For all of my latest papers have a look at what I’ve been up to in my ‘New’ page.
In unstructured online media text, users reveal their emotions in ways analogous to the principle of revealed preference in consumer demand theory. Machine learning techniques can be used to construct real-time measures of sentiment/well-being.
Here is a paper which gives the practical illustration . The Feel Good Factor for London is updated regularly here.
The rational choice theory of economics still works well in many contexts. But it faces increasing challenges when networks, social influence and emotion are playing an increasing role in decision making. Here is a presentation I gave on the topic to a conference organised by ING bank in Amsterdam.
Obesity has become a major problem in the West, highlighted by the Covid crisis. Here is a paper on how obesity in the US has grown rapidly over the past 30 years, along with potential explanations.
There is still intensive debate about income inequality, and in particular the pay of the top 1 per cent. Here is a piece I contributed to a book on the topic.
Here are the slides of a keynote presentation I gave to a Bank of England/Federal Reserve conference on better ways to understand economic recessions using machine learning
Here is a piece published in the Royal Economic Society’s newsletter on what I term “algorithmic economics”. It covers issues on machine learning and converting text into quantitative data
There is still intensive debate about income inequality, and in particular the pay of the top 1 per cent. Here is a piece I contributed to a book on the topic.
Here are the slides of a keynote presentation I gave to a Bank of England/Federal Reserve conference on better ways to understand economic recessions using machine learning
In January I wrote a very timely article for Prospect Magazine on why so few economists are Brexiteers, you can read it here.
Dirk Helbing of ETH in Zurich is a very interesting thinker on complexity in general, and there is a whole issue of the Review of Behavioral Economics devoted to a general theory of sociological behaviour. Here is a critique which I wrote for the journal.
Here is a paper I wrote for the Economics e-Journal on incorporating uncertainty into the core models of economic theory.
The national economic accounts might seem a very dull subject. But they are the fundamental building blocks of economic policy. Policy makers want ‘innovation’ and a ‘knowledge society’, but the current methods, based as they are on the framework set up in the 1930s and 1940s to measure GDP, do not give them proper information about these key policy goals. In addition, the growth of activity in cyber space raises important questions about whether value is becoming dislocated from price. Here is a submission to the Government’s Review of the national accounts led by Charles Bean, former Deputy Governor of the Bank of England and here is a 2 page summary.
I wrote an article about behavioural economics for the EA Magazine’s Autumn Edition, a publication by the Institute of Economic Affairs. You can read it here.
I have been doing a lot of work over the past year on the role of emotion in the economy. This is the key theme of the Centre for the Study of Decision Making Uncertainty at University College London, where I am a Visiting Professor. Here is a paper I presented at a conference in Washington DC in December 2014 organised by the Federal Reserve Bank of Cleveland and the Office for Financial Research. It is joint work with the Bank of England. Subsequently, I wrote this paper which looks at the role of emotion in predicting financial stress indices developed by the Federal Reserve banks in the US.
Here is a paper presented at the Institute for New Economic Thinking Conference in Paris in April, which describes some more general results I have obtained on the role of emotion in determining GDP growth in the short-term. And here is a paper I gave the Kiel Economics Institute which looks both empirically and theoretically at the role of emotion in the business cycle.
For the past five years I have enjoyed being a member of the Tipping Points project at the University of Durham. An ambitious multi-disciplinary project funded by Leverhulme. Here is the project website, and here is a paper I gave this year on a long standing interest of mine, the role of evolution in economic theory (and practice!).
I wrote a short critical appraisal of the fashionable concept of behavioural economics for the Institute of Economic Affairs’ journal Economic Affairs. The Bertelsmann Institute in Germany published a piece on complexity and economic policy.
Here is an interview I did for the Cambridge Institute for Economic Thinking (INET) on Using Networks to Revolutionise Economic Theory and Policy.
I also recently gave a public lecture in Cambridge for INET on ‘The Financial Crisis: What Went Wrong and What Can be Done?’, here are my notes.
In April, I gave a presentation to the OECD in Paris on Positive Linking. The link to the presentation is here (the talk begins 25 minutes in), and see my slides here.
I gave a public lecture in Cambridge for the Institute for New Economic Thinking (INET) on ‘The Financial Crisis: What Went Wrong and What Can be Done?’, here are my notes.
The Polish Economic Council is the main economic policy making body in Poland, and I had a two hour session with them in January, and here is the presentation, entitled ‘Prediction and Narratives’
I am working a lot with colleagues at UCL on how people make decisions under conditions of genuine uncertainty, of ‘unknown unknowns’. Here is the paper I gave to the main INET conference in Toronto in April on this.
Peter Allen at Cranfield was one of the first people to work on complex systems approaches to modelling economic systems, and I was delighted to make a contribution to his Festschrift (here). The full set of essays is in The Social Face of Complexity Science, editors M Strathern and J McGlade, 2014.
Here is a paper I gave at the European Central Bank in Frankfurt on Big Data and economic prediction.
I keep my links with the maths department at Durham, and here is a paper in Evolution and Human Behavior, written with a member of the department and my long standing collaborator, ex-Durham now at Bristol, Alex Bentley
Here, is a paper looking at the persistence of unemployment at a very local area level in both the US and the UK over a 20 year period. There is strong persistence in relative unemployment rates at local area levels in both countries, This result extends to counties and local authority areas within individual states and regions. So even the American labour market does not have the ‘flexibility’ beloved of equilibrium economists
Here is a paper on a new approach to macroeconomic thinking which I gave in Florence in September. This is very much part of a collaborative project with David Tuckett and others at the new Centre for Decision Making Under Uncertainty at UCL. We use psychological theory and algorithmic text search to operationalise Keynes’ concept of ‘animal spirits’ for both the US and UK economies. The results are fascinating
Here is a paper I gave in the Institute of Economic Affairs’ series of Beesley Lectures on regulation, taking a behavioural economics perspective.
