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It's an interesting simulation, but fatally flawed by the assumption that transactions between actors are a zero sum game. It would be more realistic if it mod

It's an interesting simulation, but fatally flawed by the assumption that transactions between actors are a zero sum game. It would be more realistic if it modeled the fact that wealth can be created and that actors transact only when the net outcome is more valuable to each of them.

DigitalJack 13y ago
I'm assuming by wealth, you mean actually producing a good or providing a service? I know we have to draw the line somewhere, but it would be interesting to throw in some renewable and non renewable resources for transforming goods.
flatline 13y ago
> actors transact only when the net outcome is more valuable to each of them At least, the perceived value, but often times in real economies this does not match up with actual value at all. People hoping to better their fortunes end up making poor decisions to that end, particularly -- but certainly not limited to -- poor people without much financial savvy. This part of the simulation seems perfectly accurate to me.
- Symmetry 13y ago
  Well, there are three things to think about. There's the current open market price of something, there's the actual subjective value of something, and there's the subjective value that the buyer hopes something will end up having before the transaction is made. Poor people are certainly sometimes bitten by lack of savy, but more often bitten by the exigencies of their lives pushing them towards shorter planning horizons.
  - JackFr 13y ago
    For a very rigorous yet still accessible understanding try Debreu's Theory of Value: http://cowles.econ.yale.edu/P/cm/m17/m17-all.pdf http://cowles.econ.yale.edu/P/cm/m17/m17-all.pdf
Symmetry 13y ago
He's using the word 'wealth' in a imprecise, non-jargon sense that is something like money, or the open market value of all of a person's possessions, or the economist definition. Without teasing those apart it's hard to make any sort of economics simulation that will give results that are interesting in a practical sense. But hey, Python has lots of cool packages that are useful here, which is the real point.
yetanotherphd 13y ago
It's also flawed in that most transactions increase the wealth of both parties. Even though wealth in this context includes non-monetary factors, (e.g. I exchange my time for money), it still means that the interactions in the article (two people meet and one ends up with some proportion of the total money) are very unrealistic. It might be a realistic simulation of professional poker players.
cma 13y ago
Seems to model things like transactions in fixed resources like land pretty well. In third-world countries we (the US) have repeatedly bought up land in exchange for short-term goods. The people in the country increasingly become dependent on providing services to the foreign land-holders, or factory work for the outside market. Once they get fed up with this near-slavery they often try land reform, and that's when we send in the troops/CIA-paid thugs in the name of anti-communism (see Guatamala or Haiti as good examples). It's like the Asimov story where aliens offer to extend humans' life by ten years for a price in natural resources, which they repeatedly double every ten years. Every resource on earth is eventually strip-mined, life can no longer be supported, and the aliens just move on to the next "voluntary" target. The WTO plays a big role in these kind of attacks on societies as well. Of all the third-world countries that have developed, they have almost uniformly made heavy use of protectionism, foreign-ownership limitations, etc. The Seattle WTO protests in the 90's were actually seeded with some really interesting arguments and analysis. Still focusing on land, but bringing things back towards Norvig's simulation (lots of individual actors), Thomas Paine's short essay, "Agrarian Justice," has some good descriptions of what goes on and offers some pretty good solutions. http://www.ssa.gov/history/paine4.html http://www.ssa.gov/history/paine4.html
- 001sky 13y ago
  in fixed resources like land... What is this resource you talk about? Land values are f(productivity, past productivity). That is they are derivatives of income and wealth. Notwithstanding the critique of the author, the GP has a point that the science of economics is about the relationship between (production, distribution). Eliminate that feedback loop, and ... yes, you are just looking at the diffusion of "fake games" people play. Which are only insightful in the assumptions, but broadly speaking, not so much All of that in mind, this type of essay/article is just a demonstration of ~technique in a very broad sense. Its useful to mention/caveat any extrapolations are problematic, but no need to dwell or be overyly crtitical here. IMHO.
  - dllthomas 13y ago
    I don't think the parent meant that land has fixed value, but that we can't willy-nilly create more of it through the sweat of our brow, in the way that we could make more widgets.
logjam 13y ago
And so your own assumptions are that wealth can be created out of thin air, and that humans behave as rational actors? I'd say your assumptions are the ones that are fatally flawed, as history has shown repeatedly.
kaonashi 13y ago
Well, it's just a crude barter system, it has none of the complexities of a real capitalist system.

