Does the way we look at a problem – over time or across an ensemble – change what we see? The main insight from Ergodicity Economics is that when ergodicity is broken, it does. But asking the ergodicity question is not only a great starting point for solving f
Ergodicity economics is an umbrella term for addressing issues in economics research by carefully considering the ergodicity problem -- that's the problem that the expected value of something may be different from its time average. One key finding which illust
Readers of this blog will probably be familiar with the Copenhagen experiment . We conducted a similar but much simpler experiment, and we did it in Brussels, so we’re now calling it the Brussels experiment . What did we find? Our results suggest two things: F
If you're wondering where ergodicity economics comes from, where it sits in the world of science, then this blog post if for you. I won't go into detail about any of its results. Instead, I will focus on its origins and history. This history is superficial and
[elementor_post_thumbnail] “Reinforcement learning, a powerful branch of artificial intelligence (AI), has revolutionized the way machines learn and make decisions. From training autonomous robots to mastering complex games, reinforcement learning holds the ke
A central puzzle in evolutionary biology is that of spontaneous altruism. When two creatures interact, why might one sacrifice something of value in order to help the other? Why, if I'm rich, might I want to help the poor? In one view of the problem, there's n
The business of insurance, by various measures, is the largest industry on earth. Somewhat surprisingly, mainstream economics struggles to explain its existence. This post is about how ergodicity economics approaches the subject, which leads to a glimpse into
In 2011 I gave a 15-minute talk to a lay audience in London. The topic I had chosen was ergodicity breaking, and the challenge was clear: how do you get this across? I invented a coin-toss gamble, which has since become a go-to illustration of ergodicity break
One key observation that helped launch the field of behavioral economics into stardom is called probability weighting: a human cognitive bias to assign higher probabilities to extreme events than ... well, than what? Than what someone else thinks the probabili
Over the years, some words have established themselves at the London Mathematical Laboratory as a useful vocabulary. " Laplacing something" and " Weltschmerz" (p.32) are among these words. Another is "Democratic Domestic Product" or DDP -- a humorous term, lik
When statistical things go wrong, it's often because someone unknowingly assumed ergodicity where that wasn't ok. This can have dramatic effects in everyday language: I will use the example of incarceration rates. I will then present a visual illustration to d
Growth rates are at the heart of ergodicity economics, and economic news are full of them, too -- "GDP grew by 3% last year," something like that. Sometimes we also hear "national debt grew by $1,271,000,000,000 over the last year" (which is dimensionally diff
A few weeks ago I was made aware of an experiment that was recently carried out in Copenhagen, by a group of neuroscientists led by Oliver Hulme at the Danish Research Center for Magnetic Resonance . Results of the experiment have not been published yet, so th
If we assume that a false proposition is true, we can prove anything ( ex falso quodlibet ). Bertrand Russell, so the story goes, once mentioned this in class. A student raised his hand and challenged: in that case prove that 1=0 implies that you're the Pope.
Not all academic fields have a clear starting point, a seminal paper that constitutes the foundation of the entire discipline. But economics does. The paper that defines modern formal economics was written by Daniel Bernoulli in 1738. It introduces expected ut
In June 1946 Max Planck spoke in the Göttingen physics colloquium. Planck was 88 years old, had received the highest honors of his community, including a Nobel Prize in 1918 for his discovery of the quantum, and had profoundly changed how we think about physic
The most interesting scientific projects are those that surprise, when the mathematics, or the code, tells us something we didn't expect. In our study of US wealth dynamics that's what happened. We wrote it up in a paper , but that's only the end product not t
This is a bit of LML jargon that we felt is worth promoting, even though it's terribly unfair to a great mathematician. So please, you admirers of Laplace, don't take offense. What's the story? In 1738 Daniel Bernoulli wrote his famous paper that introduces ex
[latexpage] Scientific theorizing is indeed about finding something reliable in the world -- if we're lucky something reliable enough to be called a law. Why do we want something that doesn't change? Deep question. Here's a practical reason: we aim to capture
This is how Cédric Villani puts it [ Birth of a theorem , p.38]: Ask a mathematician the average of a bunch of numbers, and he will likely respond: what average? Geometric, arithmetic, truncated, weighted (with what weight?)... There are an infinity of average
Michael Mauboussin recently re-tweeted an article by Jason Zweig in the Wall Street Journal titled "Disturbing New Facts About American Capitalism" . The article summarizes reports of an increasing concentration of economic power (market capitalization, profit
This post is about mindset, culture, implicit assumptions. The big assumption in neoclassical economics is ergodicity, or equilibrium, or stationarity, or stability -- basically the idea that nothing ever changes fundamentally. Things may fluctuate but they al
The term "weak ergodicity breaking" helps categorize things by their ergodic properties: ergodic strongly non-ergodic weakly non-ergodic This list is chronological, in that there used to be an implicit belief that everything was ergodic (from 1654), then the r