Reviewed by
Frank Dignum
Utrecht University
In the chapter of Paul Ormerod it is stated that economics is founded on three basic assumptions:
1. Agents have preferences which are stable over time
2. Agents have preferences which are independent of those of other agents
3. Agents are able to gather and process substantial amounts of information
He convincingly shows that none of these assumptions actually hold in the real world. If policies are for a large part founded on theories from economics it must be clear that they are not build on solid ground. So, why are policy makers sticking to economic theories as their main source for informing policies?
A very interesting chapter explaining this is from Bridget Rosewell describing her experiences as chief economist in London with policy making. In this chapter she illustrates the principles that are also described in the chapter of Andrzej Nowak et.al. about economy being based on narratives. In the end we should be able to “sell” a policy to all parties involved. Arguments about having done things in a certain way for many years (using a particular model) count more than using a potentially better informed model that does not fit that easily in the policy making culture.
This culture is geared towards finding an optimal choice that will work for sure. A model that will provide such an answer is preferred over a model that only gives possibilities over a range of outcomes. The latter is what complexity science delivers. In complex systems with dependencies and layers of components it is not possible to make precise single-point predictions. That the model better reflects society seems less important than the fact that it does not so easily allow for a certain answer to what the optimal policy is.
It seems that policy makers are also stuck in their own narratives of how society works and how policy making should be done. As we probably all know it is very difficult to break our routine unless the routine is not available anymore or there is a very appealing alternative that also fulfills the same purpose. It is actually in this respect that the book is somehow lacking. It does give research directions but does not show that policy making can be done “better” if based on more solid social psychological principles. In several chapters examples are given of the use of ABM and complexity models for policies. However, the examples are not really worked out and therefore they do not convince that these tools work actually better.
One of the problems in showing that NESS tools would work better than equilibrium based theories for policy making is that one cannot easily do scientific experiments comparing the two methods in the same situation. It is already difficult to claim success of a policy, because even doing nothing does not guarantee that society will not change. Therefore there is no clear baseline against which to check results. So, it is even more difficult to compare different policies as created by different methods.
However, rather than critiquing the book for not coming up with a very strong alternative that could be readily used by policy makers, we can also see this as an opportunity and a call on all of us to fill in this gap and provide theory, tools and methodologies that can convince policy makers.
Reading a review about a book should also answer the most important question: “should I read this book?”. I would answer this question firmly affirmative. The fact that many people have contributed to the book with different perspectives on policy making makes in one hand that chapters are not always going very deep, but on the other hand gives a nice overview of all available social science theories that can be used for policy making. It also will contain interesting new insights for most people as you get glimpses from perspectives of all disciplines. At least for me it was worth reading it. And maybe more important I will recommend some of my colleagues and PhD students to also read it!