complexity economics – pluralist econ

>economics -macro, school, paradigm, hetero, pluralist, transdisciplinary economists

  • Eric Beinhocker is the Executive Director of the Institute for New Economic Thinking at the Oxford Martin School, University of Oxford. 
  • W. Brian Arthur is External Professor at Santa Fe Institute.
  • Robert Axtell is Co-director of George Mason University’s Computational Public Policy Lab.
  • Jenna Bednar is a political science professor at the University of Michigan.
  • Jean-Philippe Bouchaud is Chairman and Chief Scientist at Capital Fund Management and a physics professor at Ecole Polytechnique.
  • David Colander is an economics professor at Middlebury College.
  • Molly Crockett is an Assistant Professor of Psychology at Yale University and lab director of Crockett Lab.
  • J. Doyne Farmer is Director of the Complexity Economics programme at the Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
  • Ricardo Haussman is Director of Harvard’s Center for International Development.
  • Cars Hommes is an economics professor at the University of Amsterdam.
  • Alan Kirman is professor emeritus of Economics at the University of Aix-Marseille III.
  • Scott Page is the Leonid Hurwicz Collegiate Professor of Complex Systems, Political Science, and Economics at the University of Michigan.
  • David Sloan Wilson is SUNY Distinguished Professor of Biology and Anthropology at Binghamton University.

>Mikroökonomie & Märkte, Reflexion der Ökonomik, Democracy’s Promise, Economics After Neoliberalism, Economy, Neoliberalism 2019 Economics After Neoliberalism – by Suresh Naidu, Dani Rodrik, and Gabriel Zucman

We live in an age of astonishing inequality. Income and wealth disparities in the United States have risen to heights not seen since the Gilded Age and are among the highest in the developed world. Median wages for U.S. workers have stagnated for nearly fifty years. Fewer and fewer younger Americans can expect to do better than their parents. Racial disparities in wealth and well-being remain stubbornly persistent. In 2017, life expectancy in the United States declined for the third year in a row, and the allocation of healthcare looks both inefficient and unfair. Advances in automation and digitization threaten even greater labor market disruptions in the years ahead. Climate change–fueled disasters increasingly disrupt everyday life… 2019 Forum Response – Inclusive Economics Is Complexity Economics – by Eric Beinhocker, W. Brian Arthur, Robert Axtell, Jenna Bednar, Jean-Philippe Bouchaud, David Colander, Molly Crockett, J. Doyne Farmer, Ricardo Hausmann, Cars Hommes, Alan Kirman, Scott Page, and David Sloan Wilson.

We welcome Naidu, Rodrik, and Zucman’s contribution …  Nonetheless, we believe they they do not go far enough in their calls for reform. The vision they paint is still focused on the discipline of economics and anchored in the core ideas of neoclassical theory that dominated the field in the twentieth century. We believe that in order for economics to progress, it needs to fully embrace a transdisciplinary approach and modernize a number of its key concepts… This transdisciplinary perspective, sometimes referred to as “complexity economics,” differs in a number of significant ways from the traditional perspective of economics. We will give three examples.

First, Naidu, Rodrik, and Zucman correctly note that the behavioral economics critique of the rational actor model has become mainstream. Yet despite this, much economic modeling, including much policy modeling, continues to use rational choice assumptions. …  But if economists widened their view to include neuroscience, cognitive science, anthropology, social psychology, evolutionary biology, computer science, and philosophy, they would see that, over the last few decades, there has been a revolution in behavioral science that should have a major impact on economics.

The picture that this work paints of Homo sapiens looks almost nothing like homo economicus. Instead of asocial, transactional, self-regarding utility maximizers, real humans are intensely social, highly cooperative, and other-regarding creatures who make decisions inductively, heuristically, mimetically, and through group reasoning. …  A large body of empirical and experimental work shows that moral and social considerations strongly shape economic and political preferences. These preferences often do not align with standard economic views about self-interest, incentives, and “rationality.”

A second example of how the complexity economics perspective differs is in its views on heterogeneity. Through most of the twentieth century, economics was primarily concerned with aggregate data such as GDP, productivity, and national income, and the resulting macro-economic models assumed that all of the households and firms in the economy can be summed up as “representatives.” … In contrast, explicitly modeling heterogeneity is central to the complexity economics agenda. Borrowing tools widely used in physics, biology, and computer science (e.g., agent-based modeling, network theory, and techniques using micro-level data), researchers are able to model economic systems from “the bottom up”—starting with individual households or workers, fully capturing their key dimensions of difference.   …

Finally, a third area of difference is the systems-level view of the economy. Economics has historically assumed that the economy is an equilibrium system…  Complexity economics provides an alternative framework. Instead of portraying the environment as an externality, it depicts it as a complex system embedded within the larger complex system of the environment. And it portrays the shift to a zero-carbon economy not as marginal, but as an epochal system transformation on par with the Industrial Revolution or the shift from hunting and gathering to agriculture. It is a problem that requires extremely rapid responses that go far beyond what the standard optimization models even consider, including major changes in our technologies, institutions, behaviors, and cultures. This is the mother of all disequilibrium problems and will require economists to work closely with other disciplines and be open to radically different ways of thinking…  Economics needs to embrace what other fields have learned about behavior, networks, institutions, culture, evolution, and non-equilibrium systems. To date the infrastructure of the economics profession—journals, funding bodies, hiring and tenure committees— has been largely closed to these ideas and approaches. …