Complexity economics is the study of economic systems as complex systems. Both concepts are closely related to the ‘whole systems’ section above.
The following challenges for complexity economics are summarised from the website Exploring-economics.
(1) Is this a new field or a tool for understanding and explanation, like mathematics?
(2) What is the role of mathematics?
(3) How complex should the models be in order to provide understanding? Humans are far more complex than can be modelled, hence radical simplification is inevitable, e.g. agent-based modelling where the agents adopt simple rules.
(4) How should agent-based models be replicated and validated? Should they explain stylised facts? Clearly there is a trade-off between simplicity of explanation and the matching with economic observations.
“Towards a new complexity economics for sustainability” – Foxon et al., 2013
“How to relate models to reality? An epistemological framework for the validation and verification of computational models” – Gräbner, 2017
Beinhocker, E. D. (2006) The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics. Boston, Massachusetts: Harvard Business School Press. Available on Google Books.
Foxon, T, Köhler, J., Michie, J. and Oughton, C. (2013) Towards a new complexity economics for sustainability, Cambridge Journal of Economics, 37:1, 187–208. Available on Oxford Academic.
Gräbner, C. (2017) How to relate models to reality? An epistemological framework for the validation and verification of computational models (No. 63). ICAE Working Paper Series. PDF available here.
Kirman, A. (2016) Complexity and Economic Policy: A Paradigm Shift or a Change in Perspective? A Review Essay on David Colander and Roland Kupers’s ‘Complexity and the Art of Public Policy’, Journal of Economic Literature, 54:2, 534-572. Available on American Economics Association.