Physicist Doyne Farmer thinks we should analyze the economy the way we do epidemics and traffic.

Psychoanalyst David Tuckett believes the key to markets' gyrations can be found in the works of Sigmund Freud.

Economist Roman Frydman thinks we can never forecast the economy with any accuracy.

Disparate as their ideas may seem, all three are grappling with a riddle that they hope will catalyze a revolution in economics: How can we understand a world that has proven far more complex than the most advanced economic models assumed?

The question is far from academic...

Mark Whitehouse writes in the Wall Street Journal.

Justin Fox has a few things to say about the article in this blog post at Harvard Business Review:

Economic theories based on rational behavior have been called into doubt by recent events. A few maverick scholars "are stepping up the hunt for new models that could more accurately describe the real world." Some look to psychology for answers; others are interested in importing approaches from the physical sciences.

Sound like something you might have read in Tuesday's Wall Street Journal? It does in fact accurately describe Mark Whitehouse's article, headlined, "Economists' Grail: A Post-Crash Model." But it also describes (and the quote is taken from) a 1988 article in Fortune by Gary Hector.

If you want to learn about the subject, in fact, Hector's article is probably better — it's clearer in its descriptions of the relevant theories. But it's 22 years old. Have we learned nothing in the intervening two decades?

You might also be interested in this video of Doyne Farmer speaking on Networks and Systemic Risk at the inaugural conference of the Institute for New Economic Thinking at Kings College, Cambridge.

J. Doyne Farmer is a professor at the Santa Fe Institute. He has broad interests in complex systems, and has done research in dynamical systems theory, time series analysis and theoretical biology. At present his main interest is in developing quantitative theories for social evolution, in particular for financial markets (which provide an accurate record of decision making in a complex environment) and the evolution of technologies (whose performance through time provides a quantitative record of one component of progress).

More from Doyne Farmer's Homepage.

Papers in Economics by Doyne Farmer.