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Building an economy simulator from scratch

thomassimon.dev

101–110 of 217 posts

Re: Building an economy simulator from scratch

#101
post #89
post #82

First, I really appreciate author trying to understand economy better in this way, even though this simulation is quite naive. I think everybody should do that. But as others have noted, it has no concept of capital, private property, and labor market. Therefore, it's not capitalism. It's not anarchism or communism either - it lacks flexibility of workers to do something else, or state planning telling workers to do…

Would rich people be able to stop you from creating a good economy simulator? At the end of the day, it's programming. Someone who has studied economics could make that without rich people coming after him. I argue that no one would come after you if you were to do so.

Yeah, but you also need to compare it with real world data. Without grounding, the simulation will be very limited.

So you need to understand the real-world monetary flows to a sufficient level of detail. You need to understand who actually owns what, and how the power is exerted. And the rich people are against that, for example, in most developed countries (with IIRC notable exception of Norway and Sweden) the tax fillings are private.

Also, it's kind of difficult to understand actual production, because private companies keep the data on production costs secret.

On top of that, there is little culture of data sharing in economics profession. Again, mostly because the data are very valuable to companies and individuals, profit takes precedence to public understanding.

So the fact of the matter is, lot of powerful people (and perhaps most middle class as well) don't want the level of transparency required to build a meaningful model.

It's true that nobody will come after you if you try to program it. But also, you won't get much support from the existing, mostly neoliberal, institutions.

Re: Building an economy simulator from scratch

#102

Earlier quoted context omitted.

Any model has some precision associated with it. I am not asking for 5 sigma level of precision. But if the economists are fighting about what will happen to a particular macroeconomic variable, they are making a prediction even if it is a log_2(3) bit prediction [1]. There must be some math that is backing that. I want to see it explicitly put into a computational model that runs on live data. Otherwise is there any…

> But if the economists are fighting about what will happen to a particular macroeconomic variable, they are making a prediction even if it is a log_2(3) bit prediction [1]. There must be some math that is backing that. I want to see it explicitly put into a computational model that runs on live data This is what (some) people in finance do: make models to predict things, because if something about the future can be…

Few scientific hypothesis have been tested by so much money as that there is no alpha in the market. I mean, the amount of money that goes into proving that wrong is perhaps larger than what went into finding the Higgs boson.

Re: Building an economy simulator from scratch

#103

I've long had the fantasy of an economics simulator given dwarf fortress levels of dedication and attention to detail. This might not be it, but it does warm my soul a bit.

Thanks, and agreed. How ironic though, working on that fantasy is near certainly not economically viable. This blog post is merely procrastination that preempted job seeking.

Re: Building an economy simulator from scratch

#104
post #82

First, I really appreciate author trying to understand economy better in this way, even though this simulation is quite naive. I think everybody should do that. But as others have noted, it has no concept of capital, private property, and labor market. Therefore, it's not capitalism. It's not anarchism or communism either - it lacks flexibility of workers to do something else, or state planning telling workers to do…

> rich people don't want that You had a great comment until you went off the rails. Sadly, economic ignorance is much more easily explained by apathy and the rarity of systems level thought in the general population.

That wouldn't be a problem, just look at climate science, it has decent models of very complicated systems, grounded in real-world understanding. But it requires lot of data to be collected and made available for people who do these simulations.

Re: Building an economy simulator from scratch

#106
post #5

dont' mistake a beautiful map for the territory, you'll find yourself lost amongst lines that aren't a real place.

It sounds like you take issue with this simulation? It applies heavily academic and simplistic rules around behavior. I like build up of it all to illustrate _simulating things_, but I think almost any traditional economics theory outside behavioral economics ought to be shelved for good.

Both have been shelved; the state of the art in economic modeling is far, far more sophisticated. It goes way beyond the limitations of economics’ loan from XIX century physics (static mechanics).

Economic modeling based on game theory with extensions (say, requiring that certain agent choices are computable and are so under a limited computational budget, or non determinism, or learning) you still get sensible results under much weaker hypothesis.

Re: Building an economy simulator from scratch

#107
post #92

In this day and age of AI, I think it's worth trying to build a better economy simulator without having any existing economic models in mind. Addressing this from a programming point of view could lead to interesting results.

That has been done uncountable times…

It’s just really hard to get precise predictions. Really hard. Not like settling P=NO hard, but like moto perpetuo hard.

Re: Building an economy simulator from scratch

#108
post #99
post #92

In this day and age of AI, I think it's worth trying to build a better economy simulator without having any existing economic models in mind. Addressing this from a programming point of view could lead to interesting results.

That's more or less what every quantitative hedge fund out there is doing.

With no reports of funds consistently beating the market in a surprising way.

There’s no consistent way to make money. You can exploit small details about how each market works, but in a short time everyone will notice and copy you. It’s like a market without patents. People talk, the trade ideas spread. Like wildfire. Too fast even for a quant to make sense - good managers can tell if a piece of info is hot. No manager will ever be able to tell whether a stock will outperform.

Re: Building an economy simulator from scratch

#109

This is interesting, in that I've tried to come up with simple simulations like this for strategy games before. But I was a little "eww" when he kicked the number of government workers up to 40% of the workforce. Looks like it goes all the way up to 50%. On simulation #13, where tax is fixed at 10%, the government workers all eventually starve. Surprisingly, the libertarians are correct because at this point the qual…

> After, the developer then introduces ration tickets. This is simulation #20, and I'm pretty sure it's Zimbabwe. But it's not the real world Zimbabwe, it somehow works. That is, if you're ok printing trillion dollar bills. In a cashless society, I suspect the zimbabwe method would actually probably work. The only hangup was "Now I need to crate around boatloads of money". In a cashless society, we can just move the…

It's definitely important, when analyzing the impact of policies on an economy, not to get hung up on things like 'what the numbers on the banknotes look like' rather than important things like 'how well the population's wants and needs are satisfied'. Certainly it's not inherently a problem to continually have to revalue your currency if the net effect of your economy is it makes a lot of happy people, and it's certainly not impossible to imagine that a functional stable productive economy might coexist with a rapidly inflating - or deflating - currency.

But the simulation doesn't do much to validate that concept. It introduced inflation to a group of agents who never think about the future value of their goods or money.

In a runaway inflation situation, some producers of apples aren't going to sell you apples today for 1,000 Simoleons, when they know tomorrow those apples will fetch 1,100 Simoleons... and by Friday they'll be worth 10,000. And some holders of Simoleons will think 'These 10,000 Simoleons could buy be ten apples today, but tomorrow they'll only buy me 9, and by Friday they'll only buy me one... so I should buy 10 apples today, then sell them on Friday'.

Without capital accumulation, time valued money, or investment, this simulation barely scratches the surface of what effects inflation has on an economy.

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