Economics, Ethics, Quantum Physics, and Hydrology

I just read the article Economics is Quantum by David Orrell. The author makes some solid points about the state of economics, but I think he’s missing an even bigger opportunity to talk about science & engineering in general.

Quick summary of the article: in light of the failure of economics to predict recent disasters like the housing bubble and subsequent financial meltdown, the whole discipline should be rebuilt, along the lines of the reconstruction of physics in the early 1900s. Quantum physics is a surprisingly good analog for economics, with transactions roughly mapping to particle interactions and the concept of uncertainty of measurement throwing ideas of value into a new light.

Early in the article Mr. Orrell talks about what economics actually is, and decides that most economists think ‘”Economics is about happiness.”‘ So, if economics is about happiness, and it’s basically concerned with quantification and transactions, then the obvious next step to me is – economists are applied utilitarians. And not just any utilitarians, either – they’re classical utilitarians, believing that happiness can be measured in discrete packets, little ‘hedonic units’ to be passed around between people. Economists are making up theories and rules about how these hedonic units (things with value – goods and services) are passed around between people.

If I’m right about that, then I’m totally with Mr. Orrell – economics needs to be rebuilt. Utilitarianism is really appealing to someone who wants the whole world to make sense with simple rules – a rationalist. It’s really terrible as a way to actually describe how people think about morals and ethics. It’s just not true. And if economics is applied utilitarianism, and utilitarianism isn’t true, then yeah – let’s rebuild economics.

But I see that Mr. Orrell does research on complex systems, so I think his thesis should be bigger. I think there are a lot of disciplines trying to explain complex, dynamic systems with mechanistic rules, in defiance of the quote that ends the article: ‘”The days of the Universe as Mechanism are over.”‘ Try telling that to a hydrologist, for example.

The way water moves through the earth is amazingly complex, especially for something that basically follows one rule: flow downhill. It evaporates, it falls as rain, it runs off of roofs, it soaks into the ground, it flows as streams; and the outcomes of all of those processes tend to be things that people care about a lot, like “Will my house flood?” or “Is our well going to go dry?” The task of the hydrologist is to try and answer those questions by measuring and modeling how water moves.

Measuring and modeling water, though, is nearly as hard as doing economics. Lots of water is underground, so it can’t be directly observed. It’s changing all the time, as streams dry up or as rain falls, so it has to be measured continuously. More to the point, though, the actual models used by hydrologists, like HSPF for surface water and MODFLOW for groundwater, are basically mechanistic. They’re usually ‘mass-balanced’; basically, every drop of water that enters the system is accounted for. In HSPF it’s even more mechanistic; the equations that describe how water flows through a stream are actually modified versions of the Manning’s equations, which were originally designed to calculate flow through a pipe. Hydrologists literally treat water flowing around watersheds like a water machine.

Worse than that, there doesn’t seem to be any recognition that there’s a problem with hydrology. Hydrologists are mostly engineers. They see their task as applying the rules to the problem at hand. Problems that crop up (like, say, levee failures in Katrina, massive flooding during Harvey, the draining of the Ogallala) are treated as failures to make a sufficiently calibrated model or failures to collect enough data. Maybe, though, the issue is that the entire profession uses equations developed in the 1880s.

I don’t know if quantum mechanics can translate to hydrology in the same way it can translate to economics. I do think it’s time to re-examine the foundations of hydrology. And I’m aware that hydrology just happens to be an area I’m familiar with. How many other disciplines are similarly trying to model complex, dynamic systems using fundamentally mechanistic means? Maybe there are a lot of places where quantum revolutions could explode.

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