Ormerod, Paul. (1998). Butterfly Economics. (EN-0291)
New York: Pantheon Books.

Editorial reviews from amazon.com.

Editorial Reviews

In Hollywood, William Goldman's famous dictum that nobody knows anything is accepted as gospel. Nobody can tell you how much a movie will gross before it's released, no matter how big the stars or advertising budget. Compare the box-office receipts of two summer-of-'99 horror movies, if you have any doubt about this law: The Blair Witch Project, with no stars and a small budget, earned far more money than the very expensive, star-driven The Haunting. Yet, in economics, it's assumed that everything boils down to an engineering calculation: Maintain girders A, B, and C, and the roof will never cave in.

Paul Ormerod, author of The Death of Economics (1994), offers a different idea: "In the current state of scientific knowledge, it is simply not possible to carry out forecasts which are systematically accurate over a period of time." The title Butterfly Economics comes from the idea in chaos theory that a butterfly flapping its wings here could cause a hurricane on the other side of the world. It's not that chaos is guaranteed in economics; it's just that we never know when it'll occur, or what will cause it. "Small changes can have big consequences, and vice versa," Ormerod notes. His arguments range far afield. He talks about crime and family structure, biology, fashion, and many other topics seemingly unrelated to economics. But it comes down to this: No matter how you analyze it, human behavior is surprisingly random. And no economic model can account for all of it at any given time.

Butterfly Economics will, of course, be of most use to those with professional interest in the titular topic (economics, that is, not butterflies). But anyone seeking a good read on the vagaries of life might want to give this one a shot. Any author who can analyze the behavior of ants and Hollywood studio executives in successive breaths deserves a wide audience. --Lou Schuler --This text refers to an out of print or unavailable edition of this title.

The New York Times, Christopher Lehmann-Haupt
It is accessible and even entertaining.... Mr. Ormerod not only writes about capital, but also points to a way it may at last be understood. --This text refers to an out of print or unavailable edition of this title.

From Kirkus Reviews
Ormerod (The Death of Economics, 1995), British economic theorist for The Economist, seeks to perk up his famously dismal science with a broader view. His plausible argument is based on the activities of ants. It seems that if the little beggars are situated between two equidistant sources of food that are maintained equal in volume their trips to the comestibles may, at first, appear random. After a while, however, a pattern emerges, because the behavior of each insect is affected by that of the insect society. Extrapolating to a higher order, Ormerod find analogies in voting patterns, and propensity to disease, crime, and marriage, and thence proceeds from matters uxorious to economic and econometric models used to devise national policy. Even if it may cause a tornado, as is sometimes reported, the flight of a butterfly on the other side of the world is the sort of microactivity that's difficult to quantify usefully. Look for the larger patterns and do not base policy on ephemera, Ormerod advises. Shifts in supply and demand, human tastes and preferences, are operative and not fixed, as conventional economic models predict. Classical economists like Ricardo and Keynes, without current analytical tools, were obliged to look at communities taken as a whole. Governments, says Ormerod, ``should do very much less in terms of detailed, short-term intervention. Close inspection of the ants may not change their activities; but, a reader may ask, will the published observations of the econometricians invoke Heisenberg's Uncertainty Principle and alter human economic activity? Ormerods writing, supplemented with mathematical examples, charts, and diagrams, is lucid, with touches of humor. The technical appendices and occasional footnote memorializing such things as ``the ordered eigenvalues of the covariance matrix of a delay matrix'' may be safely ignored. ``Go to the ant, thou economist; consider her ways and be wise'' is a new proverb that may be good advice to astute policy makers who study this skillful, worthwhile tract. -- Copyright 1999, Kirkus Associates, LP. All rights reserved. --This text refers to an out of print or unavailable edition of this title.

Kirkus Reviews
"Ormerod's writing is lucid, with touches of humor."

Publishers Weekly (starred)
"... amusingly written, and every page offers surprising facts or strikingly new ways of looking at well-known facts."

Book Description
A beautifully written and engaging look at the cutting edge where economics meets complexity theory In this cogently and elegantly argued analysis of why human beings persist in engaging in behavior that defies time-honored economic theory, Ormerod also explains why governments and industries throughout the world must completely reconfigure their traditional methods of economic forecasting if they are to succeed and prosper in an increasingly complicated global marketplace.

"It is accessible and even entertaining. . . Mr. Ormerod not only writes about capital, but also points to a way it may at last be understood." -New York Times

Book Info
(Pantheon Books. Perseus Books) Presents a new theory of economics that suggests that the key to economic prosperity is to alter the theory from a 'hard science' theory to one less dependent on 'laws' and 'forces' and more open to social factors. Suggests that economics is as unpredictable as fashion trends. Softcover. DLC: Economic policy.

From the Back Cover
"If you're looking for a fascinating, entertaining introduction to twenty-first century economics, here's an excellent starting place. You'll learn more here about the way real economies work than by reading a bookshelf of academic tomes. And you'll have fun along the way."
-- The New Scientist
--This text refers to an out of print or unavailable edition of this title.

About the Author
Paul Ormerod has been head of the Economic Assessment Unit at The Economist and a visiting professor at the Universities of London and Manchester. He lives in London.