Again for the IEA, I gave a paper in Slovenia on an evolutionary perspective on privatisation.
I have recently had a paper accepted by the journal PLOS ONE. We find strong evidence to support the Darwinian theory of literature. Emotion in the economy, measured by the misery index, in the recent past is a very good indicator of the emotional mood in books today. We use text search algorithms on Google Ngram data for books in American English, British English and German.
I gave a paper at the opening ceremony of the Alibaba Center for Research in Complex Systems in Hangzhou. Some of the themes are familiar ones from my work, but I pose three interesting challenges which can in principle be solved using the vast amount of data which goes through the Alibaba system.
Here is a paper I gave recently to the students at INSEAD on the theme of how networks and technology are revolutionising how people take decisions.
Finally, here is a paper I gave to a conference on Developments in Economics Education at Exeter, organised by the very friendly and Economics Network, of which I am a patron.
I have supported Rochdale Hornets, the Rugby League team of my home town, for many years. They have just won their first trophy since 1922, getting promoted from the bottom division. Here I am with the trophy and, more importantly, our coach Ian Talbot and our longest-standing supporters, Ray and Ena Myers. Ray and Ena watched the famous Cup semi-final in 1958 which Hornets lost very narrowly to the most successful RL team of all-time, Wigan.
In the Spring I promoted the paperback launch of my latest book ‘Positive Linking’ at various events, including a Creative Mornings event in the high tech hub at Shoreditch Roundabout, a TEDx talk at LSE (here), and literary festivals in the Lake District and Bath.
Listen to a recent interview with Peter Day on Global Business for BBC radio on what is wrong with economics and how the themes I talk about in ‘Positive Linking’ can offer a new perspective!
Here are some thoughts on recessions and economic crises, looking at them from a network perspective and emphasising the role of narratives and psychology. I have presented on this topic at the University of Buckingham, to the students at Trinity College Cambridge, and the Accumulation Society, a dining club of economists from the City, the media and academia
Here is a paper on whether quality matters in the success of goods and services in ‘social network’ markets – markets in which people can be influenced directly by the choices made by others. Here is a presentation on the same theme, my keynote address to the COMPLEX 2012 conference in Santa Fe, New Mexico.
Here is a short piece on reforming the economics curriculum, which from 3-13 May was discussed live on the World Economics Association Economics Curriculum forum
I recently served on the ‘Insights Panel’ for Barclays Wealth Insights Series latest volume If at First You Don’t Succeed… Mapping Global Attitudes to Adversity. Here is a video where I (together with Barclays Head of Behavioural Finance Dr Greg Davies) discuss some of the themes picked up on in the report, and here is the final report published by Barclays.
Here is an interview I did with DNA, India’s fastest growing English speaking newspaper. It is an in-depth exploration of some of the key themes of Positive Linking.
Complex systems models have made great scientific advances over the past decade or so. But their impact on policy has been much more limited. At Volterra, we have been involved with policy makers, developing such models for them, since the late 1990s. Here, Bridget Rosewell and I reflect upon complex systems modelling and the real world, in a paper to be presented at the European Conference on Complex Systems in September.
I recently spoke at a conference on 21st Century Policy Development. The conference was co-hosted by Synthesis (a Think Tank that I co-founded in 2011) and the RSA. Watch my presentation on “Network Effects and the Limits of Incentive-Based Policies” here.
Here is a presentation I gave in January to the Complex Systems Group at Beijing Normal University on Grand Challenges in Economics. Here is one result of collaboration with this group, a paper which looks at technological innovation and its disruptive effects as one of the causes of the business cycle – a very Schumpeterian view of the cycle. And here is a talk to the Australian Complex Systems Conference on Heron Island on the Great Barrier Reef on the business cycle more generally.
In February, I also gave a seminar at the University of Sydney on evolutionary models of choice, arguing that we need to replace the standard model of choice in economics with an evolutionary one. Described in the talk FuturICT is a visionary project designed to completely re-think the social sciences. Here is a paper written with a team of distinguished economists on re-thinking the economy as a complex system.
On a similar theme, in February, the Bank of England and the UK Government Economic Service held a one day conference on what economics students should be taught in the light of the financial crisis. Here is a paper written with Dirk Helbing, the Scientific Director of FuturICT, for the proceedings of this conference on rebuilding macroeconomics J-C Trichet, when Governor of the European Central Bank, issued a call for economists to develop completely different models for helping policy makers understand and anticipate crises. Here is a paper setting out one way of thinking about this, focusing on the current situation is Spain. It was originally written for a client in the summer of 2011.
On a completely different theme, here is a paper exploring the structure of connections between industries – also a potential source of the business cycle – for a Special Issue on Extreme Events for International Journal of Complexity in Leadership and Management. And here, reflecting my widely disparate interests, is an agent based model of the lethality of terrorist attacks.
