The Future of Everything

January 12, 2018

Aeon piece on quantum economics – responses

Filed under: Economics, Physics — David @ 12:32 pm

Thanks to readers for taking the time to comment (via Twitter) on my recent Aeon piece Economics is quantum. Since it is hard to reply in strings of 140 characters, this post addresses some of the questions and criticisms that came up (edited for clarity).

After physicist Richard Jones wrote that the piece was “confused & misleading” (not a completely unusual reaction, I must admit) I asked him to clarify which parts of the text he was referring to. 

Jones: “Why do you think the brain is a quantum phenomenon? Direct involvement of consciousness in wave-function collapse is not mainstream view, & I’m very sceptical of any role of coherence in mental phenomenon.”

What I wrote was: “a number of scientists believe that the problem is not so much that people are being irrational; it is just that they are basing their decisions, not on classical logic, but on quantum logic. After all, quantum systems, such as us, are intrinsically uncertain and affected by history and context.” [As an example, see: Wang, Z., Solloway, T., S., M., R., & Busemeyer, J. R. (2014). Context effects produced by question orders reveal quantum nature of human judgments. Proceedings of the National Academy of Sciences, 111(26), 9431-9436.] Note that the fact that a system shows quantum properties does not mean it can be reduced to quantum mechanics. I don’t claim that consciousness is the product of quantum coherence, though it may well be. See for example: Atmanspacher, Harald and Thomas Filk (2014) “Non-Commutative Operations in Consciousness Studies,” Journal of Consciousness Studies.

Why is it helpful to compare the Scholes-Black equation to the Schrodinger equation? It’s a diffusion equation. I understand the math correspondence between the diffusion equation and the Schrodinger equation – it’s very useful in my own field as a formal device – but it involves imaginary time which seems unphysical here. In any case the Scholes-Black equation isn’t actually accurate as a representation of markets, as a diffusion equation doesn’t describe a random walk with step sizes whose variance is undefined (a Levy flight).”

This refers to the section: “It turned out that many of the formulas regularly used by ‘quants’ to value derivatives such as options (the right to buy or sell a security for a set price at a future date) could be restated as quantum effects. The Black-Scholes equation, for example, can be expressed as a version of the Schrödinger wave equation from quantum physics.” I am not claiming that this is particularly useful. My book The Money Formula (written with quant Paul Wilmott) discusses how the Black-Scholes equation and others have been abused in finance. Such equations were influenced in large part by quantum physics and the nuclear program, but only took part of the message (randomness). The quantum finance approach can address some of these shortcomings, by relaxing assumptions such as high liquidity, efficiency, etc.

“But why would you think a Schrodinger equation would help us understand economics better anyway? It’s a deterministic, linear equation of exactly the same class that you criticise economics for relying on.”

Not sure which part of the text this refers to, and I am not making exactly this claim. The main advantage of the quantum approach in areas such as decision making is that it allows us to consider effects such as context and history. Interesting that this was argued back in 1978 by Qadir, before behavioural economics was invented. Qadir, A. (1978). Quantum Economics. Pakistan Economic and Social Review, 16(3/4), 117–126.

“You compare money both to an observable – which has an uncertainty relationship with a conjugate variable (which is?) & also with a particle, so it has wave-particle duality. Isn’t this confusing an object with a property of the object?”

I define money objects to be transferable entities, created by a trusted authority, which have the special property of a defined monetary value, specified by a number and a currency unit (see The Evolution of Money, and this paper). They therefore combine the mental idea of a numerical quantity of money – the virtual wave attribute – with the physical idea of an object that can be possessed or transferred – the real particle attribute. Money objects are unique in that they have a defined value, so there is no chance of e.g. interference effects (a five-dollar bill doesn’t interfere with a ten-dollar bill in your wallet). However money objects are used to price goods through transactions in markets, where such effects can occur. In quantum finance, the conjugate variables for something like a stock are price and momentum. And one of the main findings of quantum cognition is that many behavioural economics effects can be explained in terms of interference. See e.g. Yukalov, V. I., & Sornette, D. (2015). Preference reversal in quantum decision theory. Frontiers in Psychology, 6, 1-7.

“I agree with you that economics needs to put more thought into understanding what kind of things money and value are & agree that money’s trying to do more than a simple scalar variable can manage. But it seems to me that invoking quantum mechanics doesn’t bring much more to the problem than a bunch of rather forced analogies.”

The piece does not evoke forced analogies,  it is saying that the money system is a quantum system in its own right, with its own versions of duality, indeterminacy, entanglement, and so on. This is not the same as saying that it is identical to quantum physics or reduces to it.

