dreamdancer 0 #1 June 11, 2009 interesting... QuoteCan we pack an entire economy, with all its complex human and political interactions, into a computer? Physicist Dirk Helbing of ETH thinks so - as long as we're bold enough in going about it. He points out that financial systems aren't the only monsters we've let out of the box. How traffic flows in and around huge cities simply cannot be grasped by mathematical analysis, but computer models let millions of virtual vehicles interact on realistic road patterns - and often discover potential problems before they occur in reality. The complexity of today's economy, Helbing suggests, demands a similar approach. "We're not currently using the best capabilities of science," he says. "We need to bring together scientists from different fields and put together tools that can be used as a kind of wind tunnel for testing out social and economic policies." The approach has already proved its worth on a small scale. Several years ago, when the state of Illinois decided to deregulate its electricity market, it wanted to avoid California's disastrous experience, when the disgraced firm Enron manipulated prices, created shortages and caused rolling blackouts. The state authorities hired Charles Macal and colleagues at Argonne National Laboratory to build a sophisticated model of Illinois' power market, incorporating suppliers, consumers and regulators, as well as the full network along which power flows. The team first interviewed the various market participants to learn their behaviour. Each was represented in the model by virtual agents who could act on those strategies, but also learn on their own. Running the model, the team found that the initial legal framework for deregulation had flaws which made it vulnerable to Enron-like manipulation. The state successfully altered its plans, and the approach has since been used in similar cases in Croatia, Portugal and South Korea. Some stock markets, such as NASDAQ, have used it in planning changes to their trading rules. Groups in the US and Europe are already building similar models of whole economies, including millions of individuals, families, firms and banks, as well as government regulators. Helbing and colleagues have lodged a proposal with a European Union funding body to start building the extensive communities of researchers and collaborations - between economists and other social scientists, physicists, lawyers and computer scientists - that would be needed to simulate whole economies effectively. With growing computing capacity and greater understanding of complex systems, they suggest it should be possible within a decade to have functioning models of the global economy to which policy-makers could look for sound insights with which to penetrate the overwhelming complexity of today's markets. http://www.newscientist.com/article/mg20227112.100-can-science-reinvent-the-economy-5-an-economy-in-a-computer.htmlstay away from moving propellers - they bite blue skies from thai sky adventures good solid response-provoking keyboarding Quote Share this post Link to post Share on other sites
metalslug 31 #2 June 11, 2009 I have my doubts, except perhaps for making very short-term predictions. A computer program is only as good as the data that you feed it. A computer reaches conclusions based on raw mathematics and statistics, with very limited intuition for human nature and politics. Changes in world leaders and their economic advisors, natural disasters, consumer spending, national morale, war and diplomacy, corruption, insider trading, legal settlements costing billions,... are all things that can affect economics and the survival of big business, and only a fraction of these have elements of predictability. If the best team of world economists are struggling to make reliable predictions on the "overwhelming complexity of today's markets" then I doubt that a machine is going to trump them, at least not for several decades still. Quote Share this post Link to post Share on other sites
Beachbum 0 #3 June 11, 2009 Not to mention that the program processing that data is only as good as the analysis up front to create the proper abilities in the program to handle that data correctly. With something as complex as world economics, that is a VERY tall order. The amount of ambiguity involved in economics would make it at best very difficult to create an accurate program.As long as you are happy with yourself ... who cares what the rest of the world thinks? Quote Share this post Link to post Share on other sites
kelpdiver 2 #4 June 11, 2009 Douglas Adams wrote about such a computer. It was called Earth. Quote Share this post Link to post Share on other sites
dreamdancer 0 #5 June 11, 2009 except earth isn't a computer - that was just a story stay away from moving propellers - they bite blue skies from thai sky adventures good solid response-provoking keyboarding Quote Share this post Link to post Share on other sites
kelpdiver 2 #6 June 11, 2009 Not surprising you miss the point. An organic simulation is the minimum required to model the world economy. It is affected by far more matters than can accurately be coded into a computer model. Quote Share this post Link to post Share on other sites
carmenc 0 #7 June 11, 2009 QuoteNot surprising you miss the point. An organic simulation is the minimum required to model the world economy. It is affected by far more matters than can accurately be coded into a computer model. Computer model successfully model the interior of stars and the dynamics of nuclear detonations, bird flocks and fish shoals. In a macro-sense I see no reason that economics should be immune. Quote Share this post Link to post Share on other sites
dreamdancer 0 #8 June 11, 2009 QuoteAn organic simulation is the minimum required to model the world economy. It is affected by far more matters than can accurately be coded into a computer model. nope, these experts say otherwise.stay away from moving propellers - they bite blue skies from thai sky adventures good solid response-provoking keyboarding Quote Share this post Link to post Share on other sites