More and more markets have network characteristics in which people are making choices, at least in part, simply on the basis of what other people do. The basic model of choice in economics needs to be radically altered to fit our changing world. The objective attributes of choices are becoming less and less relevant. Especially in financial markets, what matters is the narrative which dominates at any point in time. Facts are capable of being interpreted in many different ways. Here is a talk I gave to the economists at the Royal Bank of Scotland (RBS) in Edinburgh on the networked economy.
A completely different approach to behavioural choice is being developed in disciplines outside economics, such as computer science and cultural anthropology. It is empirically successful in explaining two key features of much of the modern social and economic worlds: non-Gaussian outcomes at any point in time and turnover over time in the rankings within the outcomes. But it does so without reference to the attributes of the various alternatives on offer – which is quite shocking to economists. Here is a presentation I gave to the Department of Economics at the University of Amsterdam on the topic.
Here is a general talk I gave to the UK government’s Department of Environment on agent based models and how they are used in practice.
I have given several presentations recently on the main theme of my new book. Policy making in the 21st Century needs to be based on the potential power of networks. This is completely different from the prevailing view of the world, in which it is based on incentives.
Here is a presentation I gave to the Institute for Government in London.
Here is a talk I gave to a high powered audience in Washington DC in early October and here is the summary of the entire conference on ‘Taming Complexity’
And here is my lecture to the Adelaide Festival of Ideas (Adelaide), and the link to the radio recording.
The FuturICT project to completely reshape the social sciences continues, and a core group of some forty researchers from all over Europe met on Lake Maggiore in early September to take the proposal forwards. Here is my presentation on Grand Challenges in Economics.
At the European Social Simulation Association, I gave examples to the assembled academics of social simulation models I have been working with for which companies or public sector bodies have paid real money to help them solve practical and immediate problems.
Geoff Riley, Head of Economics at Eton, runs some very interesting conferences for sixth formers and their teachers, and here is a talk I gave to a teacher audience on Lessons from the Nobel Laureates.
A Golden Oldie
The Real World Economics journal has evolved into the World Economics Assocation, attracting 4,500 members since its launch in May this year. The Association is dedicated to intellectual pluralism in economics, so it embraces a wide range of different approaches. I will be on the Editorial Board. And here is a paper I wrote for them in 2001 on ‘economics as social theory’ following their first conference in Cambridge in 2000. The models are very simple, but the basic concepts remain valid. Over the past decade, this sort of approach has become much more widely used – outside mainstream economics! See, for example, FuturICT.
Setting the economics agenda:
Here is my presentation to FuturICT in Zurich on hard problems in economics.
Here is a paper using evolutionary agent based models to analyse the lethality of terrorist attacks.
Recessions and modelling the business cycle: here is a paper I gave as a keynote at a conference in Kiev marking the 110th birthday of Simon Kuznets. Kuznets was a great economist. He worked out how to measure GDP and did theoretical work on growth, the business cycle and income inequality. But above all, he insisted on empirical evidence.
Complexity science and policy: here are some short notes of a discussion I led at the Institute of Public Policy Research on the implications of complexity for policy.
Here and here are two talks on macroeconomics and the financial crisis. The first was given at the MAFIN conference in Reykjavik and the second at the Systems Dynamics UK chapter. A podcast of the latter talk is available here.
Here, here, here and here are several presentations on the theme of the need to define a different model of rationality of agent behaviour, one much more appropriate to the information-overloaded, highly connected social and economic worlds of the 21st century. The presentations were given in London, Switzerland, Germany and China.
Here are some rather more technical papers and presentations on a new model of rational agents. The economic definition of ‘rational’ is by no means the only one possible, where there are large numbers of choices and/or the products are complicated (i.e. most of the products and services which are now sold), rational behaviour is based much more on ‘copying’ than on a careful evaluation of the product attributes. The key paper is here published in Behavioral Ecology and Sociobiology. Here and here are two papers which consider a range of potential candidates for a new definition of rationality, and here is a presentation given at the Centre for Complex Social Simulation, George Mason University.
There are two specific applications of the general model of rational choice here and here in the Proceedings of the Royal Society B on some key issues in linguistic evolution and in Advances in Complex Systems on the evolution of popular culture in America.
My longstanding interest in forecasting is still there, and here is a technical paper on potential ex ante prediction in networked systems.
I have had a sceptical view of happiness/well-being for some time now, and here is a blog I did for the Institute of Economic Affairs.
Here are some thoughts on risk, models and the role of judgement in a presentation to senior managers in the insurance industry.
And here is the most recent piece on history, ideology and networks in History and Policy.
Yet more reflections on the future of economics: what can we learn from the Nobel prize winners? A presentation to the University of East China, August 2010, and a different one to the IEA’s educational day, Exeter College, Oxford, September 2010
China-EU summer school on complexity, Shanghai August 2010: here is the presentation in challenges for complexity and econophysics
‘N Squared: Public policy and the power of networks’, The Royal Society of Arts has a new strapline: 21st century enlightenment. This pays tribute to the eighteenth century founders of the Society and to the pioneering spirit which inspired them. The RSA “have commissioned a series of essays from leading thinkers and practitioners, lookingnot only at the history and theory that liesbehind the notion of twenty-first centuryenlightenment, but also at the practical implications of what this may mean today.” I was invited to write this pamphlet, arguing that effective public policy in the 21st century needs to be based on an understanding of human networks.
‘Dealing with failure and success’, Here is a short piece I wrote a couple of years ago for the handbook Business: the Ultimate Resource published by A&C Black, and now entering its 3rd edition. So at least some things do well!
‘How languages replace one another’, This paper offers a simple behavioural explanation of three key empirical features observed when a language is replaced by another.