“E.g. quantum entanglement means something really very precise that isn’t at all the same as saying that people are connected, or even that one persons credit is someone else’s debt.”

To quote my textbook (Rae), “the word ‘entanglement’ refers to a quantum state of two or more variables, where the probabilities of the outcome of measurements on one of them depend on the state of the other – even though there is no interaction between them.” The classic example is of two entangled photons A and B, where a result of positive spin measured along a certain axis for A implies that a later measurement of B “can now yield only a negative result.” Suppose now that person A has a loan from person B. From the viewpoint of quantum decision theory (or just a mathematical model), we can view A’s decision to default as a measurement process similar to the measurement of a particle’s spin; and this decision changes the status of the loan instantaneously – it can only yield a negative result – as B will find if they try to get their money back. Obviously it is hard to think how one could perform something like a Bell’s test (designed to tease out relationships between entangled particles) on a loan agreement, since such tests require measurements along different spin axes, but that doesn’t mean entanglement does not occur.

“So I agree with you that there’s lots to be done in economics & it should learn from physics, but I think (as has already begun) the place to look is in stat mech (including complexity & network theory) rather than qm.”

I have been advocating for a complexity approach in several books (Economyths, Truth or Beauty, etc.), but I see the quantum approach as backing up that claim.The point is not that economists should try to build elaborate quantum models of the economy – indeed, the neoclassical emphasis on microfoundations is misplaced. Instead, prices are best seen as emergent properties (see this paper). At the same time, the quantum effects of money can scale up and affect the economy as a whole. An example is the quadrillion dollars worth of derivatives which have been strangely absent from mainstream macroeoconomic models – now that is confused and misleading.

Update: response to more twitter comments.

Economist David Harbord: “This bit of silliness by @d_orrell should be enough to keep @Noahpinion wound up for a day or two …”

Niels Bohr asked of one physics theory, “The question is whether it is crazy enough to be have a chance of being correct.” The economics version is that this theory might be silly – but is it silly enough?

“I recall someone showing up at the LSE when I was a graduate student claiming that the problem with economic theory was the assumption Newtonian time & space, hence we needed an Einsteinian revolution in economics! Might be worth checking up on progress in that research program.”

Over a century ago some people showed up claiming that economics should be based on Newtonian mechanics. We all know how that research program is going.

“Both suggestions focus on phenomena at the wrong scale for modelling economic activity. If you can produce a model in which quantum effects matter & make predictions that ‘Newtonian’ economics cannot (lots of scope there!), then I’ll admit you are on to something.”

I’m not saying economics reduces to quantum physics – I am saying that money has its own quantum properties, which do scale up. But read the book when it comes out and judge for yourself. For my thoughts on prediction, see this recent article for Newsweek Japan.

Thread begun by science communicator Natalie Wolchover from Quanta:

What a load of hogwash.”

Like traditional economics then – with the nice difference that it doesn’t act as the PR wing for an out-of-control financial sector.

Further comments by various people on the same thread:

“I thought these guys were starting to get passed the physics envy.”

I actually trained in math and physics, so perhaps this should be economics envy. In my previous books such as Economyths I have done as much as most people to argue against the idea that economics can be simply transposed from physics. However metaphor is intrinsic to our thought processes, and neoclassical economics has long been replete with metaphors from Victorian mechanics – one of its founders Vilfredo Pareto for example said that “pure economics is a sort of mechanics or akin to mechanics” – so perhaps it is time to expand our mental toolbox. After all, it isn’t just quantum mechanics which has been “misused and abused” (to quote Sean Carroll). Also, while I did study quantum mechanics, and use it in my work (my early career was spent designing superconducting magnets which rely on quantum processes for their function), my intention is not to further mathematicise economics – quite the opposite. The core ideas of the theory proposed are very simple.

“Can hardly wait for the forthcoming quantum astrology piece.” “Or auto repair done by quantum mechanics.” “I would be happy to have dollars tunnel from pockets of rich folks to mine.” “That’s about two steps away from Deepity Chakra.” “I think he means a paradigm shift.” “To quote physicist Wolfgang Pauli, this is not even wrong.”

Not even funny … Physicists have been very careful to put up a lot of filters around quantum ideas, which is understandable, but is also one reason social scientists are stuck in an oddly mechanistic view of the world. So we need more discussion between these areas.

For more comments and responses, see the comments thread in the article.

 

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April 9, 2015

Funding other universes

Filed under: Physics — Tags: , , — David @ 2:57 pm

Peter Woit has written an interesting post responding to the response by Matthew Kleban (and my reply to his response) to my review of the recent Unger/Smolin book.

