Making Sense of Chaos

Outline

Making Sense of Chaos (2024) argues that traditional economics often fails to predict crises because it assumes the economy is stable and predictable. J Doyne Farmer introduces complexity economics, which uses computer simulations of many interacting individuals and businesses to model how real economies behave. He shows how this approach can help us understand financial crashes, climate policy, and economic change.

• Traditional economics often fails to predict crises because it assumes the economy is stable and predictable.
• Complexity economics models the economy through computer simulations of many interacting individuals and businesses.
• Simulating how real people and firms behave helps explain how actual economies work, not how they should work in theory.
• This approach can help us understand financial crashes, climate policy, and economic change.

J Doyne Farmer is an American complex systems scientist and professor at the University of Oxford, where he directs research on complexity economics. He was a pioneer of chaos theory and later co-founded a successful quantitative trading company. Making Sense of Chaos brings together decades of his research.