Dominican research featured in OECD article

The articles, appearing online in OECD Insights, honor the 100th anniversary of the birth of mathematician Alan Turing, the “father” of modern computing and artificial intelligence. The Dominican work is featured in an essay titled Going with the Flow: Can analog computing make economics an experimental science?

The Cambiant Project is a new approach to econophysics and economic models.  The Cambiant Economic Model is based on a fluid dynamics modeling concept that derives economic performance from a physical analogy based on the properties of airflow over a cambered or curved surface.

The model was developed by physicist John R. Hulls in association with faculty from Dominican’s School Business and Leadership, students enrolled in the School’s MBA in Sustainable Enterprise (Green MBA), and the Dominican-based Environmental Finance Center for EPA Region 9 (EFC9).

The goal of the Cambiant Project is to build an economic simulator that will be useful for evaluating environmental and economic policy, said EFC9 Executive Director Sarah Diefendorf.

As a physical analog, the model develops force coefficients that have direct economic equivalents. The model simulates a lifting surface or wing ‘flown’ through an atmosphere of potential transactions. A surface was developed by fluid dynamic methods to approximate the income distributions generally representative of a developed country. The force coefficients for growth and cost of production show that the efficiency of the economy may be evaluated by the ratio of the growth coefficient to the cost of production coefficient, with the rate of growth achieved at a given ratio being driven by the creation of value within the economy.

As noted by the article in OECD Insights, the model offers a warning to policymakers:

“The simulation, disturbingly, shows that there is a minimum velocity below which austerity will have negative effects, directly opposite to the intended policy, literally a region of reversed commands....our simulation shows that catastrophic stall is inevitable unless velocity is restored to the point where growth is possible. Math models and economists' other tools all count, but the profession must develop good simulations that let policymakers evaluate the potential consequences of their actions in an accessible, comprehensible and visible way.”

The econophysics project has been a major EFC9 initiative since 2011 and is supported by funding from The Rathmann Family Foundation. Four Green MBA interns were hired for this effort, and they researched three case studies that were integral to the new model.

To view the OECD Insight article, please visit http://wp.me/pIiql-16X.

To visit the Econophysics website, please visit https://sites.google.com/a/dominican.edu/econo-physics/Home.

For more information, please contact Sarah Diefendorf at 415-494-5422 or Sdief1@gmail.com.