‘New thinking in economics’, June 2010. One of the most interesting strands of new thinking has been in econophysics, the application of ideas in statistical physics to economic problems. Here is a paper I was invited to write for the Indian Journal ‘Science and Culture’, reflecting on the challenges and opportunities facing econophysics.
‘Political economy of spending cuts’, June 2010. I gave the opening presentation in early June to a conference of local authority Directors of Childrens Services organized by the Dartington Trust. Gives a perspective on the economy, and thoughts on the political economy of the next 5 years with pointers for getting better value from the public sector.
‘Economics, management and complex systems,’ April 2010. Sage are publishing a handbook on Complexity and Management, and here is my chapter on complexity and economics.
‘Anticipating extreme events in the political environment,’ April 2010. It is not just eocnomists who have problems with their forecasts. Political scientists routinely fail to anticipate dramatic changes. Here is a short article forthocming in the International Public Policy Review about a methodology which might help indicate when dramatic changes might occur.
‘A new approach to geo-political risk’, March 2010. Here is a paper I published a few years ago with a former British diplomat present at Tiananmen Square. We propose an innovative methodology for assessing geo-political risk, using the stability of China as an illustrative example. It was published in ‘Diplomacy and Statecraft.
What can economics learn from the other social sciences?, March 2010. The Greater London Authority sponsored this event as part of the Economic and Social Research Council’s Social Science week in March. The podcast is here. The other speakers are Neil Stewart, psychologist at Warwick University, Luc Bovens, philosopher at London University, and Avner Offer, economic historian at Oxford.
‘Economic Psychology and the Financial Crisis’, March 2010. Here is the keynote address to the International Association for Research in Economic Psychology/Society for the Advancement of Behavioural Economics conference at the University of Bolton, March 2010. There is material from previous papers on conventional macroeconomics and rational agents, but new material on how the disciplines of economic psychology and behavioural economics can help move forward our understanding of financial crises
‘What’s wrong with macro-economics?’, March 2010. Counterpoint, ABC National Radio, Australia.
‘Extreme Events’, March 2010. A presentation at the Institute of Applied Systems Analysis, Vienna, March 2010 on recessions, extreme events, and the resilience of capitalism.
‘Challenging the empirical empire’, March 2010. Written with Helen Jackson, this is published by the Institute of Economic Affairs in March 2010. Many of the problems in the British public sector directly relate to the attempt tocreate a world fit for the central planner in which all tasks can be set down in a system of rules. The philosophy of ‘empirical consequentialism’ underpins this entire venture. This is the view that the empirically-proven consequences of an action are the most valid basis for moral judgment of the action and that these can be fully evaluated through expert research rather than democratic dialogue. A crucial policy challenge is to restore the value of ‘tacit knowledge’ in the public sector, allowing individuals to exercise choice and judgment responding to feedback in a process of trial and error.
‘Be bold for growth’, February 2010.This is a pamphlet published by the Centre for Policy Studies in February 2010. We discuss the sustainable long-term growth rate of the UK economy, and urge politicians not to be held in thrall by the seemingly scientific but flawed ideas of modern technocratic economic.
Wall Street Journal – A short piece in the Wall Street Journal Europe on the Centre for Policy Studies pamphlet. We recommend getting rid of most of the 1600 economists employed by the UK government.
‘Beyond Copying’, January 2010. A presentation to a workshop at the Sorbonne, Paris in January 2010, this considers the emergence of shared concepts such as quality and social norms.
‘What should economists be taught?’, January 2010. Here is my short presentation to a debate at the LSE on 20 January about what economists should be taught. I draw on the work of the Nobel Laureates in the 21st century to suggest fundamental changes to conventional textbooks. The paper is also available, along with Geoff Hodgson’s contribution, here
‘What do market demand curves look like in the cultural and creative industries?’, January 2010. In this rapidly growing sector of the Western economies, much of it web based, the choices of others can influence your choice directly. Conventional economic theory assumes this doesn’t happen, you make choices completely independently of what others do. This paper, with ex-Volterra colleague Amy Heineike, now at George Mason university, looks at the implications for market demand curves in these industries. Does price still matter?
‘Have economists gone mad?’ Podcast of a public lecture given at the University of Bath December 2009
‘Bird flu and swine flu,’ January 2010. Effective communication strategies regarding health issues are affected by the way in which the public obtain their knowledge, particularly whether people become interested independently, or through their social networks. This is often investigated through surveys. In rapidly-evolving situations, however, there may also be a need for swift, case-specific assessment as a guide to initial strategy development. We analyze real-time online data, provided by the new ‘Google Trends’ tool, concerning Internet search frequency for health related issues, to estimate the relative importance of independent interest in swine flu and bird flu, compared to people being interested simply because others are.
‘Network models of innovation processes and policy implications,’ October 2009. Innovation is a key feature of successful economies, yet it is understood very poorly by standard economics. This paper is part of a forthcoming handbook on innovation and technological change by a group of European economists working as the Bureau of Research in Complexity, Knowledge, Innovation (BRICK). The paper has an original theoretical model which is calibrated against commissioned survey evidence on four different industries in the Greater Manchester area.
‘Predicting the unpredictable,’ August 2009. A famous experiment by the head of consumer research at Yahoo showed that in popular cultural markets, people often select things simply because others do. As a result, it is impossible to predict in advance which brands will succeed. In this paper, we develop a simple methodology which enables very early prediction of eventual success in such circumstances.
