PROPOSAL FOR UARCTIC THEMATIC NETWORK ON
ARCTIC ECONOMIC SCIENCE
UIT- THE ARCTIC UNIVERSITY OF NORWAY, SCHOOL OF BUSINESS AND
ECONOMICS
Professor Stein Østbye, PhD
Director of Centre for Economics Research
June 20, 2016
We propose setting up a new social science Thematic Network (TN) under the University of the
Arctic (UArctic). The proposal has been developed by the Centre for Economics Research at UiT
(The Arctic University of Norway) in collaboration with the College of Business and Public
Policy at UAA (The University of Alaska in Anchorage). In addition to UiT and UAA, the
founding members include researchers from Université Laval in Canada and the Higher School
of Economics in Moscow (HSE). There are ties between the founding members already in place
both related to education and research, on an institutional as well as on a personal level. UiT has
for example cooperation with HSE (linguistics), UAA (economics) and Laval (biology).
The TN will examine issues on conflict and cooperation related to the economics of the Arctic
with a special emphasis on aiming at developing high quality research and building a knowledge
base of particular relevance for Arctic policymaking. Examples could be development of
property rights and fair division of revenues generated from the exploitation of natural resources.
The TN will further emphasize an experimental methodological approach in accordance with
principles adhered to by the Economic Science Association (ESA).
The network welcomes researchers and member institutions of UArctic that are interested in the
broad theme outlined above (further elaborated below) and committed to the methodological
platform. Although the experimentalist school is rapidly expanding within economics, political
science and other fields where this approach until quite recently was rare, UArctic members in
the North seem on average to lag behind. An important aim of the TN is therefore to facilitate
transfer of knowledge that enables Arctic institutions to catch up and excel in niche areas that
receive relatively little attention elsewhere but are of particular relevance for the Arctic.
The TN will seek cooperation and sharing of information across Thematic Networks when it is
useful. We have already an agreement in place with the two TNs that we consider most relevant:
the TN on Geopolitics and Security and the TN on Arctic Extractive Industries.
The motivation for the proposal is presented in Section 1. After the motivation follows a brief
outline of the thematic focus area and the aims and planned activities (Section 2). In Section 3,
the relevance for indigenous issues is discussed as well as aspects related to quality control. In
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Section 4, the added benefits of the proposed TN is highlighted. Finally, Section 5 lists required
information about the TN members and the host institution and leader.
1. MOTIVATION
The case for Economics
An examination of the list of existing TNs suggests that researchers with expertise in economics
(PhD level and above) are underrepresented. The relative lack of economists is noticeable give
that several TNs do have economic issues as areas of interest. We think it is time to fill this gap
and more timely than ever to recognize that economics has an important role to play in the Arctic
as the social science with a main focus on scarce resources.
There are at least three significant trends that highlight the importance of economics for studying
Arctic issues related to scarce resources:
1. An increased scarcity of natural resources worldwide that can be commercially exploited
2. Receding ice because of climate changes increase accessibility to natural resources in the
Arctic
3. Technology development makes non-feasible exploitation increasingly feasible
Regardless of political views on the desirability of increased exploitation, these trends combined
create incentives for increased activity and for competition for property rights over resources that
before had no immediate commercial value. It also implies increased potential for conflicts at
various levels, including between nation-states, and between indigenous groups and commercial
enterprises, giving rise to the need to find ways to mitigate conflicts of interest between agents.
These are exactly the kind of issues that economics is meant to handle. We do recognize that
other social sciences also have a role to play and welcome their participation in the TN alongside
research economists.
The experimental approach
The success of policy advice based on statistical correlations is sensitive to changes in economic
fundamentals. A robust approach necessitates an understanding of the causal mechanisms behind
the correlations. This is essentially the take away lesson from the famous Lucas critique (Robert
Lucas, Nobel laureate economics 1995), as well as recent contributions in experimental and
quasi-experimental methods.
Experiments, whether in controlled laboratory settings or in field environments, have come to be
recognized as uniquely powerful tools to identify causal relationships. While psychology has
had a long tradition of experimental work, the technique was long considered infeasible in
economics. This view has changed as a result of a large volume of work both in market and nonmarket settings that followed the seminal efforts of Vernon Smith and Daniel Kahneman, both of
whom were awarded the Nobel Prize in Economics in 2002.
