On Apr. 4, 2025 the Center for Political Economy, the Institute for Social and Economic Research and Policy (ISERP), and the Program for Economic Research (PER) co-hosted a panel discussion centered around the question: how can behavior economics be incorporated into economic theory?
J. Doyne Farmer, who addresses this central question in his recently published book Making Sense of Chaos, laid the foundation for a discussion around the use of complexity economics as an alternative in which complex systems thinking and methods are applied to economics. Highlighting the need for a widening of the aperture of mainstream economics, Farmer made the case for studying emergent behavior through the use of fine scale modeling and simulations, particularly agent-based models (ABMs) involving decision makers. Contemporary utilizations of ABMs discussed include that by central banks, energy and power sectors, and national level measuring of pandemic related economic impacts.
Farmer was joined by discussants Alma Steingart (Assistant Professor in the Department of History, Columbia), an intellectual historian who studies the interaction between politics and mathematical rationalities; Michael Woodford (John Bates Clark Professor of Political Economy and Chair of the Economics Department, Columbia), a macroeconomist and monetary theorist; and moderator Suresh Naidu (Jack Wang and Echo Ren Professor of Economics and International Affairs, Columbia University, and Co-director of the Center for Political Economy).
Should complex systems science change the way we think about and interact with economic models? What does this mean for a world so intimately connected by these fields? These core questions, amongst discussions around replicability, interpretability, tractability, and interplays with policy analysis, were at the forefront of the conversation.
