regulating financial markets currently goes to central banks. How do their activities relate to the economic policies of the governments? As the financial system is tightly integrated across borders, decisions by national central banks and other regulators can have global repercussions. How should we think about this from a perspective of justice? A lot of relevant research is currently underway in a vibrant field at the intersection of economics, sociology, political science, and economic history, which carries many lessons for these normative questions.

The webinar is a collaboration of the INET Young Scholars Initiative (YSI) and the Bayreuth Philosophy and Economics program.  Webinars will take place on the online GoToMeeting platform during 90 minute sessions. The webinar will not only be open to Bayreuth students, but also to members of this community from around the world.

Are Financial Markets Efficient? Implications of the Efficient Market Hypothesis for Financial Stability & Corporate GovernanceEinklappen

Seminar Summersemester 2016

In its most popular form, the efficient market hypothesis (EMH) is the claim that asset prices reflect all publicly available information. The EMH is an important cornerstone for most asset pricing models. But it is also highly controversial. Critics claim that models based on the EMH are to blame for the inability of predicting and avoiding the global financial crisis of 2008/9.

In this seminar, first, we discuss the the key arguments for and against the EMH. Exploring the persistent controversy around the EMH will lead us to a core issue in the philosophy of science: the question of whether one can ever falsify a single hypothesis. We will illustrate this, using case studies on the reaction of financial markets to the disaster of the Challenger space shuttle, and we will study the futures market for oranges.

Second, we will look at the role the EMH plays in financial markets today. Who is using it, how are they using it and does it matter? We will discuss two arguments stating that the ‘false belief in efficient markets’ (i) causes financial crises and (ii) leads markets to be short-termist.

Third, we will discuss alternatives to the EMH which have been suggested by economists and behavioral psychologists. We will discuss the implications of their work for financial regulation and for public debates about the financial system.

The Complexity Science Approach to the Financial SystemEinklappen

Seminar Wintersemester 2015/16

Complexity science provides new ways of modelling the financial system as a complex system. It challenges dominant views of linearity, predictability and responsibility in finance. On the philosophical side, this could have implications for how we think about morality in financial markets. On the policy side, the complexity approach could require at least a partial rethinking of how we regulate the financial system.

In this seminar, first, we provide an introduction to some key concepts and mathematical foundations of complexity science. We then take a philosophy of science angle, asking what we can possibly expect to learn from models of complexity. Second, we ask if the financial system is really 'complex'; and turn to three specific models: agent-based modelling, network theory and statistical finance. Third, we discuss the implications of these approaches for ethics in financial markets and for financial regulation. 

Sovereign Debt. How can we respond to sovereign debt crises in a fair way?Einklappen

Seminar Summersemester 2015

In this seminar, we will tackle core philosophical and economic questions that arise in sovereign debt crises, with a special focus on Europe. On the first day, we will examine from a philosophical perspective in what way states are morally bound by sovereign debt contracts. We will build on the established economic literature which addresses the puzzle why sovereign states repay at all given limited legal enforcement procedures. On the second day, we will discuss under which conditions debtor countries should repay. Should creditors enforce debt repayment and should they impose conditions in return for bailouts? We will scrutinise the conditions enforced by the Troika and discuss if conditionality undermines democratic sovereignty. Finally on the third day, we will ask who should pay the burden for excessive debt levels.  We will discuss different policy options of how European countries can reduce their debt levels at the current juncture.

The seminar will equip participants with analytical tools and empirical background to analyze sovereign debt crises. Participants are encouraged to attend the Finance & Philosophy Lecture Series on the same topic this Summer Semester.

Verantwortlich für die Redaktion: Sabine Übelhack

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