A "new economic synthesis" (some are calling it a revolution) is under way, and long-held notions -- Homo economicus and wisdom of the crowd among them -- might just topple along with many of the tenets of neoclassical economic theory, according to a feature article in New Scientist that quotes a number of SFI external professors and collaborators.
The synthesis, notes the article, is a coming together of macroeconomics with not only behavioral economics, but with other fields, too -- anthropology, ecology, and evolutionary biology, to name a few. Approaches from these fields could help economists account for more and subtler determinants of human behavior such as beliefs, cultural norms, and reactions to each other.
The article touches a number of complex systems ideas that have been explored at SFI, and by SFI researchers, for nearly three decades.
SFI External Professor Joshua Epstein’s open-source agent-based modeling software, Agent Zero, is described as a promising alternative to one-size-fits-all economic modeling. It simulates the emotions, reason, and social pressures at the individual level that give rise to collective phenomena such as financial panic.
SFI Science Board member Robert May, The Lord May of Oxford, is quoted drawing analogies between financial and biological networks.
Some are more skeptical. SFI External Professor Scott Page notes that evo-complex economics might never be mainstream or result in practical approaches, as both economists and politicians seek simplicity.
The article was inspired by a recent international conference in Germany, the Ernst Strungmann Forum, hosted at the Frankfurt Institute for Advanced Studies.
A collection of essays summarizing the conference is to be published by MIT Press; its SFI contributors include Robert Axtell, Jenna Bednar, Peter Turchin, John Padgett, Iain Couzin, Epstein, and others.
Read the article in New Scientist (July 22, 2015, subscription required)