Home > Uncategorized > “Let’s pretend that people are like molecules”

“Let’s pretend that people are like molecules”

“Social researchers of the 19th century were impressed by the success of this branch of science [thermodynamics], and also by its similarity to economics. A gas is a macroscopic thing, characterized by macroscopic properties — temperature, pressure, volume. But it consists of many microscopic constituents (molecules) whose interactions collectively create the macroscopic state. The study of macroscopic properties arising from microscopic interactions is called statistical mechanics. That really does sound like economics: an economy is a macroscopic thing, characterized by macroscopic properties such as GDP and trade balances, and those macroscopic properties arise from myriad microscopic constituents (people) interacting with each other.”  ergodicity economics

 

  1. rddulin
    March 15, 2018 at 4:32 pm

    This sounds pretty good until one considers that interactions between people are regulated by something called money, not predictable atomic forces that gives each person- molecule information about the other molecules.
    Money is regulated and priced by a central bank monopoly- oligopoly, with a price discrimination system that is very unfair, first and foremost for its own interests.
    Every partially blind, person-molecule pays a different cost for that money if they can afford to use money at all.
    It is like the space between the molecules was foggy and obstructed the atomic forces.
    These grand prestigious thermodynamic analogies don’t work on a system that can’t even define money much less implement an equitable money system.

  2. Nick
    March 15, 2018 at 4:55 pm

    was it only post keynes that hydraulics became the favoured model from ’empirical’ science…neoclasicism harps back to an earlier pre-scientific Rationalism…tush economics still searching for a ground for its non-existent autonomy…

  3. March 15, 2018 at 5:11 pm

    I studied Statical Mechanics in graduate school and have followed economic issues for many decades. I never saw any similarities but now I can visualize one. A molar volume of gas has 6.02 x 10^23 molecules and the “status” of the molar volume is described by a single point (like an economy?) in a space with 6.02 x 10^23 dimensions. That concept might be useful in an analytical approach to economics!

  4. C-R D
    March 15, 2018 at 7:14 pm

    The molecules always obey the laws of statistical mechanics, and this happens in a closed system. In economics, the participants may disobey and may make mistakes in a dissipative system the can grow and decay. Ergodicity is missing.

  5. March 15, 2018 at 8:37 pm

    For crying out loud it’s not. Physical systems like gases depend on the statistics of simple agents interacting by local, linear forces. Economics has complex agents interacting by non-local, non-linear goals and incentives. Modelling the economic system by micro agents may be feasible (or not) but it sure isn’t a simple statistical system of linear or reversible forces.

    Nor are the statistical variable of the system necessarily that interesting. What’s more interesting? GDP (an aggregate statistic) or the experience of people in networks of work, precarious work, families, friendships, social systems etc? Get out of modelling economies as aggregate scalars. they are networks.

    • Rob Reno
      March 16, 2018 at 1:39 am

      For crying out loud it’s not. Physical systems like gases depend on the statistics of simple agents interacting by local, linear forces. Economics has complex agents interacting by non-local, non-linear goals and incentives. Modelling the economic system by micro agents may be feasible (or not) but it sure isn’t a simple statistical system of linear or reversible forces.

      Nor are the statistical variable of the system necessarily that interesting. What’s more interesting? GDP (an aggregate statistic) or the experience of people in networks of work, precarious work, families, friendships, social systems etc? Get out of modelling economies as aggregate scalars. they are networks. ~ Pavlos Papageorgiou, emphasis added

      Well, ludicrous as it is, that is what peterblogdanovich and Shiozawa believe.

  6. Norman L. Roth
    March 16, 2018 at 1:15 am

    For more than 200 years economic thought and analysis has been littered with the bones of those who fancied they could solve the “economic riddle” {Keynes’s words} with analogies & metaphors borrowed from other sciences and disciplines. They have ranged from people who were quite distinguished in their own fields to outright crackpots and conspiracy theorists. Most of them considered themselves to be ‘szhientifik’. One could write a highly entertaining & hilariously satirical book; based entirely on a 10 page short list of the leading contenders; Followed by appropriate commentary.. BUT, It seems to me that the famous Japanese HAIKU says it best: “When the glaciers melt & recede, old weeds bloom afresh”..
    In fact, I’m willing to do it ! Any offers ? Didn’t think so.