‘Predictability and prediction for cultural markets,’ August 2009. This paper extends the previous one, and puts the analysis into a more technical theoretical framework. It is being given at the conference on Social Computing, Behavioral Modeling, & Prediction in Maryland in March, sponsored by the US Air Force Research Laboratories and Office of Naval Research.
‘The Current Crisis and the Culpability of Macroeconomic Theory’, October 2009. Updated and longer version (October 2009) of the culpability of conventional macro-economics in the financial crisis of 2008/09. Macroeconomic theory played a big role in the crash, giving policy makers a wholly misleading view of how the world operates. I was invited to give this at the AGM of the British Academy of Social Sciences.
‘Understanding Terrorism and Radicalisation: A Network Approach’, October 2009. This is a policy-related piece with historian Andrew Roach on historical lessons for successful counter-terrorism policy.
‘Complexity and the Evolution of Market Structure’, October 2009. This is specially written for a volume of essays in honour of Peter Allen, a Cranfield-based physicist who was in many ways the pioneer in the UK of the application of complex systems principles to economic questions. The paper examines aspects of how market structures evolve, and how complexity can give us models more in keeping with the empirical evidence than conventional economics. In particular, the principles of standard competition theory widely used by regulators are usually misleading.
‘Imitation or deliberate selection?’, September 2009. In an increasing number of consumer markets, imitating what others do is becoming more important relative to the inherent merits of the product or service on offer. As we become more connected, we are more aware of the actions, opinions and behavior of others. Analysing this, both empirically and theoretically, is one of my main interests. Here are a couple of short empirical pieces on estimating the relative weights of imitation and selection. The first is a brief note in the Proceedings of the National Academy of Science on the choice of baby names in America. The other looks at ‘Google Trends data on bird flu in 2005 and swine flu in 2009’. Did people search because they really wanted to know, or because it was the fashionable thing to do?
‘Phillips curve does not really exist’, September 2009. Economists constantly search for a relationship which identifies a trade-off between inflation and the state of demand in the economy. Unemployment is often used to measure the latter, so that as unemployment rises or falls, inflation moves in the opposite direction. Despite huge amounts of work by skilled econometricians, every time such a relationship is believed to have been identified, it breaks down.
We look at evidence for the US, UK and Germany 1871-2009 and conclude that instability of the Phillips curve is an inherent feature of the Western economies. Whilst in theory such a relationship might exist, in practice there are persistent shocks to the economic environment which dominate short-term movements up and down the Phillips curve. This paper is also available on the Economics E-Journal website.
‘Agents, Intelligence and Social Atoms’, September 2009. In the last 15 years, models based on the physics of interacting particles have provided significant insights into the understanding of collective interactions in social systems, from Internet communities to pedestrian and vehicular traffic, economic markets and even prehistoric human migrations. But, even to researchers sympathetic to this ‘non-rational’ approach, they seem to have something missing. This is written jointly with anthropologist Alex Bentley for a collection of essays, and addresses how the ‘particle model’ would be even more powerful with a bit of human behavioural content.
‘How integrated are Brazil, Russia, India and China (BRIC) with the West?’, August 2009. A lot is being written about the BRIC economies. This paper, using some rather advanced maths, looks at how the synchronisation of their business cycles with those of the West has evolved since the Second World War. For much of this period, the movements in GDP of the individual BRIC economies were uncorrelated either with those of the West. However, since the early/mid 1990s, there has been a very marked increase in the degree of synchronisation of the BRIC economies with those of the developed world.
‘Social influence and the evolution of long-tailed distributions’, July 2009. Unequal outcomes are entirely normal in terms of economic, social and cultural processes. The most popular books/films/music sell enormously more than less popular ones. Word frequencies, citations of scientific papers, the sizes of cities, internet links, the number of sexual partners – all these diverse phenomena have the same characteristic: the biggest are hugely bigger than the smallest. Scientific models already exist which can explain why we observe unequal outcomes everywhere look. But these models cannot account for why there is constant change within these outcomes; the top download on You Tube isn’t number 1 for long and even major cities go up and down the rankings over time. This paper describes a general evolutionary model, with sound behavioural foundations, which for the first time links all these factors. The paper has been given at Sandia National Labs, New Mexico, the European Social Simulation Association conference, the European Conference on Complex Systems.
‘Ostrich Economics’, May 2009. In this essay, I focus on three aspects of financial markets where the conventional thinking in economics proved to be seriously misguided. They are the potential for volatility, the ability to diversify risk, and the lack of smooth adjustment to change. The assumptions made on each of these in mainstream risk models were known to be scientifically invalid. Yet economists persisted with them.
‘Patterns of recession and recovery’, May 2009. The UK government has attracted a lot of criticism for the strength of its economic predictions once the recession has ended. But history is on the government’s side. When recessions end, recovery is usually strong. This is no guarantee that it will happen, and it doesn’t tell us exactly when the recession will end. But once it does, look for a swift revival in economic activity.
‘Physics and Anthropology’, April 2009. A presentation given at a workshop at Durham University’s Institute for Advanced Study on Physics and Anthropology. The document describes the issues addressed at the workshop, which I organised with Alex Bentley of Durham. Two key questions in particular are: how useful in the social sciences is the ‘interacting particle’ models in physics, and how are models validated with the short, nosiy data which we see in most social science contexts. The powerpoint gives my own presentation.
