Paul Samuelson once famously claimed that the “ergodic hypothesis” is essential for advancing economics from the realm of history to the realm of science. But is it really tenable to assume — as Samuelson and most other mainstream economists — that ergodicity is essential to economics?Assuming ergodicity in economics limits the scope of the model pretty much to the conceptual world of the model. Since human beings not like atoms and are organized into complex adaptive systems subject to reflexivity and emergence, generalized behavior is observed to be non-ergodic. This implies that most approaches to econometrics are of limited scope, and if they representative of human behavior in society (the real world), it is with respect to special cases.
Moreover, scale counts. Micro economics could be more susceptible to analysis based on assuming ergodicity than macroeconomics. For example, it is typical in micro to model exclusively economic behavior that can be reduced to rational maximization of "utility." But how many issues in life fall into this category, especially at the macro scale? For example, the political process is replete with examples of voters voting against their economic interests as a class, presumably since non-economic values supervene in individual choices of similar demographic groups.
Lars P. Syll’s Blog
Ergodicity: a primer
Lars P. Syll | Professor, Malmo University
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