DigitalJack 13y ago

I'm assuming by wealth, you mean actually producing a good or providing a service? I know we have to draw the line somewhere, but it would be interesting to throw in some renewable and non renewable resources for transforming goods.

flatline 13y ago

> actors transact only when the net outcome is more valuable to each of them At least, the perceived value, but often times in real economies this does not match up with actual value at all. People hoping to better their fortunes end up making poor decisions to that end, particularly -- but certainly not limited to -- poor people without much financial savvy. This part of the simulation seems perfectly accurate to me.

Symmetry 13y ago
Well, there are three things to think about. There's the current open market price of something, there's the actual subjective value of something, and there's the subjective value that the buyer hopes something will end up having before the transaction is made. Poor people are certainly sometimes bitten by lack of savy, but more often bitten by the exigencies of their lives pushing them towards shorter planning horizons.
- JackFr 13y ago
  For a very rigorous yet still accessible understanding try Debreu's Theory of Value: http://cowles.econ.yale.edu/P/cm/m17/m17-all.pdf http://cowles.econ.yale.edu/P/cm/m17/m17-all.pdf

Symmetry 13y ago

He's using the word 'wealth' in a imprecise, non-jargon sense that is something like money, or the open market value of all of a person's possessions, or the economist definition. Without teasing those apart it's hard to make any sort of economics simulation that will give results that are interesting in a practical sense. But hey, Python has lots of cool packages that are useful here, which is the real point.

yetanotherphd 13y ago

It's also flawed in that most transactions increase the wealth of both parties. Even though wealth in this context includes non-monetary factors, (e.g. I exchange my time for money), it still means that the interactions in the article (two people meet and one ends up with some proportion of the total money) are very unrealistic. It might be a realistic simulation of professional poker players.

cma 13y ago

Seems to model things like transactions in fixed resources like land pretty well. In third-world countries we (the US) have repeatedly bought up land in exchange for short-term goods. The people in the country increasingly become dependent on providing services to the foreign land-holders, or factory work for the outside market. Once they get fed up with this near-slavery they often try land reform, and that's when we send in the troops/CIA-paid thugs in the name of anti-communism (see Guatamala or Haiti as good examples). It's like the Asimov story where aliens offer to extend humans' life by ten years for a price in natural resources, which they repeatedly double every ten years. Every resource on earth is eventually strip-mined, life can no longer be supported, and the aliens just move on to the next "voluntary" target. The WTO plays a big role in these kind of attacks on societies as well. Of all the third-world countries that have developed, they have almost uniformly made heavy use of protectionism, foreign-ownership limitations, etc. The Seattle WTO protests in the 90's were actually seeded with some really interesting arguments and analysis. Still focusing on land, but bringing things back towards Norvig's simulation (lots of individual actors), Thomas Paine's short essay, "Agrarian Justice," has some good descriptions of what goes on and offers some pretty good solutions. http://www.ssa.gov/history/paine4.html http://www.ssa.gov/history/paine4.html

001sky 13y ago
in fixed resources like land... What is this resource you talk about? Land values are f(productivity, past productivity). That is they are derivatives of income and wealth. Notwithstanding the critique of the author, the GP has a point that the science of economics is about the relationship between (production, distribution). Eliminate that feedback loop, and ... yes, you are just looking at the diffusion of "fake games" people play. Which are only insightful in the assumptions, but broadly speaking, not so much All of that in mind, this type of essay/article is just a demonstration of ~technique in a very broad sense. Its useful to mention/caveat any extrapolations are problematic, but no need to dwell or be overyly crtitical here. IMHO.
- dllthomas 13y ago
  I don't think the parent meant that land has fixed value, but that we can't willy-nilly create more of it through the sweat of our brow, in the way that we could make more widgets.

logjam 13y ago

And so your own assumptions are that wealth can be created out of thin air, and that humans behave as rational actors? I'd say your assumptions are the ones that are fatally flawed, as history has shown repeatedly.

kaonashi 13y ago

Well, it's just a crude barter system, it has none of the complexities of a real capitalist system.