Odd Lots

What Complexity Economics Can Add to Our View of the World

Jul 22, 2021

Brian Arthur, a leading economist in complexity economics and professor at the Santa Fe Institute, sheds light on the limitations of traditional economic models. He discusses how the pandemic highlighted irrational decision-making, like sawmills cutting production due to past fears. Arthur advocates for complexity economics, which embraces uncertainty and the dynamic interplay of participants. He argues that this approach can better explain unpredictable market behaviors and the intricate web of supply chain issues we face today.

49:53

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Episode guests

Brian Arthur

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Episode notes

Intro

4min

Understanding Complexity Economics

9min

Navigating Uncertainty in Stock Market Trading

3min

Redefining Economic Paradigms

12min

Rethinking Economics: Embracing Complexity

6min

Navigating Complexity in Economics

17min

Exploring Complexity Economics and Its Implications

6min

Over the past year it's become clear that traditional economics doesn't necessarily do a great job of accounting for real world problems like transport gridlock or irrational decision makers. For instance, sawmills' first response to the Covid crisis was to cut back production because they were scarred by the memories of the 2008 housing bust. Container shipping issues have caused widespread supply chain issues, and so on and so on. Enter complexity economics, which views the economy as the outcome of decisions by sometimes irrational participants who are constantly interacting and learning from each other. In this version of economics, nothing is ever stable or at equilibrium and everything is always changing. Brian Arthur, economist at the Santa Fe Institute and visiting researcher at PARC, explains why complexity economics might be the perfect way of viewing the world right now.

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