‘The current crisis and the Hayekian response’, March 2009. A paper given at a group of City economists, journalists and academics. This hypothesizes two general types of recession. I also draw contrasts and similarities between the work of Keynes and Hayek.
‘The state of macro-economic modelling’, January 2009. A summary in two pages of the inadequacies of current academic approaches to macro-economics.
Counter-terrorism and network theory, 2008. This is a neat summary of a paper my collaborator Andrew Roach, a historian, gave at a Security Research Forum at the University of Glasgow.
‘Perspectives on the current economic crisis’, 2008. This is a powerpoint presentation of my thoughts on the world economy, a keynote address given at a conference in Riyadh on 22 December 2008.
‘Global recessions as a cascade phenomenon with heterogeneous interacting agents’, 2008. A paper showing that ‘contagion’ across countries is an important source of recessions. A slightly revised version is forthcoming in the Journal of Economic Interaction and Control.
‘Recessions and the resilience of the capitalist economies’, 2008. This paper examines the resilience of Western economies to recessions. The typical recession in fact lasts for only a single year. An earlier version was given at the Organizational Science conference, Lake Tahoe, CA.
‘Binge drinking in the UK: a social network phenomenon’, 2008. A study of why the rapid rise in binge drinking in the UK can be explained as a phenomenon of imitation across social networks. The paper also shows how to reduce the number of parameters in agent based models by reference to simple survey analysis.
’21st Century Economics’, 2008. Based on a public lecture given in the University of Durham, it is part of the Durham Institute of Advanced Study’s Insight series.
‘Emergent scale-free social networks in history: burning and the rise of English Protestantism’, Cultural Science 2008. Written with the historian Andrew Roach, this shows the role of the martyrs under Catholic Queen Mary in bringing about a very rapid conversion of England to Protestantism.
‘Random Matrix Theory and the Evolution of Business Cycle Synchronisation, 1886 – 2006’, 2008. This paper shows that an international business cycle in any meaningful sense of the word did not exist until the final quarter of the 20th century. A revised version is published in Economics E-Journal.
‘What can Agents Know? The Feasibility of Advanced Cognition in Social and Economic Systems’, 2008. A short paper for the symposium ‘Agent cognitive ability and orders of emergence’ at the Society for the Study of Artificial Intelligence and Simulation of Behaviour conference, Aberdeen, published in the Proceedings.
‘The tradition of complexity in economic theory’ in Marisa Faggini and Thomas Lux, eds., Economics from Tradition to Complexity, Springer, 2008. This is a more in-depth look at the work of Hayek and Keynes, with particular reference to modern complexity theory.
‘Is the concept of “wellbeing” useful for policy-making?’, 2008. A paper prepared for the Sustainable Development Committee. Not surprisingly critical of the concept of well-being, but with some positive thoughts as well.
‘Shelf space strategy in long-tail markets’, 2008. This paper develops some initial results on inventory strategy for both physical and internet retailers in markets in which sales of products exhibit a long-tail. The paper has been accepted for publication in Physica A.
‘Tradition and Fashion in Consumer Choice: Bagging the Scottish Munros’, 2008. Analysing a leisure interest of mine in the context of economic theory, and proposing a modest extension to the classic Bass diffusion model, submitted to Scottish Journal of Political Economy. Written with Alex Bentley of Durham University.
‘Cultural and Creative Industries’, 2008. A short paper on the theoretical implications of a sector of the economy which is growing very rapidly. Conventional economic ideas are often stood on their head in such markets. An expanded version will be published in Cultural Science, 2009.
‘Social network markets: A new definition of the creative industries’, Journal of Cultural Economics, 2008. Cultural and creative industries are a rapidly growing sector of Western economies attracting attention from policy makers. But conventional definitions are based upon the old industrial classification methods. We propose, instead, a new market-based definition in terms of the extent to which both demand and supply operate in complex social networks.
‘Real World Happiness’, 2008. A distillation of the 2007 IEA happiness monograph (see below), with some new results, for the on-line journal Real World Economics Review.
‘Happiness, Economics and Public Policy’, 2007. An extensive critique of so-called ‘happiness’ or ‘well-being’ economics, a 20,000 word monograph for the Institute of Economic Affairs, written with ex-Volterra Helen Johns.
‘Extracting deep knowledge from limited information on an evolved social network’, presented at a US Office for Naval Research conference on social networks, Budapest 2006 and published in Physica A in 2007. This develops a general methodology for approximating a social network from very limited information, an important practical issue.
‘What is social about the social sciences?’ is an interesting debate at the British Academy of Social Sciences and published in 21st Century Society, 2007. My paper starts on page 2, and there is discussion at the end.
‘Resilience after Local Economic Shocks’, 2007. This paper looks at employment changes over a 20 year period in the UK local areas where the coal mines were closed rapidly in the 1980s. Cultural factors are important: the longer the miners’ strike of 1984/85 lasted, the worse the subsequent economic performance. Published in Applied Economics Letters, 2008.
‘Long Range Inflation Prospects’, 2007. This shows that the potential range of inflation in both the UK and the EU is much wider than most people imagine. It was written in early 2007, at a time when most commentators believed the problem of inflation had disappeared!
‘Innovation, Diffusion and Agglomeration’, 2007. This considers the role or urban agglomerations in spreading innovation. In an evolving network, networks of firms which are either too sparsely connected or too densely connected both inhibit the spread. Dense connections are in general not good for innovation. The paper is being published in Economics of Innovation and New Technology, 2008.