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The experimental methodology is now pervasive in many fields of economics and is getting
increasing attention in other social sciences such as sociology and political science, as well as in
management science, and public policy applications. Experimental research in the social and
policy sciences has the same virtue that has made it so valuable in the physical sciences. The
ability to compare treatment and control conditions allows researchers to generate
counterfactuals and therefore test basic theory and also to search for novel empirical regularities.
A good example is in labor economics where experimental methods have made numerous
important contributions in the last decade, shedding light on fundamental questions about the
power of intrinsic and extrinsic motives, the nature of discrimination, and bargaining and
negotiations. What has happened in labor economics has, to varying degrees, occurred in other
fields. Important contributions have been made in environmental and natural resource
economics, finance, industrial organization, public economics, as well as at interdisciplinary
boundaries of economics with sociology in the study of social networks and identity and
psychology (behavioral economics). In addition to addressing theoretical questions,
experimental methods have also proven vital in diverse management and policy applications that
include the market design of natural resource and financial markets, education and tax policy,
poverty alleviation, public health, and charitable giving.
In recognition of these developments, we propose that the TN core members have competence in
experimental methodology and belong to institutions that have committed to this strategy by
setting up relevant research facilities. This implies a recognition of experimental methodology as
the most reliable method for establishing causal behavioral relationships in the Arctic as
elsewhere and thereby building a knowledge base for policy advice that is less fragile than
anecdotal evidence and correlations.
The flexibility of experimental approaches are such that both market and non-market topics can
be investigated. Non-market topics may involve strategic interactions that are relevant for
understanding conflict, cooperation, and negotiation, as well as the elicitation of preferences and
beliefs that allow researchers to predict and understand behavior in a variety of settings.
Issues in the Arctic that experimental methods are well-suited to explore include resource
harvesting and extraction issues, particularly those for which property rights are ill-defined, and
understanding novel interactions across groups from different cultures. A fundamental issue is
the normative question of how to share costs and benefits in a way that is considered fair.
Experimental environments also make a natural testbed for examining regulatory issues of
different types. Further, unexpected shocks to resource availability or of other types have been
explored experimentally among rural indigenous populations. Experimental economists have
also honed protocols for eliciting subjective beliefs over various outcomes. These beliefs are
typically difficult to observe and remain confounded with preferences in non-experimental work.
The opportunity to identify what people believe about the nature of changes in the Arctic can
take us a long way towards understanding potential conflicts and solutions.
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2. GOALS AND ACTIVITIES
The overall goal of the TN on Arctic Economic Science is to promote research that improve the
knowledge of how the diverse changes in the Arctic affect opportunities and constraints of
existing populations and the potential for economic growth/change, and thereby extend and
improve the knowledge base for informed policy advice. The TN founding members will meet to
discuss and clarify an action plan for the first year of operation and a strategy plan identifying
key goals and activities for the first two years of operation. A main objective for the meeting will
be to specify and prioritize the research that should be undertaken. This meeting is planned to
take place during the European conference of the Economics Science Association in Bergen,
Norway, late August, before the UArctic Council meeting in St. Petersburg in September.
In pursuing the overall goal there are necessarily many intermediate goals that are conducive to
the overall goal. These intermediate goals, however, are not only valuable as steps towards the
overall goal but can be seen as having intrinsic value in themselves for the Arctic, if realized. A
main intermediate goal is to identify research issues for joint projects, identify possible funding
possibilities, and develop project proposals for applications. By bringing together institutions
from different parts of the World, there is a range of potential benefits. The possible sources for
funding will increase, the general interest of the research is likely to be greater, cultural and
language specific barriers to data collection from several countries are minimized, international
knowledge exchange within the network is facilitated, and a wider dissemination of results
outside the research community is more easily obtainable.
