In taking economists to task for failing to consider new methods for understanding the economy, Newsweek’s Michael Hirsh notes SFI Professor Doyne Farmer’s difficulties infusing complexity thought and computer modeling into the mindsets of economists “who reject any model that doesn’t tend toward general equilibrium.”
New thinkers are still having trouble breaking in, Hirsh writes, describing Doyne as a physicist “trying to bring the idea of complexity back into economics by making use of advanced computing power to map human economic behavior the way weather or climate change is tracked.”
He notes that Doyne received a $450,000 National Science Foundation grant for a three-year study of systemic risks in markets “only after a sympathetic NSF case officer overruled negative assessments by ‘neoclassical economists’ who reject any model that doesn’t tend toward general equilibrium.”
Doyne is quoted: “The established view just holds this stuff back. One of the dangerous cultural patterns that economics has fallen into is an excessive emphasis on theorem proof for its own sake rather than what gives you scientific results. That’s led to a disdain for computer simulation.”
…
Read the full Newsweek article