‘Hayek, the ‘Intellectuals and socialism’ and weighted scale free networks’, Economic Affairs, 2006. This develops a conjecture of Hayek and demonstrates the decisive importance of a small liberal elite in altering opinion on social matters in the West.
‘Worrying trends in econophysics’, 2006. Presented at the World econophysics conference Canberra 2005, this sparked a wide debate, including an editorial in Nature. Published in Physics A.
‘Verification and validation of agent based models in the social sciences’ was given at the conference on Epistemological Perspectives in the Social Sciences, Brescia 2006 and will be published in F.Squazzoni, ed.
‘Economic modelling with low cognition agents’ was presented at the World Econophysics Conference, Canberra 2005 and published in Physica A, 2006.
‘Friedman, Keynes and Hayek’, a short piece I wrote for the UK magazine Prospect at the end of 2006 following the death of Milton Friedman.
‘An Agent-Based Model of the Evolution of Market Structure and Competition’, 2006. What happens to a market when regulation or technology removes quasi-monopoly power? Economics knows part of the answer: relative prices fall and quality improves. But its problem is that the previous monopolist usually retains a large market share, making the market distinctly uncompetitive on standard criteria. This agent based model resolves the problem, and gives outcomes which fit much more closely what has actually happened.
‘Industrial Structure and Economic Success at the Local Level’, 2006. A detailed study of 20 year employment growth in the 400+ UK local economic areas. The results suggest that a wide variety of industrial structures are compatible with employment growth and economic success. The current policy obsession with attracting and developing ‘knowledge-based’ industries is misplaced. Published in the Business Economist.
‘Labour Market Flexibility in the US and the UK: Evidence at the Local Area Level’, 2006. A short paper on labour market ‘flexibility’. The US and to some extent the UK are held up as examples of the more ‘flexible’ labour markets to which other countries should aspire. But even over a fifteen year period, 1990-2005, there is strong persistence in relative unemployment rates at local area levels in both countries, and especially the UK.
‘Working Paper 17: Why distance doesn’t die: Agglomeration and its benefits’, 2006. A paper written for the Greater London Authority on the theoretical and empirical benefits of urban agglomeration.
‘Behavioural Economics and the Benefits of Choice’, 2006. Increasing choice can make consumers feel worse off. This is a piece we did for the Financial Services Authority showing that, by incorporating recent advances in economic thought on the process of how consumers make choices, more choice can quite rapidly make people feel worse off.
‘Hayek and current developments in economic methodology’, in P Booth, ed., Towards a Liberal Utopia?, Institute of Economic Affairs, London, 2005. This is a short essay on Hayek and the future of economics.
‘System wide failures in complex evolving systems’ presentation was given at the Brisbane club meeting 2005 and is published in J.Foster and S.Metcalfe, eds.
‘The Convergence of European Business Cycles 1980 – 2004’, 2005. Updating a previous paper on this topic. Acta Physica Polonica B.
‘Agent based modelling and policy design: The case of elective surgery in the UK National Health System’, 2005. This models the introduction of patient choice into the UK health service, contemplated by Blair and abandoned by Brown. Even with individuals operating with highly imperfect information and not always taking the optimal decision even with the information they have, and with suppliers using myopic decisions rules, the introduction of choice in general increases consumer welfare.
‘Estimating the Uncertainty around Forecasts for GDP Growth and Inflation – A Stress Testing Approach’, 2005. This is a paper we wrote in Volterra 4 years ago, using an innovative approach to estimating the probability of both a recession and negative inflation. We said that the probability of a recession in any given year was 11 per cent and the probability of negative inflation 13 per cent. The Bank of England Monetary Policy Committee, both then and up to very recently, put a probability of effectively zero on both events. At the time, most other economists dismissed this approach completely. But now?
‘Complexity and the limits to knowledge’, Futures, 2004. This paper argues that Western economies exhibit the key features of complex systems, short-term non-predictability, emergent properties and multiple possible histories.
‘On the methodology of assessing agent-based evolutionary models in the social sciences’ in J Foster and S Metcalfe, eds, Evolution and Economic Complexity, 2004. This paper was written for the Brisbane club, a group of evolutionary economists, in 2002.
‘Social networks: their role in access to financial services in Britain’, National Institute Economic Review, July 2004. This is an econometric paper which shows the decisive influence of social networks on consumer choice in financial products.
‘The medieval Inquisition: scale-free networks and the suppression of heresy’, Physica A. Written with mediaeval historian Andrew Roach, looks at how the first Inquisition learned to suppress the Cathar heresy. Terror didn’t work and subtle methods were required.
Scaling invariant distributions of firms’ exit in OECD countries, 2004. The power law distribution paper on firm extinctions used American data. This is a paper with some very good Italian economists which replicates the results of my 2003 paper for a wider sample of OECD countries. Published in Physica A.
‘Non-linear modelling of burglary and violent crime in the UK’, 2004. A detailed attempt to model crime empirically using a non-linear differential equation framework. Most of the work was done for the Home Office in 2000. They eventually published it in an Occasional paper in 2004.
‘Explaining Social and Economic Phenomena by Models with Low or Zero Cognition Agents’, 2004. This gives some examples of models which give good explanations of socio-economic phenomena are based upon agents with very limited information gathering and processing capabilities. In M Salzano, Economic Complexity Hints, Springer-Verlag.
‘Information cascades and the distribution of economic recessions in capitalist economies’. An agent-based model of the business cycle which is compatible with some key empirical features of these cycles. Physica A.