Building a knowledge base does not necessarily imply new research. A first step is certainly to
map the research that already has been done and assess the relevance. In order to accomplish this
and make it accessible outside the TN, we envisage building and maintaining a database
containing research literature that can be put into different categories. Examples could be: social
science experimental literature on natural resources in general; social science experimental
literature on cross-cultural interaction in general; experimental literature within social science in
general related to Arctic issues; social science experimental literature on natural resources in the
Arctic; social science experimental literature on cross-cultural interaction in the Arctic. Some of
these categories may contain very few entries and by that indicate a possible need for more
research to be undertaken. It is also a sad fact that different disciplines are not good at
communicating with each other. The negotiation literature (more below) is one example, where
the connection to the broader experimental literature could be much better and make the research
more useful. Our database should therefore be sufficiently comprehensive across disciplines to
help reduce the risk of a too narrow perspective.
More institutions in the Arctic should be interested in doing social science experimental research
as many institutions recently have begun to do outside the Arctic. A goal of the TN is to facilitate
the transfer of knowledge necessary to get started. This pertains to advice on designing
laboratory facilities, necessary tools for designing and implementing experiments, and sound
principles and tools for recruiting participants. This goal may have immediate intrinsic value to
the receiving institutions both in terms of enabling the use of experiments for educational
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purposes and giving a head start for doing own research, in addition to contributing to the overall
goal in the long term.
3.
INDIGENOUS INTERESTS AND QUALITY CONTROL
The circumpolar North represents a laboratory in itself with a large number of indigenous groups
that are both different and similar culturally, living under comparable climatic conditions in
different countries and to varying degree entitled to property rights over renewable and nonrenewable natural resources. Do indigenous people receive their fair share of the revenues
generated from the exploitation of natural resources and do indigenous people themselves
consider the distribution to be fair?
There is a large experimental literature on negotiations that could be potentially relevant for
eliciting negotiations between heterogeneous agents like indigenous people on the one hand and
commercial companies on the other, negotiating over an agreement for exploitation of natural
resources for example. The experimental approach to negotiations has been dismissed for lack of
external validity to situations involving indigenous interests and commercial interests. Among
objections raised is lack of an inter-cultural perspective. However, there is an interesting and
growing experimental literature addressing the cultural dimension. Rather than dismissing the
experimental approach out of hand, a more constructive approach would be to acknowledge that
research is a cumulative and incremental process. Our position is that we should look into the
possibilities to meet the objections raised and not conclude that the limitations are
insurmountable based on existing and in part outdated research.
There are not many experimental studies available that take the cultural dimension seriously, and
even fewer that has pretended to be relevant for issues pertaining to the interest of indigenous
people in the Arctic (some studies by TN members from UAA exist for Alaska). This work
should be assessed, not only through the academic peer-review process for publication (that
foremost ensures internal validity), but also by representatives for the indigenous people in order
to get first-hand opinions on relevance (external validity). This could be useful for pointing to
directions that not only are researchable but also relevant for the people living in the Arctic. We
may view this check on external validity as quality control specific for the TN or quality control
at the network directly involving indigenous people in the research process. We may also
emphasize that all founding members of the TN have strong profiles on indigenous research
issues (also for HSE despite being outside UArctic).
We are pleased that we have been able to attract first rate research economists to the TN. The TN
members are publishing on a regular basis in world class journals and have no incentive not to do
so in the future based on the joint research planned as the top priority for the TN. With rejection
rates in the order of 90 percent and higher, it is evident that this constitutes an extreme quality
control (in particular for internal validity) by expert external reviewers that surpass any internal
quality control at the network or the institutions where the researchers work.
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The TN defines the quality standard for the research output as published research articles in
international top journals with peer review, articles that also are assessed to have high relevance
for the Arctic by people in the region.
4. BENEFITS AND ADDED VALUE
Knowledge transfer
According to Nobel laureate Reinhard Selten, every first rate university offering economics
should by now have experimental economics on their program. By that account, there are few
first rate universities in the Arctic with economics programs. There is for example no university
in Russia having competence and facilities for experimental economics outside Moscow
although no country has as many UArctic members as the Russian Federation. We see a great
potential for knowledge transfer to UArctic members in the North that may reduce this gap, and
we see the participation in the TN by HSE as particularly valuable in this respect.
Knowledge creation
It is clearly a research gap in the experimental literature when it comes to issues specifically
related to the Arctic. The TN can help to assess to what extent this gap should be filled and in
what areas. Furthermore, through joint research efforts gaps should be closed where it is seen
useful.
