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In Hollywood, William Goldman's famous dictum that nobody knows anything is accepted as gospel. Nobody can tell you how much a movie will gross before it's released, no matter how big the stars or advertising budget. Compare the box-office receipts of two summer-of-'99 horror movies, if you have any doubt about this law: The Blair Witch Project, with no stars and a small budget, earned far more money than the very expensive, star-driven The Haunting. Yet, in economics, it's assumed that everything boils down to an engineering calculation: Maintain girders A, B, and C, and the roof will never cave in.
Paul Ormerod, author of The Death of Economics (1994), offers a different idea: "In the current state of scientific knowledge, it is simply not possible to carry out forecasts which are systematically accurate over a period of time." The title Butterfly Economics comes from the idea in chaos theory that a butterfly flapping its wings here could cause a hurricane on the other side of the world. It's not that chaos is guaranteed in economics; it's just that we never know when it'll occur, or what will cause it. "Small changes can have big consequences, and vice versa," Ormerod notes. His arguments range far afield. He talks about crime and family structure, biology, fashion, and many other topics seemingly unrelated to economics. But it comes down to this: No matter how you analyze it, human behavior is surprisingly random. And no economic model can account for all of it at any given time.
Butterfly Economics will, of course, be of most use to those with professional interest in the titular topic (economics, that is, not butterflies). But anyone seeking a good read on the vagaries of life might want to give this one a shot. Any author who can analyze the behavior of ants and Hollywood studio executives in successive breaths deserves a wide audience. --Lou Schuler
--This text refers to an out of print or unavailable edition of this title.
From Publishers Weekly
Combining sophisticated economic analysis with a gift for lucid explanation, Ormerod deepens and expands upon the points he made in 1994's The Death of Economics. He starts with an elegant critique of conventional economics, arguing that the prevailing thinking mistakenly ignores insights from other fields (notably biology, psychology and literature) and that practitioners of the dismal science pay too little attention to empirical verification and see the world through narrow theoretical blinders. Ormerod, head of the economic assessment unit at the Economist, then presents his alternative approach, Butterfly Economics, an interdisciplinary view that takes its cues from sources as diverse as ant behavior and the mathematics of chaos theory. The mathematics, relegated to three appendices, are simplified to a high-school algebra level. But Ormerod's argument is easy enough to follow without the numbers as he applies Butterfly Economics to explain why VHS beat out Betamax to become the VCR standard and why low-budget movies often outperform the most expensive Hollywood features. At the core of Ormerod's thinking is the observation that human behavior is not nearly as neatly predictable as prevailing economic models assume, that economic life is more like a living organism than like a machine. His book is amusingly written, and every page offers surprising facts or strikingly new ways of looking at well-known facts. Anyone who likes to think about people and how they act will find much of interest, and probably something to love or hate, in this book.
Copyright 1999 Reed Business Information, Inc.
--This text refers to an out of print or unavailable edition of this title.
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