Paper presented at the 15th IMACS World Congress on Scientific Computation, Modelling and Applied Mathematics, Berlin, 1997.

1. What simulation has done for economics and
what it might do
Edmund Chattoe
Department of Sociology
University of Surrey
Guildford
GU2 5XH

2. Motivation
• Fitting work in with work of economists
and simulators

3. Classification
• By technique (GA, NN, Monte Carlo,
Stochastic)
• By application area (forecasting, learning,
macro policy)
• Other possibilities?

4. Classification by scientific hierarchy
METHODOLOGY
THEORY
MODELS
DATA
?
Different disciplines use this
differently
What is taken as given

5. New typology
• Casts new light on kinds of simulation
• Allows simulators to orient with respect to
each other: descriptive not prescriptive
• Casts light on the attitudes of different
disciplines to methodology, theory,
models and data and, indirectly, on
expected attitudes to simulation

6. Economic application
• Objective, quantitative data
• Models based on equations linking data
• Theory based on optimisation within a
system of constraints
• Methodology: positivist, individualistic,
humanistic
• Theory/methodology distinction only made
clear by study of history of economics

7. Trends in
• Generality
• “Ideological” importance

8. Data
• Calculation(s)
• Estimation (Monte Carlo)
• POLIMOD
• “Aggregation” (SPSS)
• Even given “objective” data, the goals
and success of these tasks are well
defined/uncontroversial

9. Models
• No longer uncontroversial: Can’t take
model as given (“more of the same”)
• Generalisation to n dimensions (but
not “difficult” cases)
• Addition of types
• Addition of noise
• “Safe” applications are an
overwhelming majority … why?

10. Theory and methodology
• Problem separating these at moments in
time
• Uncertainty versus risk
• Altruism
• Bounded rationality

11. New possibilities
• Embodied preference
• Different models, relative success, evolution
• Autonomy of environment, other agent process
(not exogeneity!)
• Alternative knowledge and decision
representations (hybrid agents?)
• Integration of partial disciplinary theories
• Simulation removes technical defences of
traditional economic method. Empirical defences
were always contentious. What is left?

12. Additional benefits
• Clarify objections to simulation also