For now, as those of you who have found their way to this post might know, I came out with a new book a few months ago called The End of Theory. (I hate linking to Amazon, but that is where people will end up going.)
When I started it, my objective was to explain the use of agent-based modeling to deal with financial crises. I had been working on this at the Office of Financial Research. But in order to motivate the use of this new method, I felt I should explain why economics could not do the job. That took on a life of its own, and by the time I was done my "how-to" book on agent-based modeling had expanded to be a critique of neoclassical economics with the agent-based model proposed as a replacement -- a new paradigm.…
To get a sense of the ideas behind the book, here is a recent interview I gave for The Institute for New Economic Thinking which gets to the key themes.
And, for a more in-depth treatment, here is the webcast of a talk I gave in June at the OECD.
Rick Bookstaber
I'm going to start blogging again
I'm going to start blogging again
5 comments:
It's Bookstaber, not Bookstabber.
He has an impressive list of credentials. It should be a good book.
I like this:
'Bookstaber points to “four horsemen of the econopolypse”— aspects of reality that traditional economics can’t deal with—and calls for a new “agent-based” economic model that invokes real-world simulations. It acknowledges that individuals are not identical, radical optimizers; their interactions with each other and their environments matter; and the future doesn’t always look like the past. “You can’t solve the world through a set of equations,” says Bookstaber. “You cant solve for life; you have to live life.”
Flawed policy decisions continue to arise from economics with alarming frequency. The statistics upon which economic theories are drawn and the producers of the statistics acknowledge the limitations and flaws in the economic "empirical" data that they produce. Yet economists flagrantly misuse the information to harm society by ignoring the warnings to produce policy. Just as their finance brethren who proffer financial products of mass destruction, economists wield statistics which are dangerous products that have no safe use for society. The economic approximations need to be clearly labeled and copyright restrictions placed on them requiring any articles that contain the statistics or analysis based upon the statistics to carry a warning: NOT FOR MAKING ECONOMIC OR GOVERNMENT POLICY. INFORMATION IS INCOMPLETE, FLAWED AND DOES NOT REFLECT REALITY. ... Maybe some specific warning, "PRODUCTIVITY NUMBERS ASSUME PRICE EQUALS QUANTITY" or maybe "SECTORS ANALYZED USING NAICS CODES DO NOT CAPTURE REALISTIC", "REPORTED DATA SKEWED BY TAX EVASION" basically a cigarette box warning to prevent economic tools of mass destruction from being unleashed on the public.
If each data point carried these requirements to prominently display the limits and warnings in a preface in all publications which use them, most of the adverse impacts of economics could be avoided and it would remind readers of economic articles that most of what they are reading is terribly flawed opinion only valid in very narrow conditions. A typical academic article might read like a drug insert and carry a few paragraphs about all the adverse data. For people like Krugman that mix opinion and facts into intoxicating elixirs it would help his readers understand he is mostly F.O.S.
Thanks, MRW. Fixed.
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