EconLog | Arnold Kling | Colander on ComplexityI think I have to disagree with Kling here.
Since I brought up the topic, a commenter pointed me to the Wikipedia article on complexity in economics, and that in turn referred to David Colander [pdf].
[complexity theory] is highly mathematical, and, as I stated above, accepts the need for simplification. But it argues that the mathematics needed to simplify economics often involves non-linear dynamic models that have no deterministic solution.[...]
It strikes me that there is a deep question of what constitutes knowledge in economics. I do not know the answer, but my instinct is that the contribution of computer simulations of complex processes will not amount to much.
Computer simulations -- the new "third way" of Science* -- have been helpful in understanding other complex processes. Why not economics?
That's a serious question: what is different about economics that would make simulations less valuable? Perhaps our economic knowledge is insufficient to properly verify and validate. That's the primary concern that comes to mind, and it's far from trivial.
I will concede that most computer simulations are not terribly helpful. And I say that as someone who has spent much time doing sims of complex systems. Most of them just aren't very good for various reasons. (Often poor V&V, or question-begging assumptions imbedded in the sim.) But most numeric analysis aren't very useful either; nor is most theoretical work. I don't see simulation work as being terribly different in this regard.
NB As usual "complex" should be taken in the technical sense, not as a synonym for "complicated." I wish I didn't have to specify that (do I?) but such is the English language.
* Simulations are often called a third way because they contrast with the two traditional modes of scientific inquiry, theoretic work built up symbolically on the blackboard, and numeric work based on experimental or field observations. Sims combine some of each of these traditional modes, unchanged since Newton or so, in a way that was impossible even half a century ago. Computer sims are still a very fledgling field, so I think it imprudent to judge their potential for creating insight based on the work done with them so far.