Jason Smith — Information transfer economics: year in review 2017

With 2017 coming to a close, I wanted to put together a list of highlights like I did last year. This year was the year of dynamic information equilibrium as well as presentations. It was also the year I took some bigger steps in bringing my criticisms of economics and alternative approaches to the mainstream, having an article at Evonomics and publishing a book....

Information Transfer Economics
Information transfer economics: year in review 2017
Jason Smith

Diego Espinosa — The Answer Is Under Your Foot. How Ants Solve Inequality

Information in biology applied to economics.

Evonomics
The Answer Is Under Your Foot. How Ants Solve InequalityDiego Espinosa runs Sistema Research, a consulting firm that applies a complex systems approach to strategic uncertainty. He also teaches security analysis at the University of San Diego.

Paul Romer — Why Information Grows

Anybody interested in the future of mathematical theory in economics should read Cesar Hidalgo’s book Why Information Grows. There are many things to like about this lucid account of the evolution of our scientific understanding of information. One of the most important may be the simplest. It illustrates what it means to think like a physicist. 

Thinking like a physicist is very different from using such tools from physics as partial differential equations. In fact, many of the economists who seem most interested in the tools of physics seem least inclined to think like a physicist.…

Paul Romer
Why Information Grows

Chris Dillow — The Knowledge Problem

Is Hayek's The Use of Knowledge in Society still relevant?

There's a common theme in these three examples. The claim that individuals can possess extensive knowledge is also a claim to power and wealth; CEOs, fund managers and politicians all say: "trust us, because we know better."

In this sense, Hayek's message has shifted. Whereas it used to support dominant western institutions, it now undermines them. For this reason, it might be no coincidence that the question "what are the limits of our economic knowledge?" is rarely asked nowadays.

Is there a scale at which the ability to manage an organization or to foresee outcomes breaks down owing to the sheer volume and complexity of information? 

Stumbling and Mumbling

The Knowledge Problem

Chris Dillow | Investors Chronicle

Jason Smith — Which way does the information flow?

Hayek's The Uses of Knowledge in Society (1945) established information as the basis of modern economics. This accords, for example, with the view that the primary function of money is as a unit of account, and that accounting records are primary information sources for the study of both economies and economic principles.

Then the questions become questions about information and its use. This is much clearer in business and finance than economics, however. What emerges is recognition that information is not only a matter of records but also a factor that enters into choices that affect outcomes especially through feedback.

When information becomes the basis for theory in addition to record-keeping, then direction of information flow becomes relevant to causality. Jason Smith present arguments for why the direction of flow of economic information is chiefly from demand to supply rather than vice versa.

Information Transfer Economics 

Which way does the information flow?
Jason Smith