11 ms·
This is not economic model in any usual sense of the word 'economic'. At best it's a discrete diffusion simulation -- purposely obfuscated with loaded words li
by JackFr 13y ago
This is not economic model in any usual sense of the word 'economic'. At best it's a discrete diffusion simulation -- purposely obfuscated with loaded words like wealth and transactions.
Its a nice exposition of using python for a simulation, but it has little bearing on economics.
- aet 13y agohttp://www2.econ.iastate.edu/tesfatsi/WhyEconomistsShunSimulation.Lehtinen2008.pdf http://www2.econ.iastate.edu/tesfatsi/WhyEconomistsShunSimul...
- Fomite 13y agoAs someone who works with simulation models for a living, this was a fascinating read. Thanks for linking it.
- arethuza 13y agoI'd be interested in what you think of that paper - I was fascinated by it as it seemed rather odd coming from an engineering perspective.
- Fomite 13y agoDisclaimer: I'm an Epidemiologist, not an Economist, so it was a reading from someone outside the field. The idea that fields have certain "ways of knowing" something was interesting to me - that for economics, its about the analytic solution of an equilibrium. My own field has something similar - generally speaking, the "hierarchy of evidence" starts with single case reports at the bottom, and then way up at the top are meta-analyses of large randomized clinical trials. As a modeler, I was once asked by a clinician where models (be they analytical or simulation) fit in that framework, and the only answer I could give was "along side it". Analytic results are Capital-T True in a way that even RCTs aren't, but are only true in the universe laid out by the model itself, for example. It was also just an interesting read as models in my field have been migrating from analytic (or numerical) solutions to equilibrium problems toward more simulation and agent based models, and that same "Yes, but how do you know it's right" type questions are coming up.
- Quequau 13y agoThis is slightly off-topic but I've recently read the book "Growing Artificial Societies: Social Science From the Bottom Up" and in my spare time I've been slowly implementing something very similar to the sort of "Maximally-Minimalist" simulation they describe. This simulation includes the concept propagation of disease, again in a sort of "Maximally-Minimalist" way. While it's suitable in the sense that it fits with the rest of simulation, I've identified it as something that I am going to have to learn about before I extend that part of the simulation beyond what's already been described. So I was wondering if you might know of a resource which presents various minimalist models of disease propagation that you could recommend. I'm not epidemiologist, I'm actually retired and studying economics as they pertain to environmental systems, so I'm not actually looking for anything that extremely complex or compute intensive... I'm just looking for something slightly more detailed that what I've got now and perhaps describes a step-by-step method towards modeling that's actually realistic.
- Fomite 13y agoThis may be a good place to start: http://press.princeton.edu/titles/9639.html http://press.princeton.edu/titles/9639.html It's a textbook on agent-based models written by an ecologist (where an awful lot of disease modeling is done). I believe there's a cheaper paperback version on Amazon, and they use NetLogo, which is pretty gentle computationally.
- Quequau 13y agoThanks!
- arethuza 13y agoI guess one thing that epidemiologists and economists have in common is that you can't do controlled experiments?
- Fomite 13y agoIndeed.
- yetanotherphd 13y agoI think that paper doesn't capture the main reason economists shun simulation. It is true that economists have an unjustified preference for analytic solutions over numeric solutions. However, the main reason to avoid simulations, is that the assumption of rational agents is not very amenable to the typical approach of simulation. Any simulation that imposed the assumption of rationality would look very different to the simulations that are usually done. For example, rational agents make decisions based on future prices. I might decide to build a factory, because I expect positive profits given the future prices of inputs and outputs. But I can only know this if I have myself modeled the entire economy. Economists do this using backward induction. They solve for equilibrium in the future, and work backwards. Another more basic example is that rational agents naturally form markets. Buying/selling of goods is much more accurately described by a perfect market, than by some random matching with random prices.
- anonymousDan 13y agoHave you ever read the book 'The Origin of Wealth'. It goes to great lengths to discredit such 'rational agent', and to a non-economist like me makes a pretty convincing case. Avoiding simulations because they are not very amenable to the assumption of rational agents says more about economists than the utility of simulations in my opinion.
- yetanotherphd 13y agoWhy do you presume to talk down to me when you haven't even bothered to address the points in my post (in particular the concrete examples I gave of rational agents vs simulations). I have a PhD in economics, but I don't insist that people take my word for gospel. You on the other hand, seem to think that reading a single book makes you an expert.
- reader5000 13y agoWhat you are saying is "discrete diffusion simulation[s]" do not adequately model/explain real economic dynamics. So this is a valid contribution to economics in the form of an inadequate dynamic model.
- gyom 13y ago> So this is a valid contribution to economics in the form of an inadequate dynamic model. With that line of reasoning, don't you feel that anything is a "valid contribution to economics" ?
- reader5000 13y agoNo, for example if we were discussing a model of weather, that would not directly be a contribution to economics.
- WalterBright 13y agoWeather has a rather strong influence on economics, for example as a predictor of future crop prices. The better the weather model, the more accurately prices can be forecast. Hedge funds very definitely watch the weather projections.
- eru 13y agoYes, so that would be at best an _indirect_ contribution to economics.
- saraid216 13y agoIt's economics. Nothing in the field is adequate.
- nabla9 13y agoSo are you saying that discrete diffusion simulation does not model economics in any meaningful sense?
- arethuza 13y agoThe paper linked to by aet is quite interesting - it suggests that economists are mainly interested in the internal logical structure of their models and that these must be amenable to analytical solutions. So perhaps the discrete diffusion simulation being discussed just doesn't look like what an economist regards as a "good" model. [NB I've spent a lot of time writing simulations in the industrial domain - where the simulated result is generally primary and the logical structure is a means to that end].
- JackFr 13y agoI would say its as good an economic model as it would be an epidemiological model, if we changed 'wealth' to 'infection'.
- markkat 13y agoThat's the beauty that is used to advantage in physics, systems often behave in similar ways. Such a characteristic is not a weakness of a model, often it is a strength.
- Gravityloss 13y agoSomewhat true. In "winner takes all" naturally the asymptotic end point is that all the wealth is on one agent at a time, and it is passed around in transactions randomly. It would be more interesting to look at where the agents end up from their starting positions. Besides looking at wealth inequality, one could look at "consistency" or whatever you call it.
- tomrod 13y agoSeems to be missing demand or utility (for derived demand) functions. But it does have some overlap with computational/agent-based models. I'd give it a B- as a midterm project, maybe a B for using a language better than Matlab. (I'm an economist).
- fiatjaf 13y agoHow about this? http://nbviewer.ipython.org/gist/fiatjaf/8551280 http://nbviewer.ipython.org/gist/fiatjaf/8551280