    Please GOOGLE: Norman L. Roth

  7. March 16, 2018 at 1:34 am

    I compare people to molecules all the time. For example, this is in my first response in my profile in Quora:

    ==================
    I think this is something that Democrats and Republicans can agree on. However for a contrary opinion, lets say your car quits working as efficiently and you take it into the mechanic.

    “I can fix it. You just need a stronger fuel pump”.

    “Don’t you want to open the hood and look at it first?”

    “I don’t have to. There is only one thing that can make a car go and that’s gasoline. When your car moves, that is nothing more than the chemical energy of gasoline being released to turn into forward motion, so therefore you need more gasoline in your engine.”

    “Say – Are you a real mechanic?”

    “Actually I am an economics pundit. I just do this for extra money on the weekends.”

    There are lots of economic pundits who will tell you that the only thing an economy needs is more efficiency so that if every company in the economy became more like Walmart and Amazon the economy would have no choice but to grow.

    Just as in a car engine where fire happens when gasoline meets air in the right proportions, economic activity occurs when production capability meets consumption capability in the right proportions. It is whichever ingredient that is rare that determines the speed of the reaction, so just as when your car gets flooded you can counter-intuitively make it work better with less gas and more air, when your economy hits a supply glut you can counter-intuitively make it work better with less production efficiency and more consumption capability.
    =========================

    IMO, the problem comes not when you think of people as molecules, but rather when you choose ergodicity and heat transfer as your analogy instead of inorganic chemistry and chemical reactions. Of course which math you chose is tightly bound in the question of why you are choosing that math and whether simple tests of your application of that math give you useful results.

    • March 16, 2018 at 2:49 pm

      The proper and applicable math technology to use in economic analysis is control system technology. Many economic issues fit very well in the control system domain.

  8. rddulin
    March 16, 2018 at 12:47 pm

    Molecules have perfect information while people do not. This is primary lesson that can be illustrated by this analogy.

  9. Norman L. Roth
    March 16, 2018 at 8:04 pm

    Please scroll back to March 16, 2018, at 1:15 A.M.

    “Charles 3000” . Where have we heard that kind of stuff before ? I shudder to think that you could mean a closed loop control system at that !. Who decides what “issues fit very well ” ? And what magic algorithm gets chosen ? By the way: Speaking of “molar volumes of gas molecules”. and/or a “hydraulic ” analogy {like Tustin’s notorious “hydraulic Keynesianism” of the 1950s}… It’s already been tried. Ever heard of well trained Ivy League Economist/Mathematician Irving Fisher ?
    Using Irish scientist Robert Boyle’s basic gas Law, of Newton’s time, Fisher constructed a mechanical -hydraulic model of HIS version of the QUANTITY THEORY of MONEY around 1930…Complete with pipes, pistons,,pulleys, hydraulic fluids etc. The remains of it are said to be still lying about in some dusty alcove of the Smithsonian. No wonder Keynes detested the very mention of the QUANTITY THEORY of MONEY ! And then there’s all those schemes to use “energy units” as “scientifically-based” coin of the realm…I better stop . It gets rather tedious after a while.

    Thank you for your patience. Please GOOGLE: {1} Norman L. Roth, .[2} Norman L. Roth, Economics {3} Norman L. Roth, Economics of Work

    • March 17, 2018 at 10:26 pm

      That was very entertaining. Thanks and I will read your links! There is one significant organization that believes / must believe that the economy can be managed by controlling the quantity of money in the economy. The Fed, by way of the FOMC and open market operations and overnight interest rates control/ attempt to control, the US economy. Their tools are very weak and in recent times, have gotten weaker, but they try. .The FOMC could and should be replaced by an AI system which would have the ability to devise its own “algorithms” plus add speed/bandwidth to the control system. An AI system could ingest and analyze millions of times more data than the FOMC members can by flipping through their reports three or four times a year. The technology is available now. Bottom line: We have a control system in place now to control the economy. It is just an archaic and lousy design.

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