In their study, James Crutchfield, SFI External Professor and Physics Professor at the University of California at Davis, and graduate students Christopher Ellison and John Mahoney, developed the analogy of scientists as cryptologists who are trying to glean hidden information from Nature. As they explain, “Nature speaks for herself only through the data she willingly gives up.”
According to finance experts and economists, the market meltdown was due to the failure of Wall Street's mathematical models of risk, which were too simple-minded. One scientist incorporating human behavior into models of risk is J. Doyne Farmer, SFI Professor. His research involves models of markets, institutions and their complex interactions, applying a hybrid discipline called econophysics. “You don’t need a model of human psychology to see that there was a danger of impending disaster,” Dr. Farmer observed. “But economists have failed to make models that accurately model such phenomena and adequately address their couplings.”
A recent study of the 2007 financial markets of 48 countries reveals all the world’s finances are controlled by only a few mutual funds, banks, and corporations. SFI External Professor and economist Matthew Jackson states, “Certainly people have some understanding of how large some of these financial institutions in the world are, there’s some feeling of how intertwined they are, but there’s a big difference between having an impression and actually having more explicit numbers to put behind it.
Murray Gell-Mann, SFI Distinguished Professor and winner of the 1969 Nobel Prize in physics was one of the originators of the Santa Fe Institute, an interdisciplinary research center in New Mexico that is celebrating its 25th anniversary this year. Gell-Mann recently addressed a group of about 150 high school students gathered at the Institute for Advanced Study in Princeton, N.J., for Adventures of the Mind, a biennial summit for academically outstanding 15- to 18-year-olds. Gell-Mann described the origins of and philosophy behind the Santa Fe Institute’s approach to science.
Omidyar Fellow, Jessika Trancik is a featured expert in an article on alternative energies in which she states "There are several dimensions of interest in evaluating energy technologies, including cost, carbon emissions, resource size, installation size, viability in different parts of the world, and land-use impacts, to name a few. A quantitative comparison allows us to better understand the trade-offs in moving from one technology to another."
Selected from more than 300 nominees by a panel of expert judges and the editorial staff of Technology Review, the TR35 is an elite group of accomplished young innovators who exemplify the spirit of innovation. Their work - spanning medicine, computing, communications, nanotechnology, and more - is changing our world.
SFI External Professor Douglas White and colleagues present their research into finding an approach to facilitate the design of policies in the complexity of economic networks. The research into economic networks has been studied by two perspectives: sociology and physics or computer science. White and colleagues describe what is needed in order to be able to predict and propose economic policies. With computational models, large-scale network date can be processed quickly and can reflect agent interactions.
Agent-based modeling (ABM) is a computerized simulation of agents interacting through given rules. ABM is used in tracking diseases and simulating behavioral patterns among societies, but has not been as well developed with financial and economic issues. Now many economists are working together with physicists and computer scientists to create ABMs with the financial markets in focus. NASDAQ chief Mike Brown hired BiosGroup to develop an ABM for the stock market. But the US Securities and Exchange Commission (SEC) still do not use ABMs. SFI External Professor and computational social scientist Rob Axtell states, “When the SEC changes trading rules, it typically has either flimsy or modest support from econometric evidence for the action, or else no empirical evidence and the change is driven by ideology. You have to wonder why Mike Brown is doing this, while the SEC isn’t.” SFI External Professor John Geanakoplos, Farmer and colleagues have developed an ABM to explore how leverage affects fluctuations in stock prices. An ABM for the whole economy would take time and a lot of data of multidisciplinary collaborations of economists, psychologists, computer scientists, biologists and others. Axtell also says to this point, “Left to their own devices, academic macroeconomists will take a generation to make this transition. But if policy-makers demand better models, it can be accomplished more quickly.”
Agent-based modeling (ABM) is a computerized simulation of agents interacting through given rules. ABM is used in tracking diseases and simulating behavioral patterns among societies, but has not been as well developed with financial and economic issues. SFI Resident Professor J. Doyne Farmer and SFI External Professor Duncan Foley present ABM could certainly be used on the complex system of financial economics. SFI External Professor John Geanakoplos, Farmer and colleagues have developed an ABM to explore how leverage affects fluctuations in stock prices. An ABM for the whole economy would take time and a lot of data of multidisciplinary collaborations of economists, psychologists, computer scientists, biologists and others. But it would be worth the work for a forecast that may help our economy.
