User:GBEnholm/Information dynamics

Information Dynamics

Used extensively in making economic predictions by the American economist David Wiedemer, Information Dynamics is “a theory of learning, psychology, and the costs of learning.” Dr. Wiedemer observes "economists were still not focusing on key issues such as property rights, technological evolution, and information dynamics (the way people learn)" thus not developing "an integrated theory of economics, which is critical for good economics."

Controversies are occurring among economists about which Information Dynamics can be applied to understand the roots of the controversies. Economics Nobel Laureate, Joseph E. Stiglitz, points out "The advocates of austerity counter those who argue for more government spending by saying that such spending does not stimulate the economy. They begin their critique by observing that the almost $800 billion stimulus package enacted in February 2009 didn't save the economy from a deep recesssion (NOTE: See Great Recession) ... But the stimulus did work: if it hadn't been for the stimulus, the unemployment rate would have peaked in excess of 12 percent..." Professor Stiglitz's example here shows the importance of Information Dynamics in both how people view the economy and how they expect economic activity to move up or down.

Another Economics Nobel Laureate, Paul Krugman, observes there are seemingly contradictory ideas used by economists which are understandable when Information Dynamics concepts are used. Professor Krugman writes "[C]ontrary to what you might think, debt does not make society as a whole poorer: one person's debt is another person's asset, so total wealth is unaffected by the amount of debt ... [D]ebt is a very useful thing. We'd be a poorer society if everyone who wanted to purchase a home had to pay in cash ..." Professor Krugman cites the work of Hyman Minsky and his financial instability hypothesis warning that excessive leverage -- too much debt relative to assets or income -- could create economic instability. While an individual may be able to reduce her/his debt at any given time, that is not possible for all individuals to accomplish because dramatically higher selling of assets to raise cash to pay off debt is affected by supply and demand driving down prices of assets. The major reason for the steep decline in U.S. home prices was the dramatic increase of foreclosures because homeowners could not afford their monthly mortgage payments. Studying economic behavior in the context of what is known and being learned by individuals (Information Dynamics), provides insights as to how the economy will be affected by that individual behavior.

Information Dynamics is also an analytical tool used to understand the connections between how the human brain learns and subsequent economic decision making activity to allow making accurate economic predictions Dr. Wiedemer believes an understanding of learning by using Information Dynamics needs to be brought into how economists understand production and consumption. His research in world economic history has convinced him that both producers and consumers are learning in an evolutionary manner. Information Dynamics needs to include study of research in neurobiology and neuroscience

Information Dynamics as an academic field has a journal, Open Systems & Information Dynamics (OSID) published by World Scientific including interdisciplinary research in mathematics, physics, engineering, and life sciences. Other related fields including information processing, storage and transmission, with a theoretical focus. Masanori Ohya, a professor at Tokyo University of Science Faculty of Science and Technology Information Science, has been Chief Editor.

After completing his doctoral degree, Dr. Wiedemer worked during the 1980s-90s for a start-up firm both developing new technology (he received 13 domestic and international patents on information technology) and analyzing the market for those technologies. Later, he was a co-owner of a business evaluation firm in the 2000s where he continued developing the economic history concepts he used to create STEP Evolution. His research in late 1990s and early 2000s, led to the publication of two books (cited at end) using STEP Evolution to analyze both the American and world macroeconomies. His research in late 1990s and early 2000s, led to the publication of two books using STEP Evolution to analyze both the American and world macroeconomies.

BOOKS CITED

Krugman (2012), Paul. End This Depression Now!. New York: W.W. Norton & Company, Inc. 2012. ISBN 978-0-393-08877-9 (hardcover).

Stiglitz (2012), Joseph E. The Price of Inequality. New York: W.W. Norton & Company, Inc. 2012. ISBN 978-0-393-08869-4 (hbk.).

Wiedemer (2006), David, Wiedemer, Robert A., Spitzer, Cindy, and Janszen, Eric. America's Bubble Economy. New Jersey: John Wiley & Sons, Inc. 2006, ISBN-13 978-0-471-75367-4 (cloth) ISBN-10: 0-471-75367-X (cloth).

Wiedemer (2011), David, Wiedemer, Robert A., and Spitzer, Cindy. Aftershock. Second Edition. Hoboken, New Jersey: John Wiley & Sons, Inc. 2010. ISBN 978-0-470-91814-2 (cloth).

References

DEFAULTSORT:Information dynamics Category:Economic theories Category:General economics Category:Social sciences Category:Economic bubbles Category:Great Recession Category:2000s in economic history Category:2010s in economic history Category:Financial crises Category:World economy Category:Living people Category:Information economists Category:Public economists Category:Academic disciplines