- Hardcover: 272 pages
- Publisher: Bloomsbury USA (March 26, 2013)
- Language: English
- ISBN-10: 1608198510
- ISBN-13: 978-1608198511
- Product Dimensions: 6.5 x 0.9 x 9.5 inches
- Shipping Weight: 1.2 pounds (View shipping rates and policies)
- Average Customer Review: 4.0 out of 5 stars See all reviews (27 customer reviews)
- Amazon Best Sellers Rank: #1,223,866 in Books (See Top 100 in Books)
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Forecast: What Physics, Meteorology, and the Natural Sciences Can Teach Us About Economics 0th Edition
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Buchanan, physicist and science writer, argues that scientific models of positive feedbacks can be used in economics and finance to predict what is likely and to warn of specific dangers. Positive feedbacks are . . . the process by which small variations in a given system can become increasingly large . . . accelerating how fast things get bigger and leading to consequences far beyond our expectations. We learn most economists continue to believe in the concept of equilibrium—economic systems are inherently stable and self-regulating, tending toward balance; the author urges adopting disequilibrium thinking, which has shown us that ongoing fluctuations in economic and financial systems are quite normal. Buchanan argues that financial crises of all kinds, from short shocks to global economic meltdowns, are like storms in the atmosphere that weather forecasters not only understand . . . but also predict well enough to make a big difference. The use of this scientific approach began after the 2008 financial crisis. This challenging book will appeal to students and library patrons with a background in economics and finance. --Mary Whaley
“The 2008 crash created not just a crisis in the economy, but also a crisis in economic thinking. Ideas of market stability and efficiency lost their value faster than a sub-prime mortgage. In this compelling and lively account, Mark Buchanan tells the story of the new ideas that are revolutionizing the field. We may not be able to perfectly forecast the economic weather, but we can be better prepared for storms to come.” ―Eric Beinhocker, Executive Director of the Institute for New Economic Thinking at Oxford University and author of The Origin of Wealth
“A lucid, absorbing story” ―New Scientist
“The author's stimulating deconstruction of contemporary economic theory parallels a treatment of major positive developments in physical sciences and pays due respect to the functions of government and law.” ―Kirkus Reviews
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Top Customer Reviews
Ultimately, "Forecast" is a collection of useless analogies and "personal" observations, grounded in a financial understanding so flimsy that you may question whether Buchanan has actually read the source material. When discussing Soros' work, in particular, the author sounds as though he is working from the Wiki. Does it matter to us that the work of Robert Lucas reminds Buchanan of Shrodinger's Cat? And will someone please tell him that "John" Tudor Jones' actual name is Paul Tudor Jones? To a trader, that's like saying Alfred Einstein.
Please, I implore you, save yourself. If you are considering this book, please try:
Behavioural Investing by James Montier
The Alchemy of Finance by George Soros
The New Paradigm of Financial Markets by George Soros
Thinking, Fast and Slow by Daniel Kahneman
Any of Fischer Black's published papers (they're free!)
Those are far more useful and enlightening.
Coming from a science background I just felt that Economics was essentially a “complex system” and like all the others in science (weather, earthquakes, computer networks, etc.) it should have lots of inherent instabilities which defined their natures (e.g. weather is notable for its storms, not its pleasant days). We wouldn’t have all pleasant days if we “just stopped regulating it”, but that seems to be the theory of current economics.
I’m glad to find someone who has made a great case for the nonsense being peddled by the economics establishment for the last couple of decades.
This is a sensible and VERY readable case for economics as yet another complex system and the need to understand the implications of that.
That's fine, but what we really want to know about the economy is how it behaves when things are so out of balance that slight adjustments aren't enough to restore the equilibrium. Buchanan examines many such areas which macro-economics has ignored and which are important for understanding how the economy works. This is a very good book and one that people should read.
Why 4 stars instead of 5? I found the book a bit repetitive. The anti-equilibrium message is repeated too many times. In addition, there were cases where examples (or better examples) would have been helpful. So 4 stars means that it is a good book, but it could have been better.
For more details you may want to look at my chapter-by-chapter review on Google+: http://goo.gl/OlKL3.