Physicist J. Doyne Farmer wants a new kind of economics that takes account of what we've learned from chaos theory and that builds more accurate models of how humans actually behave. Listen as he makes the case for complexity economics with EconTalk's Russ Roberts. Farmer argues that complexity economics makes better predictions than standard economic theory and does a better job dealing with the biggest problems in today's society.
Welcome to Econ talk conversations for the curious part of the Library of economics and Liberty.
I'm your host, Russ Roberts of Shalem College in Jerusalem and Stanford University's Hoover Institution.
Go to econtalk.org, where you can subscribe, comment on this episode, and find links and other information related to today's conversation.
You'll also find our archives with every episode we've done going back to 2006.
Our email address is mailcontalk.org dot.
We'd love to hear from you.
Today is August 1, 2024.
My guest is physicist Dowen Farmer.
He is the Bailey Gifford professor of complex system science at the Smith School of Enterprise and the Environment at Oxford University, where he's also director of the Complexity economics program at the Institute for New Economic Thinking at the Oxford Martin School.
In addition, he is an external professor at the Santa Fe Institute.
He is the author of making Sense of Chaos a Better Economics for a Better World, which is our topic for today.
Dylan, welcome to econ talk.
Thank you.
Happy to be here.
Let's start off with the fundamental idea behind your book and much of your career, which is the idea of complexity economics.
What does that mean to you?
What is complexity economics?
Well, simply put, it's the applications of complex systems, science and methods to economics.
And more specifically, that means doing economics in a different way than mainstream economists do it.
It means simulating the economy rather than using utility maximization to write down equations to solve for what people will do.