It’s not often I get drawn into a discussion about the number of universes in existence (a question about which I have no strong opinion, only having seen a small part of one), but what worries me about multiverse theory is that it appears to be driven more by aesthetics and a desire for a unified theory than anything else.

Woit points out another factor, which is the role of the Templeton Foundation. Funded by the estate of the investment manager John Templeton, it pays out grants worth over $100 million per year, with a significant portion going towards supporters of string theory and multiverse theory.

Seems like investment managers (or their foundations) are buying up scientific theories the same way they buy art, thus distorting the market. A smaller example is Winton Capital’s funding of an investigation into Dark Matter.

Time will tell if they are as successful at picking winners in science as they are in finance. Or maybe it won’t, since the debate about the number of universes has been running since at least the Middle Ages and shows no signs of stopping any time soon.

As Woit observes, multiverse theory and string theory have a symbiotic relationship. Together they perform a similar function as the Efficient Market Hypothesis in economics, which is to provide a perfect excuse for the failure to make any useful predictions.

String theory provides not one set of physical laws which govern the universe, but instead an entire “landscape” of possibilities. The fact that we live in one which actually works is supposed to be because there are multiple universes running different versions, and we got lucky. So while we don’t have proof of multiverse theory (barring any future discovery of a hidden portal to a parallel universe) it can be inferred from string theory. But if the particular version of string theory assumed to govern our universe is just a random choice, then that makes it inherently untestable as well.

Perfect example of the Science Games, now sponsored by fund managers.

April 7, 2015

An Imperfect Truth

Filed under: Physics, Reviews — Tags: — David @ 9:06 pm

Review of The Singular Universe and the Reality of Time, by  Roberto Unger and Lee Smolin

When the Perimeter Institute—a physics research institute in Waterloo, Ontario—decided several years ago to build an extension, they asked the architects “to provide the optimal environment for the human mind to conceive of the universe.” Clearly the results were effective. One of the founding faculty members, Lee Smolin, and the Harvard philosopher Roberto Mangabeira Unger have conceived of the universe, and have come to a number of conclusions about it, including that a) there is only one of it, and b) time is real, so all things change, mutate and get old.

To non-scientists, these main points, summed up in the book’s title, might seem unremarkable. We only have experience of one universe, so would it not be presumptuous to assert that there are more? Time is clearly real enough (just ask an editor). And Heraclitus pointed out a long time ago that “everything flows.” So how can the authors assert that the admittance of mutability “is astonishing in the reach of its implications”?

The reason for this lofty claim is that, when time is taken seriously, we need to relax the commonly held assumption that the universe is governed by strict mathematical rules based on immutable symmetries. This mathematical version of reality—the product of generations of scientists—is only “a proxy for our world, a counterfeit version of it, a simulacrum.”

Read the rest of the article at the Literary Review of Canada.

February 2, 2013

Truth vs Beauty smackdown!

Filed under: Physics — Tags: — David @ 9:31 pm

Or, a Chronicle of Higher Education article by Christopher Shea on Truth or Beauty, with contributions from physicist Marcelo Gleiser, Nobel Prize-winner Steven Weinberg, and others.

November 14, 2012

Truth or beauty?

Filed under: Physics — David @ 4:41 pm

Most people would not associate the dry pursuit of objective scientific knowledge with a powerful sense of aesthetics. But in many areas of science there has always been a strong belief in the correspondence between truth and beauty – to the point where today some theories almost seem to be competing in a beauty contest. Read more at Huffington Post.

July 17, 2012

Stop sign

Filed under: Physics — Tags: — David @ 12:26 pm

Now that the Higgs boson has (apparently) been discovered at the Large Hadron Collider, physicists are turning their attention to the next big thing. Theorists have long predicted that the LHC would produce supersymmetric particles, but these have so far failed to make an appearance. There was some hope that data would show signs of the stop particle (the supersymmetric partner of the top quark) but that too appears to be fading.

Yesterday Michael Peskin gave a talk in which he argued that the LHC evidence did not imply that supersymmetry was dead – only that we needed a bigger accelerator, such as the International Linear Collider. His argument was in part based on the “sociological evidence” that “1. No theorist who believed in SUSY before 2009 has renounced SUSY in the light of the LHC exclusions,” and “2. Model builders are still building models with 200 GeV charginos.”

As someone who is interested in the sociology of scientific prediction, I would argue that the fact that theorists do not renounce their beliefs due to lack of experimental confirmation, or refrain from building models, is not exactly convincing proof that a theory is right.