The rise and fall of Crocs can teach us a little about how we communicate and influence each other. Malcolm Gladwell has published books about targeting small numbers of the most influential people who will in turn influence the masses. However, social scientist and SFI External Professor Duncan Watts has done the same research and has disproved Gladwell’s thesis on focusing on “cool or connected” people to influence others. As Watts notes, if you want to affect masses, it is all about the quantity, not the quality of the people you reach.
The emerging field of network science focuses on studying complex systems and how they are all alike. Understanding one network may shed light on other networks. Scientists from a variety of different disciplines have gone deeper into researching complex systems. SFI External Professor and physicist Mark Newman started working in the field ten years ago with SFI and the Center for the Study of Complex Systems. Network science has opened the door to interdisciplinary training in complex systems. Many researchers take these courses through SFI, a leader in interdisciplinary studies and complex network science. Many agencies, including the US National Institutes of Health, the National Science Foundation, and even the military have made donations and funding available to continue research into network science and complex systems.
Several dozen graduate students and researchers pursuing careers that could help humans prosper on a thriving planet have gathered in Santa Fe for the first “Summer School on Global Sustainability,” developed by the Santa Fe Institute with help from the National Renewable Energy Laboratory.
Mathematicians, statisticians and political scientists are now using statistical techniques to find election fraud. The accounting technique called, Benford’s Law, has potential to find election fraud if people made up the numbers. SFI Postdoctoral Fellow and computer scientist, Aaron Clauset, thinks people may evade detection under Benford’s Law by making up numbers that fit with the real numbers. Other researchers and political scientists think it would be a challenging and slow process to make their numbers fit the Benford Law. People who are cheating and creating election fraud do not have the time to make numbers fit, especially with counts being posted to the Internet, blogs and electric journals very quickly. While this may catch evidence of election fraud in Iran’s election, some researchers say we should be focusing on the U.S. election system, which is also flawed.
Researchers and scientists are working on ways to identify any patterns in the newest strain of the H1N1 influenza virus. Vaccines and anti-viral medications are in limited supply and will need to be quickly produced in order to be ready for any future waves of the virus. SFI External Professor Carlos Castillo-Chavez is part of a research team studying the H1N1 influenza virus in Japan. Japan acted quickly to contain the disease and had no fatalities. The information from this study will be beneficial to the U.S., Mexico and other countries.
SFI Professor and behavioral scientist, Samuel Bowles, has recently been studying performance-related pay. His research shows that performance-related pay does not encourage employers to work harder. In fact, Bowles’ research shows the opposite: many employees have a loss of motivation and a diminishing capacity for fairness and other workplace ethics. Behavioral economists will be studying the effectiveness of workplace performance incentives more in the coming years as the economy continues to change.
SFI Business Network Member, Steelcase’s vice president for global design, James Ludwig, reflects on the fragile state of the contract furniture industry. Ludwig states how he is setting up strategic plans for the future. Steelcase is using research scientists at the Santa Fe Institute in order to help forecast future developments.
Dr. Jeremy Sabloff will join the Institute August 1 to lead SFI’s cutting-edge research community as it celebrates its 25th Anniversary. “We are delighted Jerry has accepted our offer,” says Bill Miller, Chairman and Chief Investment Officer of Legg Mason Capital Management and Chairman of SFI’s Board of Trustees. “We need a broad and deep intellectual to build SFI’s scientific footprint and Jerry uniquely combines an understanding of our multidisciplinary science with executive level administrative and fundraising experience."
William C. Enloe, Chairman and Chief Executive Officer of Los Alamos National Bank in Santa Fe and SFI Board of Trustee is the recipient of the 2009 NeighborWorks@Business Leadership Award. “Through his volunteerism and demonstrated commitment to affordable home-ownership opportunities and economic development, Bill Enloe has made significant contributions that have strengthened Santa Fe’s communities,” said Ken Wade, CEO of NeighborWorks@America. “His efforts serve as an inspiration to others.” Mr. Enloe is dedicated to his community and to creating more affordable housing solutions in northern New Mexico. Mr. Enloe was directly involved in the development of an affordable housing subdivision in Santa Fe by assisting in establishing the necessary bond and by approving Los Alamos National Bank (LANB) loans for developers within the subdivision. Mr. Enloe was instrumental in enabling Homewise, a member of the NeighborWorks network to provide second mortgages to clients so that they may reduce the down payments required for affordable home purchases. As a member of the Downtown Master Plan Committee and the Los Alamos Housing Authority Board, Mr. Enloe worked to establish goals and policies for affordable housing in Los Alamos and provide affordable housing for teachers, police and public servants. Most recently, Mr. Enloe partnered with Homewise to develop a homebuyer program for LANB employees through Homewise’s employer-assisted housing campaign.