billvon 2,476 #9 June 11, 2009 >Computer model successfully model the interior of stars and the >dynamics of nuclear detonations, bird flocks and fish shoals. There is one huge difference - the dynamics of bird flocks will not change when an accurate modeling tool becomes available. The behavior of the economy definitely will. Any time you have the behavior of a dynamic system dependent on the outcome of the device you are using to predict that behavior, you are going to see very odd, often unstable results. Quote Share this post Link to post Share on other sites
riddler 0 #10 June 11, 2009 More junk science. Any article that promotes an idea, then says "they are working on it now", isn't anything more than science fiction.Trapped on the surface of a sphere. XKCD Quote Share this post Link to post Share on other sites
carmenc 0 #11 June 11, 2009 Quote>Computer model successfully model the interior of stars and the >dynamics of nuclear detonations, bird flocks and fish shoals. There is one huge difference - the dynamics of bird flocks will not change when an accurate modeling tool becomes available. The behavior of the economy definitely will. Any time you have the behavior of a dynamic system dependent on the outcome of the device you are using to predict that behavior, you are going to see very odd, often unstable results. So? The world economy is odd and unstable. Quote Share this post Link to post Share on other sites
kelpdiver 2 #12 June 11, 2009 QuoteQuoteNot surprising you miss the point. An organic simulation is the minimum required to model the world economy. It is affected by far more matters than can accurately be coded into a computer model. Computer model successfully model the interior of stars and the dynamics of nuclear detonations, bird flocks and fish shoals. In a macro-sense I see no reason that economics should be immune. None of those are particularly complex. The inside of a star has scale issues, but you don't have independently acting atoms - they all behave on a fairly short set of principles. Humans do not. And as Bill points out, humans game the existing system, find new exploits, which last as long as it takes for others to jump in and diminish the advantage. How do you model the effects of swine flu? A massive monte carlo simulation? Not high quality data to input, plus it's just one of a billion variables that can have dramatic impact. End result: you have something as good as economic simulations have historically been. IOW, not very. Quote Share this post Link to post Share on other sites
Misternatural 0 #13 June 11, 2009 >can we pack an entire economy, with all its complex human and political interactions, into a computer? For fuck sakes I hope so! After last year CLEARLY human commerce and finance is much to fragile to leave up to bone headed humans to run.Beware of the collateralizing and monetization of your desires. D S #3.1415 Quote Share this post Link to post Share on other sites
billvon 2,476 #14 June 11, 2009 > The world economy is odd and unstable. . . . . and dependent upon the outcome of said analytical models, which is one of the reasons it IS unstable. Quote Share this post Link to post Share on other sites
JackC 0 #15 June 11, 2009 Quote> The world economy is odd and unstable. . . . . and dependent upon the outcome of said analytical models, which is one of the reasons it IS unstable. So is the derivatives market, but the Black-Scholes equation still makes useful predictions. Quote Share this post Link to post Share on other sites
dreamdancer 0 #16 June 12, 2009 Quote>Computer model successfully model the interior of stars and the >dynamics of nuclear detonations, bird flocks and fish shoals. There is one huge difference - the dynamics of bird flocks will not change when an accurate modeling tool becomes available. The behavior of the economy definitely will. Any time you have the behavior of a dynamic system dependent on the outcome of the device you are using to predict that behavior, you are going to see very odd, often unstable results. it depends upon what you're using the model for - and there won't be one model but many competing ones.stay away from moving propellers - they bite blue skies from thai sky adventures good solid response-provoking keyboarding Quote Share this post Link to post Share on other sites
dreamdancer 0 #17 June 12, 2009 QuoteQuoteQuoteNot surprising you miss the point. An organic simulation is the minimum required to model the world economy. It is affected by far more matters than can accurately be coded into a computer model. Computer model successfully model the interior of stars and the dynamics of nuclear detonations, bird flocks and fish shoals. In a macro-sense I see no reason that economics should be immune. None of those are particularly complex. The inside of a star has scale issues, but you don't have independently acting atoms - they all behave on a fairly short set of principles. Humans do not. And as Bill points out, humans game the existing system, find new exploits, which last as long as it takes for others to jump in and diminish the advantage. How do you model the effects of swine flu? A massive monte carlo simulation? Not high quality data to input, plus it's just one of a billion variables that can have dramatic impact. End result: you have something as good as economic simulations have historically been. IOW, not very. humans are forced into dependent behaviour within the economy and society the same as car traffic is forced into dependent behaviour within the road system (car a can't move until car b in front of him has first done so).stay away from moving propellers - they bite blue skies from thai sky adventures good solid response-provoking keyboarding Quote Share this post Link to post Share on other sites