A safer prediction is that supersymmetry will remain attractive for a long time yet – in large part because of its aesthetic qualities – and will continue to be used as an argument for larger accelerators. The lack of a stop at current energies is just a green light.

July 4, 2012

New boson!

Filed under: Physics — David @ 9:42 am

Biggest day in physics for the last half century or so, as new results from the CMS and ATLAS experiments at the Large Hadron Collider confirm the discovery of a new boson, consistent (so far) with the expected properties of the Higgs boson.

According to CMS spokesperson Joe Incandela, “What we are observing is very likely a new particle with very large mass that would have to be a boson. This is potentially an historic and very profound step forward in our understanding of the underlying structure of our universe.”

Andy Lankford, deputy spokesperson of ATLAS: “If the new particle is determined to be the Higgs, attention will turn to a new set of important questions. Is this a Standard Model Higgs, or is it a variant that indicates new physics and other new particles?”

The Higgs field, for which this boson may be the associated particle, is believed to be responsible for giving other particles their mass. Of course, this leaves open the question of why different particles interact with the Higgs field in different ways. Why are muons relatively hefty, electrons light, and photons massless? One of the next goals for physicists will be to figure this out (unless of course it is just that some particles interact more strongly because they are heavy …).

 

June 25, 2012

Higgs boson

Filed under: Physics — David @ 9:02 am

Latest rumor on Higgs boson front is that CERN is arranging a press conference on July 4 to (possibly) announce the official discovery of the Higgs boson.

I was originally a skeptic on the Higgs, though I’ll admit I did warm to the Standard Model while writing my book Truth or Beauty. In my mind it has come to resemble an iconic piece of architecture from the 1960s, which I hope will be lovingly refurbished rather than dynamited by planners.

Anyway, the discovery is very exciting if it turns out to be true – though as I mentioned back in 2008, it would be even more exciting if the particle turns out to be at least slightly different from expected …

August 21, 2011

LHC aesthetics

Filed under: Physics — David @ 8:14 am

I’m researching the background to particle physics for a new book on the relationship between science and aesthetics. Two of the main theories currently being tested at the Large Hadron Collider project are the Higgs theory, and supersymmetry. The Higgs theory plays a vital role in the Standard Model of subatomic particles, and says that space is pervaded by a particle – the Higgs boson – which interacts with other particles in such a way that it gives them mass. Supersymmetry is a component of a Theory of Everything which unites all the forces and particles under a single theory.

My argument in the book is that many such theories are proposed on purely aesthetic grounds – but that the aesthetics are wrong. So, a couple of predictions.

First is that the Higgs boson doesn’t show up, at least exactly as expected. New data will be announced tomorrow (22 August) at Lepton-Photon 2011 so we’ll see.

Second, no supersymmetric particles will appear. Ever.

September 8, 2008

Big Bang II

Filed under: Physics — David @ 9:57 am

So the Large Hadron Collider (LHC) will finally fire up this week, a beam of high-energy protons looping for the first time around its 27 km tunnel deep under the Swiss/French countryside. Once the beam has been tuned, an opposing stream of protons will be sent in the opposite direction, and the two brought together to collide at various experimental sites around the ring. The energy of the collision will recreate, in a somewhat reduced form, the conditions prevalent immediately after the Big Bang. It will be the largest experiment in human history. So what will it find?

The hope among physicists is that they will discover things like the Higgs particle, responsible for giving matter its mass, and maybe more exotic phenomena such as super-symmetric particles, extra dimensions of space, or even mini-black holes. However, as Science reported last week, many people are worried that the LHC will turn out to be a doomsday machine. In part this is a result of the scientists’ own spin. CERN theorist Jonathan Ellis notes that “we talk about recreating the big bang, and people think, ‘Oh my God, they’re going to recreate the big bang!'” Such worries were also fueled by Nostradamus, who wrote:

Leave, leave Geneva every last one of you,

Saturn will be converted from gold to iron,

RAYPOZ will exterminate all who oppose him,

Before the coming the sky will show signs.

which if you interpret RAYPOZ as being a beam of protons is enough to get you looking nervously at the sky above Geneva for signs of an emerging black hole.

Personally I’m not too worried about that – as I told Coast to Coast AM back in March, we’re constantly being exposed to cosmic rays that have a much higher energy than the LHC beams, and so far no one I know has been sucked into a mini-black hole. A bigger risk, at least for the accelerator community, is that the LHC doesn’t turn up anything too novel or surprising – in which case it will be very hard to raise money for the next big experiment.

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