What is Ergodicity Economics?
Ergodicity Economics is a field of study that considers the implications of ergodicity on mainstream economic theory.
For example, it shows how you cannot extrapolate averages in the presence of irreversibility, or how long-term investments require different evaluations than short-term ones. You can find a few examples of these phenomena in the excerpt of the first chapter of my book "Ergodicity", which is available for download on my Excerpts page.
Famous Ergodicity Economics Researchers
Ole Peters is perhaps the researcher who has advanced the most Ergodicity Economics. Namely, he and Alexander Adamou wrote the seminal paper Ergodicity Economics, which inspired my book "Ergodicity" (in fact, the reason I wrote it is that I loved the aforementioned paper but thought it was written in an excessively technical and abstract way, which restricted the audience, and instead I wanted to help laypeople understand this extremely useful idea of ergodicity and its many applications without having to understand the mathematics behind it).
Nassim Nicholas Taleb is the scholar through which I got to know about ergodicity, as he briefly mentions it in his book Skin In The Game.
Other scholars who worked on the topic include Murray Gell-Mann, Ed Thorp, John Larry Kelly Jr., Harry Crane, and Joseph Norman.
Selected Works on Ergodicity Economics
Here is a list of selected works on the topic:
- "Ergodicity Economics," by Ole Peters and Alex Adamou. The technical text of reference, in my opinion. I also recommend reading the other papers by the same authors.
- "Skin in The Game" and "Antifragile", by Nassim Nicholas Taleb
- "Ergodicity and Digital Culture," by Spear of Lugh, on how ergodicity influences the spread of cultures.
- "The Precautionary Principle (with Application to the Genetic Modification of Organisms)," by Nassim Nicholas Taleb, Rupert Read, Raphael Douady, Joseph Norman, and Yaneer Bar-Yam.
- "Risk, Intuition, and Common Sense," Harry Crane's Substack.
I have produced some novel research work on the topic myself:
- "Ergodicity as a Non-Binary Property"
- "The Dynamics of Ergodicity: Second-Order Effects in Risk-Taking""
- "The Dynamics of Risk-Taking,"on how damage propagates, how it becomes irreversible, and dynamic considerations.
Books about Ergodicity Economics
- Ergodicity: How irreversible outcomes affect long-term performance in work, investing, relationships, sport, and beyond. I would recommend my book first, despite the obvious conflict of interest, for it is the only book on the topic I am aware of that cares more about the practical implications of ergodicity than its theory.
- Ergodicity Economics, by Ole Peters and Alexander Adamou. They are about to publish a book on the topic. (As of August 2024, it is not published yet.)