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Norway is a small nation state on the northernmost coastline of Western Europe, integrated in the Western world economy. For centuries Norway's integration in the world economy had been based on exports of raw materials such as fish and timber, as well as shipping services. In the early 20th century, furnace-based metals (made possible by cheap hydropower) were added to this export basket. Just as the world economy entered an increasingly unstable phase in 1970s, another natural resource was discovered in Norway: petroleum – that is, oil and natural gas from the North Sea. This chapter analyses the challenges and possibilities inherent in the Norwegian strategy of developing an oil economy in a world economic situation influenced by new and stronger forms of international integration through the four decades between 1970 and 2010.

Germany has lower posttax income inequality than the United States and hence is doing better according to a strict egalitarian fairness ideal. On the other hand, the United States is doing better than Germany according to a libertarian fairness ideal, which states that people should be held fully responsible for their income. However, most people hold intermediate (responsibility-sensitive) positions, and this paper studies fairness of the income distributions in Germany and the United States according to these positions.

We find that only if peoples’ preferences are characterized by substantial degree of individual responsibility, the United States is considered less unfair than Germany. If we hold people responsible for the unexplained variation, the United States is considered fairer than Germany for all levels of responsibility sensitiveness. If we, on the other hand, demand compensation for the unexplained variation, Germany is fairer than the United States for all levels of responsibility. The latter may be seen as the preferred approach as it follows a “benefit of the doubt” strategy. To the best of our knowledge, this paper presents the first cross-country fairness comparison based on responsibility-sensitive ideals.

This chapter focuses on the results of laboratory experiments that reveal how social preferences help regulate behavior to overcome social dilemmas. It argues that this evidence provides empirical support for the Austrian argument that social rules (as well as the institution of the market) are an important part of how societies respond to the knowledge problem. However, it also argues that the specific laboratory results regarding the “crowding out” of social preferences and the redistributive character of social preferences when outcomes are influenced by luck provide challenges to Austrian economics. In response, Austrian economics would seem to need to develop some more expanded notion of what matters in human life beyond the exercise of freedom and so extend the list of rules or institutions that require defence beyond those of the market and the rule of law.

Laboratory studies of social interaction have revealed a wide range of phenomena that are difficult to explain using standard economic models. For example, people will often sacrifice their own earnings in order to be generous, cooperative, punitive, and retributive in interactions with anonymous strangers. “Behavioral” models that redefine agents’ preferences attempt to provide an account of these phenomena as reflecting a “taste for fairness” or altruism, aversion to inequality, concern about others’ beliefs, and so on. Such models either fail to account for the rich sensitivity of actions to context or in allowing for rich context-dependence, these models ultimately substitute description for explanation. Hayek’s work provides a foundation for thinking about how to explain these phenomena, by conceiving of people as both purpose-seeking (as in economic models) and rule-following. Decisions are shaped both by material interests and by a normative framework that is evoked by context and helps people decide what one ought to do in a particular situation. The implication of this approach is that rather than trying to understand heterogeneity across individuals in terms of preferences, experimenters should instead try to understand heterogeneity across contexts in terms of the rules and norms that operate in the background and guide or constrain people’s purpose-seeking tendencies. What economics needs, then, is a theory of how and why these rules and norms vary with context as they do.

We study how giving depends on income and luck, and how culture and information about the determinants of others’ income affect this relationship. Our data come from an experiment conducted in two countries, the USA and Spain – each of which have different beliefs about how income inequality arises. We find that when individuals are informed about the determinants of income, there are no cross-cultural differences in giving. When uninformed, however, Americans give less than the Spanish. This difference persists even after controlling for beliefs, personal characteristics, and values.