QUERY Explaining System Dynamics to Economists

[""Swanson, John"" <John.Swans]

Posted by ""Swanson, John"" <John.Swanson@sdgworld.net>

I will be addressing something called the 'Transport Economists Group' later in
September on the topic of system dynamics and why economists should consider
using it.

TEG is, well, a group of transport economists - academics, consultants, civil
servants and so on - and they hold evening meetings to discuss topics of
interest. I'll be talking at one of these meetings.

I wondered if anyone has some (serious) advice or views on how they'd approach
this. What do you think would be the right 'hooks' or messages that that you
would want to communicate? What would you avoid?

John Swanson
Associate
Steer Davies Gleave
28-32 Upper Ground, London SE1 9PD
Posted by ""Swanson, John"" <John.Swanson@sdgworld.net>
posting date Fri, 5 Sep 2008 11:13:48 +0100
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[""Michael J. Radzicki, Ph.D."" &]

Posted by ""Michael J. Radzicki, Ph.D."" <radzicki@comcast.net>

John:

I have devoted much of my career to determining how SDers and economists =
can be
brought together in a manner that is scientifically acceptable/credible t=
o both
camps. For what it's worth, I think I have an answer...Basically you have=
to
talk
to the right kinds of economists. That is, economists who adhere to scho=
ols of
economic thought that are similar in spirit to system dynamics. The princ=
ipal
schools of economists who tend to value SD include:

1. Institutional economists. These economists take a ""holistic systems ap=
proach""
to economics and believe that ""circular and cumulative causation"" is one =
of the
most important principles of economics.

2. Post Keynesian economists. These economists like to build ""stock-flow
consistent models"" and tend to agree with the institutionalists 99% of th=
e time.
In fact, Post Keynesian and institutional economists go to each other's
conferences and publish in each other's journals.

3. Ecological economists. These economists also take a holistic systems a=
pproach
to economics, but tend to focus more narrowly on sustainable development.=
They
tend to love the Limits to Growth stuff.

4. Behavioral economists. These economists reject the homoeconomicus, rat=
ional
economic man, assumption of neoclassical economics. To the extent SD mode=
ls
embody equations representing actual human decision making, they tend to =
see
value.

These schools of economic thought are basically ""heterodox."" The economis=
ts
working in these schools are trying to buck the economic orthodoxy just l=
ike
many
SDers are.

For more info see:

1. Radzicki, Michael J. 2009. =93Was Alfred Eichner a System Dynamicist?=94=
In Marc
Lavoie, Louis-Philippe Rochon and Mario Seccareccia, eds. Money and
Macroeconomic
Issues: Alfred Eichner and Post-Keynesian Economics. Armonk, NY: M. E. Sh=
arpe.
In
Press.

2. Radzicki, Michael J. 2008. ""Institutional Economics, Post Keynesian
Economics,
and System Dynamics: Three Strands of a Heterodox Economics Braid."" In Jo=
hn T.
Harvey and Robert F. Garnett, Jr., eds. The Future of Heterodox Economics.
Chapter 9. Pages 156-184. Ann Arbor, MI: University of Michigan Press.

3. Radzicki, Michael J. 2003. ""Mr. Hamilton, Mr. Forrester and a Foundati=
on for
Evolutionary Economics."" Journal of Economic Issues. 37(1): 133-173.

4. Radzicki, Michael J. 1990. =93Methodologia Oeconomiae et Systematis Dy=
namis.=94
System Dynamics Review 6(2): 123-147.

5. Radzicki, Michael J. 1988. =93Institutional Dynamics: An Extension of=
the
Institutionalist Approach to Socioeconomic Analysis.=94 Journal of Econom=
ic Issues
22(3): 633-666.

These and other papers I have written on the subject can be downloaded fr=
om:

http://michaeljosephradzicki.com/research.htm

Lastly, ""computational economists"" MAY value SD modeling b/c they value
simulation as a tool for doing economics. However, the term ""computationa=
l
economists"" embodies everyone from those who use agent-based modeling for
economic analysis to those who build computational general equilibrium mo=
dels,
so
SDers need to talk to the right sub-group of economists in this camp. Act=
ually,
some transportation economists may consider themselves to be computationa=
l
economists.

Long story short - If you're going to address a group of hard core neocla=
ssical
economists, wear your flack vest (or at least translate everything into o=
rdinary
differential equations, use Greek letters and integral signs, define tabl=
e
function shapes with first and second derivatives, and say ""simulation"" n=
ot
""system dynamics"").

Cheers.

Mike Radzicki
Posted by ""Michael J. Radzicki, Ph.D."" <radzicki@comcast.net>
posting date Sat, 06 Sep 2008 14:01:47 -0400
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[""C. Michael Reilly"" <reilly]

Posted by ""C. Michael Reilly"" <reillycm@cox.net>

How about finding a TEG group author that in a paper or blog uses the ter=
m
=91vicious cycle=92 or =91feedback loop=92 to describe some situation and=
then use SD
concepts to add something to it for more understanding?

Caveat: I have not attempted this but would be inclined to use this appro=
ach in
your situation.=20

Mike Radzicki=92s REPLY suggests this may not work; it probably depends o=
n the
degree those TEG participants simply want to make better decisions and a=
re open
to different approaches.

It would be great to hear how it goes!

Good day,

Mike
Posted by ""C. Michael Reilly"" <reillycm@cox.net>
posting date Sun, 7 Sep 2008 11:55:49 -0400
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