‘Assessing the Productivity of the UK Retail Sector’, 2004. A long paper on measuring retail productivity, which involves some quite tricky problems in economic theory. The idea arose when a UK government study suggested that British retailing is less efficient than German, a suggestion which casual experience of the two seems to refute.
‘Extracting information from noisy time series data’, 2004. Paper given at the CASS Business School conference December 2004, attended by leading econometricians Robert Engle and David Hendry. The evidence that macro-econometric relationships are usually poorly determined and will break down much more rapidly and decisively than their conventional statistical basis suggests, was greeted with a certain amount of reserve.
‘Scaling behaviour in the number of criminal acts committed by individuals’. This examines the distribution of the number of crimes committed by individuals. The results suggest that the distribution of convictions and criminal offences is bimodal. In particular, there is an important distinction between those who do not commit a criminal act in a given time period, and those who do. The crucial step in the criminal progress of an individual appears to be committing the first act. Once this is done, the number of criminal acts committed by an individual can take place on all scales.
‘Power Law Distribution of the Frequency of Demises of U.S Firms’, 2002. This paper discovers striking similarities between statistical patterns of extinction in the biological fossil record and in the extinctions of firms. Published in Physica A.
‘Replacing the State’, 2003. A chapter in a wider study by the Association of Chief Executives of the Voluntary Sector on re-thinking its relationship with the state.
‘How Much Can Firms Know?’, 2003. This considers the evolution and extinction of companies. There are high returns to knowledge, but the external environment evolves so rapidly that systematic learning is extremely difficult. Firms operate close to, but not exactly at, the paradigm of ‘zero intelligence’ agents.
‘The US Business Cycle: Power Law Scaling for Interacting Units with Complex Internal Structure’, Physica A, 2002. A Keynesian model of the US business cycle, populated by myopic, non-rational firms. The cycle is generated endogenously. The model – in contrast to existing economic theories of the cycle – accounts for the key features of output growth in the US business cycle in the twentieth century.
‘The Convergence of European Business Cycles 1978 – 2000’, 2002. Applies concepts in random matrix theory which show that the UK has not converged at all with the main UK economies. Published in Physica A.
Economics as Social Theory, 2001. An early example of agent based modelling work, produced for Edward Fulbrook’s Economics as Social Theory, which developed from the Post-Autistic Economics movement – now with a much improved name ‘Real World Economics’. Part of the motive was to try to show to those critical of orthodox economics that models can still be useful.
‘The Goodwin model and the periodicity of unemployment and factor shares in the UK’, 2001. I have had a longstanding interest in Richard Goodwin’s prey-predator model of economic growth and the cycle. The workers, in a reversal of Marxism, prey on the profits of capitalism. Unfortunately, the model is not able to replicate key empirical features of the cycle.
‘The Impact of Regulation in a Model of Evolving, Fitness-Maximising Agents’, 2001. An agent-based model of firm evolution and extinction developed for British Telecom, showing the dangers of regulation based upon the conventional economic concept of competition.
‘Random Matrix Theory and the Failure of Macro-economic Forecasts’, 2000. I started life as an economic forecaster. It soon became clear that both our models and our forecasts failed much more frequently than conventional statistical theory suggests. It took me over 20 years to work out why. Published in Physica A.
‘Conditional convergence: how long is the long-run?’, 2000. Looking at the hypothesis that income per head across countries converges in the long-run. This uses both a wide set of countries and a much longer run of data than is usual, as far back as 1500. Even in the culturally homogenous economies of Western Europe, convergence times are of the order of 150 years.
‘The Keynesian Micro-Foundations of the Business Cycle: Some Implications of Globalisation’, 1999. A simple agent base model of the business cycle on Keynes’ principles, which is empirically superior to conventional economic models of the cycle. In P.Arestis et.al., eds., What Global Economic Crisis?, Palgrave, 2001.
‘Post-orthodox econometrics’, 1999. This is a piece for a Post-Keynesian Study Group conference, and is a critique of macro-economic time series econometric analysis.
‘Richard Goodwin: A Short Appreciation’, 1998. This is an appreciation of the work of the Cambridge economist Richard Goodwin, in my view one of the most original economists in the whole of the second half of the 20th century.
‘Situational analysis and the concept of equilibrium’ Philosophy of the Social Sciences, Vol. 28, No. 4, 498-514, 1998. This is a paper on the work of Karl Popper and his views on economics.
‘Social Interaction and the Dynamics of Crime’, 1998. A highly mathematical analysis of social interaction and crime, using non-linear differential equations. The analysis was the foundation for several chapters in Butterfly Economics, and is cited extensively in Philip Ball’s best-seller Critical Mass.
These are the sorts of things I used to write years ago when I was an econometrician:
‘Rational and Non-rational Expectations of Inflation in Wage Equations for the United Kingdom’, 1982. At least there is a hint here that simple rules of behaviour might be just as good as more complicated ones.
‘Unemployment in Interwar Britain’, 1982. A major controversy was sparked by a poor article in a top journal which claimed that the unemployed in the UK in the Great Depression of the 1930s were choosing to live off benefits and take leisure instead of choosing to work. This is one of the responses.
‘Manufacturing export prices in the United Kingdom and the law of one price’, 1980. Hard core time series econometrics!
‘St. Louis models of the UK economy’, National Institute Economic Review. I show how 2 completely different macro-models, one monetarist and the other Keynesian, hardly differ in their ability to explain the British economy. It was papers like this which started me doubting whether macro-economics was of much use.