This article considers the implications of complex systems models for the study of economics and the evaluation of public policies. I argue that complexity can enhance current approaches to formal economic analysis, but does so in ways that complement current approaches. I further argue that while complexity can influence how public policy analysis is conducted, it does not delimit the use of consequentialist approaches to policy comparison to the degree initially suggested by Hayek and most recently defended by Gaus.
AllenFBabusA (2009) The Network Challenge. In: KleindorferPWindJ (eds) Network-based Strategies and Competencies. Philadelphia: Wharton School Publishing, pp. 367–82.
2.
AllenFGaleD (2000) Financial contagion. Journal of Political Economy108: 1–33.
3.
AndersonP (1972) More is different. Science177(4047): 393–6.
4.
AokiMYoshikawaH (2006) Reconstructing Macroeconomics: A Perspective from Statistical Physics and Combinational Stochastic Processes. Cambridge: Cambridge University Press.
5.
ArrowKHahnF (1971) General Competitive Analysis. New York: Holden Day.
6.
AxtellR (2001) Zipf distribution of US firm sizes. Science293(5536): 1818–20.
7.
AxtellREpsteinJ (1996) Growing Artificial Societies from the Bottom Up. Washington, DC: Brookings Institution Press.
8.
BattistonSDelli GattiDGallegatiM (2009) Liaisons dangereuses: Increasing connectivity, risk sharing and systemic risk. NBER Working Paper no. 15611. Cambridge, MA: NBER.
9.
BeckerG (1993) Nobel lecture: The economic way of looking at behavior. Journal of Political Economy101(3): 385–409.
10.
BlumeLDurlaufS (2001) The interactions-based approach to socioeconomic behavior. In: DurlaufSYoungHP (eds) Social Dynamics. Cambridge, MA: MIT Press.
11.
BlumeLDurlaufS (2003) Equilibrium concepts for social interaction models. International Game Theory Review5(3): 193–209.
12.
BlumeLBrockWDurlaufS (2010) Identification of social interactions. In: BenhabibJBisinAJacksonM (eds) Handbook of Social Economics. Amsterdam: North Holland.
13.
BrockW (1999) Scaling in economics: A reader’s guide. Industrial and Corporate Change8(3): 409–46.
14.
BrockWDurlaufS (2001a) Discrete choice with social interactions. Review of Economic Studies68: 235–60.
15.
BrockWDurlaufS (2001b) Interactions-based models. In: HeckmanJLeamerE (eds) Handbook of Econometrics, Volume 5. Amsterdam: North Holland, pp. 3297–380.
16.
BrockWDurlaufS (2001c) Growth empirics and reality. World Bank Economic Review15: 229–72.
17.
BrockWDurlaufS (2006) Multinomial choice with social interactions. In: BlumeLDurlaufS (eds) The Economy as an Evolving Complex System III. New York: Oxford University Press.
18.
BrockWDurlaufS (2007) Identification of binary choice models with social interactions. Journal of Econometrics140: 52–75.
19.
BrockWDurlaufSWestK (2003) Policy analysis in uncertain economic environments (with discussion). Brookings Papers on Economic Activity1: 235–322.
20.
CowenT (2006) The epistemic problem does not refute consequentialism. Utilitas18(4): 383–99.
21.
CrutchfieldJ (1994) Is anything ever new? Considering emergence. In: CowanGPinesDMeltzerD (eds) Complexity: Metaphors, Models, and Reality. Redwood City, CA: Addison-Wesley.
22.
DurlaufS (1997) Statistical mechanics approaches to socioeconomic behavior. In: ArthurWBDurlaufSLaneD (eds) The Economy as an Evolving Complex System II. Reading, MA: Addison-Wesley.
23.
DurlaufS (2005) Complexity and empirical economics. Economic Journal112(483): F225–F243.
DurlaufS (2006b) Groups, social influences, and inequality: A memberships theory perspective on poverty traps. In: BowlesSDurlaufSHoffK (eds) Poverty Traps. Princeton, NJ: Princeton University Press.
26.
DurlaufS (2008) Review of Reconstructing Macroeconomics: A Perspective from Statistical Physics and Combinational Stochastic Processes by M. Aoki and H. Yoshikawa. Economica76(301): 212–3.
27.
DurlaufSIoannidesY (2010) Social interactions. Annual Review of Economics2: 451–78.
28.
EpsteinJ (2002) Modeling civil violence: An agent-based computational approach. Proceedings of the National Academy of Sciences99, supplement 3: 7243–50.
29.
EpsteinJ (2006) Generative Social Science. Princeton, NJ: Princeton University Press.
30.
FarmerJDFoleyD (2009) The economy needs agent-based modelling. Nature460(6): 685–6.
31.
FontanaWBussL (1996) The barrier of objects: From dynamical systems to bounded organizations. In: CastiJKarlqvistA (eds) Boundaries and Barriers. Reading, MA: Addison-Wesley.
32.
FostelAGeanakoplosJ (2008) Leverage cycles and the anxious economy. American Economic Review98: 1211–44.
33.
GabaixX (1999) Zipf’s law for cities: An explanation. Quarterly Journal of Economics114(3): 738–67.
34.
GabaixXGoprikrishnanPPlerouV (2008) Quantifying and understanding the economics of large financial movements. Journal of Economic Dynamics and Control32: 303–19.
35.
GaiPKapadiaS (2007) Contagion in financial networks. Mimeo. London: Bank of England.
36.