Knowledge management
Although experimental economics potentially has a lot to offer both related to the study of the
commons in the Arctic, situations without clear property rights more generally, and the
distribution of costs and benefits between heterogeneous agents like commercial companies
versus indigenous groups, there is no systematic collection of research that could be relevant
both for identifying gaps in knowledge and for improving the knowledge base for informed
policies. The TN has as one of its main goals to build a systematic collection, keep it up to date
on a regular basis, and make it available for policy makers and other interested parties.
5. FOUNDING MEMBERS
UiT – The Arctic University of Norway, host (UArctic member)
Professor Stein Østbye, PhD (Head of the experimental lab)
Contact person (e-mail: [email protected])
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Professor Jan Sand, PhD
Johan Birkelund, PhD Research Fellow
University of Alaska, Anchorage (UArctic member)
Professor James Murphy, PhD
Associate Professor Lance Howe, PhD (Head of the experimental lab)
Associate Professor Jonathan Alevy, PhD
Université Laval (UArctic member)
Professor Sabine Kröger, PhD (Head of the experimental lab)
Professor Charles Bellemare, PhD
Assistant Professor Luc Bissonnette, PhD
Higher School of Economics, Moscow
Professor Fuad Aleskerov, PhD
Associate Professor Anton Suvorov, PhD
Assistant Professor Alexis Belianin, PhD (Head of the experimental lab)
Attachment:
Letter of support from the Rector of UiT
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Your ref.:
Our ref.:
Date: 29th April 2016
Dr. Kirsi Latola
Thematic Networks Coordinator
University of the Arctic
P.O.Box 7300
90014 University of Oulu
Finland
Dear Dr. Latola,
On behalf of UiT The Arctic University of Norway, I would like to express our wholehearted support
for the proposed Thematic Network (TN) on Arctic Economic Science.
This TN will examine issues concerning conflict and cooperation related to the economics of the
Arctic, and will have a particular focus on developing high quality economic research and building a
knowledge base of specific relevance for Arctic policymaking. The TN will apply an experimental
methodology in accordance with principles adhered to by the Economics Science Association (ESA).
At the onset, the TN will have participants from University of Alaska Anchorage (USA), Université Laval
(Canada), and the Higher School of Economics in Moscow (Russian Federation), in addition to UiT The
Arctic University of Norway. The TN will welcome researchers from other member institutions of
UArctic with an interest in the themes and topics addressed by the network - described in detail in
the application itself.
I believe the activities of the TN will have a very positive impact on our university as a whole, on our
School of Business and Economics in particular, and, furthermore, that it will bring added value to the
UArctic network, and to communities in the circumpolar North.
Anne Husebekk
Rector
UiT The Arctic University of Norway • P.O.box 6050 Langnes • 9037 TROMSØ • NORWAY • Phone +47 77 64 40 00 • [email protected] • http://uit.no
Your ref.:
Our ref.:
Date: 29th April 2016
Dr. Kirsi Latola
Thematic Networks Coordinator
University of the Arctic
P.O.Box 7300
90014 University of Oulu
Finland
Dear Dr. Latola,
On behalf of UiT The Arctic University of Norway, I would like to express our wholehearted support
for the proposed Thematic Network (TN) on Conflict and Cooperation in the North.
This TN will examine issues concerning conflict and cooperation related to the economics of the
Arctic, and will have a particular focus on developing high quality economic research and building a
knowledge base of specific relevance for Arctic policymaking. The TN will apply an experimental
methodology in accordance with principles adhered to by the Economics Science Association (ESA).
At the onset, the TN will have participants from University of Alaska Anchorage (USA), Université Laval
(Canada), and the Higher School of Economics in Moscow (Russian Federation), in addition to UiT The
Arctic University of Norway. The TN will welcome researchers from other member institutions of
UArctic with an interest in the themes and topics addressed by the network - described in detail in
the application itself.
I believe the activities of the TN will have a very positive impact on our university as a whole, on our
School of Business and Economics in particular, and, furthermore, that it will bring added value to the
UArctic network, and to communities in the circumpolar North.
Anne Husebekk
Rector
UiT The Arctic University of Norway • P.O.box 6050 Langnes • 9037 TROMSØ • NORWAY • Phone +47 77 64 40 00 • [email protected] • http://uit.no