Making Sense of Chaos: A Better Economics for a Better World by J. Doyne Farmer
The author uses data models to look at complex problems. This has been done at times to piece together opportunities in the market. (The author also points out that efficient markets imply that there are no easy arbitrage opportunities. However, markets are efficient because arbitrageurs will come in and eliminate inefficiencies.) Some of these models can help predict things with greater accuracy than other more conventional approaches. He is able to point out cases where his models have worked well. He then uses this as a way to predict future activity. This may get a little more questionable as things move to the unknown. (For example, the cost of renewable energy may be steadily going down making it cheaper to focus investments there. However, storage and roll out could have other impacts.)
Economics awards Nobel prizes for "good ideas" while physics requires "proof". Should economics theories be fully validated in the real world? It is an interesting concept. The big data models could be the future. How would this impact economics and the world in the future?
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