GausG (1998) Why all welfare states (including laissez-faire ones) are unreasonable. Social Philosophy and Policy15(2): 1–33.
37.
GausG (2007) Social complexity and evolved moral principles. In: HuntLMcNamaraP (eds) Liberalism, Conservatism, and Hayek’s Idea of Spontaneous Order. London: Palgrave Macmillan.
38.
GausG (2011) Explanation, justification, and emergent properties: An essay on Nozickian metatheory. In: BaderRMeadowcroftJ (eds) The Cambridge Companion to Nozick’s ‘Anarchy, State, and Utopia’. Cambridge: Cambridge University Press.
39.
GeanakoplosJ (2009) The leverage cycle. In: NBER Macroeconomics Annual 2009. Chicago, IL: University of Chicago Press.
40.
GlaeserESacerdoteBScheinkmanJ (2003) The social multiplier. Journal of the European Economic Association1(2–3): 345–53.
41.
HansenLSargentT (2008) Robustness. Princeton, NJ: Princeton University Press.
42.
HansenLSargentT (2010) Fragile beliefs and the price of uncertainty. Quantitative Economics1(1): 129–62.
43.
HayekF (1960) The Constitution of Liberty. Chicago, IL: University of Chicago Press.
44.
HayekF (1964) The theory of complex phenomena. In: BungeM (ed.) The Critical Approach to Science and Philosophy: In Honor of Karl R. Popper. New York: Free Press.
45.
HeathcoteJStoreslettenKViolanteG (2009) Quantitative macroeconomics with heterogeneous households. Annual Review of Economics1: 319–54.
46.
HeckmanJ (2000) Causal parameters and policy analysis in economics: A twentieth century retrospective. Quarterly Journal of Economics115: 45–97.
47.
HeckmanJ (2005) The scientific model of causality. Sociological Methodology35: 1–98.
48.
HildenbrandW (1994) Market Demand: Theory and Empirical Evidence. Princeton, NJ: Princeton University Press.
49.
HoltR.RosserJBColanderD (2011) The complexity era in economics. Review of Political Economy23(3): 357–69.
50.
IoannidesYOvermanH (2003) Zipf’s law for cities: An empirical examination. Regional Science and Urban Economics33(2): 127–37.
51.
IoriGDe MasiGPrecupO (2008) A network analysis of the Italian overnight money market. Journal of Economic Dynamics and Control32: 259–78.
52.
JacksonM (2008) Social and Economic Networks. New York: Oxford University Press.
53.
KirmanA (2010) The economic crisis is a crisis for economic theory. CESifo Economic Studies56(4): 498–535.
54.
KydlandFPrescottE (1977) Rules rather than discretion: The inconsistency of optimal plans. Journal of Political Economy85(3): 473–92.
55.
LeBaronB (2001) Stochastic volatility as a simple generator of power laws and long memory. Quantitative Finance1(6): 621–31.
56.
LeBaronB (2006) Agent-based computational finance. In: TesfatsionLJuddK (eds) Handbook of Computational Economics. Amsterdam: North Holland.
57.
LenmanP (2000) Consequentialism and cluelessness. Philosophy and Public Affairs29(4): 342–70.
58.
LohmannS (1994) The dynamics of informational cascades: The Monday demonstrations in Leipzig, East Germany, 1989–91. World Politics47: 42–101.
59.
LouryG (1981) Intergenerational transfers and the distribution of earnings. Econometrica49(4): 843–67.
60.
LuttmerE (2007) Selection, growth, and the size distribution of firms. Quarterly Journal of Economics122(3): 1103–44.
61.
LuxTMarchesiM (1999) Scaling and criticality in a stochastic multi-agent model of a financial market. Nature397: 498–500.
62.
ManskiC (2007) Identification for Prediction and Decision. Cambridge, MA: Harvard University Press.
63.
ManskiC (2011) Actualist rationality. Theory and Decision71(2): 195–210.
64.
MitchellM (2009) Complexity: A Guided Tour. New York: Oxford University Press.
65.
OkunA (1971) The personal tax surcharge and consumer demand, 1968–70. Brookings Papers on Economic Activity1: 167–211.
66.
OrphanidesA (2008) Taylor rules. In: DurlaufSBlumeL (eds) New Palgrave Dictionary of Economics, revised edn. London: Palgrave Macmillan.
67.
PutnamH (1987) The diversity of the sciences: Global versus local methodological approaches. In: PetitPSylvanRNormanJ (eds) Metaphysics and Morality: Essays in Honour of J. J. Smart. Oxford: Basil Blackwell.
68.
RossS (2005) Neoclassical Finance. Princeton, NJ: Princeton University Press.
69.
SargentTWilliamsNZhaT (2006) Shocks and government beliefs: The rise and fall of American inflation. American Economic Review96(4): 1193–224.
70.
SchellingT (1971) Dynamic models of segregation. Journal of Mathematical Sociology1(1): 143–86.
71.
SoeteventAKooremanP (2007) A discrete-choice model with social interactions: With an application to high school teen behavior. Journal of Applied Econometrics22: 599–624.
72.
SonnenscheinH (2008) Aggregate demand theory. In: DurlaufSBlumeL (eds) New Palgrave Dictionary of Economics, revised edn. London: Palgrave Macmillan.
73.
StanleyHPlerouV (2001) Scaling and universality in economics: Empirical results and theoretical interpretation. Quantitative Finance1(6): 563–7.
74.
YoungHP (1998) Individual Strategy and Social Structure: An Evolutionary Theory of Institutions. Princeton, NJ: Princeton University Press.
