Why I’m a skeptic about quantum economics

Since I became involved in quantum economics, I have got used to hearing people announce that they are skeptical about the field. In the piece, I want to lay out the reasons why I too am skeptical.

Most people, when asked why they are skeptical, will point to physics envy, or compare the field with something flaky like quantum healing.

However, physics envy was identified as a problem in areas such as economics long before quantum ideas were being considered - it was just mechanistic physics rather than the quantum sort. And it is a little strange that the word quantum" has flaky connotations (more on this below).

So these are not good reasons to be skeptical about quantum economics (for more along those lines, see here). My own reasons are different.

To start with, I am skeptical about mathematical models in general. My career in applied mathematics has had two main strands; building models, and pointing out the limitations of models. My D.Phil. was on the subject of model error in weather forecasting, and my first book was about why forecasts go wrong in a number of areas including weather, health, and economics. Other books explored the influence of aesthetics in physics, or the flawed assumptions behind the models used in economics and finance.

A common theme of these books is that complex systems such as the atmosphere or the economy resist prediction by mechanistic models, because they involve multiple interlocked (and often opposing) feedback loops, and because the number of unknown parameters explodes as more details are added. Highly sophisticated models can be built of anything from the climate system to the human heart, but the result is more of a movie-like simulation than a predictive model.

Quantum models are no exception to this rule. For example, a basic difference between classical and quantum probability is that the latter uses complex numbers (so parameters may have an imaginary component involving the square-root of negative one). The models are therefore much more flexible than classical models, just because every parameter has an imaginary component along with a real one. The fact that quantum models can do a good job of fitting complicated phenomena in fields such as psychology is therefore hardly surprising.

Another thing about mathematical models is that once they become accepted, they are surprisingly resistant to criticism. Economics in particular seems a safe space for models. An example is the Black-Scholes model for option pricing, which is still in use after 50 years despite its obvious flaws. From this perspective, a degree of skepticism is important, but people should reserve their strongest skepticism for established models, and be open to new ideas.

Finally, I am skeptical about arguments, of the sort sometimes heard in or around quantum social science, that the economy is quantum because the universe is quantum, or our minds are quantum. If the aim is to build a useful model of the economy, it isn't much help to know that subatomic particles - and maybe mental processes - involve quantum interactions, any more than a weather forecaster would take these into account. And it would be very reductionist to conclude that, just because a simple quantum model can simulate a decision-making process, the process itself must be ultimately quantum.

However, being skeptical about such quantum applications is not an interesting or original position, it has been the default for about the last hundred years (although some founders of the field seemed open to the idea). The question is, why has it taken so long for these models to be properly explored? A skeptic might say that it has nothing to do with their accuracy, and is really about the fact that quantum seems to hold a special and carefully-protected place in the scientific psyche - which is one reason economic models have progressed little from the Victorian era.

Quantum probability is just the next simplest form of probability after the classical one, which is well-suited for handling the flow of information, and can accommodate properties such as superposition, interference and entanglement which characterize the economic world as much as they do the subatomic one. From the perspective of a mathematical modeler, quantum mathematics (including its use of those complex numbers) does seem to offer an appropriate structure for modeling a range of cognitive and economic phenomena. Most importantly, it can be used to provide useful insights and make accurate predictions about everything from our response to survey questions, to the price of financial options.

So, I consider myself a skeptic not just of quantum economics, but of all attempts to shoehorn the world into our neat mathematical equations. But I am also skeptical about the particular level of skepticism which is sometimes levelled against the application of quantum ideas outside of physics - especially from fields such as economics and finance where real, effective skepticism seems to be in such short supply.