Oct 13 2008 2:49pm

Psychohistory and the Nobel Prize

Paul Krugman on the things that led him to become an economist:

Admittedly, there were those science fiction novels. Indeed, they may have been what made me go into economics. Those who read the stuff may be aware of the classic Foundation trilogy by Isaac Asimov. It is one of the few science fiction series that deals with social scientists—the “psychohistorians,” who use their understanding of the mathematics of society to save civilization as the Galactic Empire collapses. I loved Foundation, and in my early teens my secret fantasy was to become a psychohistorian. Unfortunately, there’s no such thing (yet). I was and am fascinated by history, but the craft of history is far better at the what and the when than the why, and I eventually wanted more. As for social sciences other than economics, I am interested in their subjects but cannot get excited about their methods—the power of economic models to show how plausible assumptions yield surprising conclusions, to distill clear insights from seemingly murky issues, has no counterpart yet in political science or sociology. Someday there will exist a unified social science of the kind that Asimov imagined, but for the time being economics is as close to psychohistory as you can get.

Krugman is famous for his work on the economics of international trade, but as our corporate cousins at Nature remind us, one of his early works was a pioneering examination entitled The Theory of Interstellar Trade:

Abstract: This paper extends interplanetary trade theory to an interstellar setting. It is chiefly concerned with the following question: how should interest charges on goods in transit be computed when the goods travel at close to the speed of light? This is a problem because the time taken in transit will appear less to an observer travelling with the goods than to a stationary observer. A solution is derived from economic theory, and two useless but true theorems are proved.

The young Krugman observed that “This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.”

Today, in another step on SF's long march toward taking over the world, Paul Krugman was awarded the Nobel Prize in Economics. And, evidently, he’ll be discussing the works of Charles Stross in a seminar to be published on Crooked Timber sometime next month. We can't wait.

1. Kabada
Too bad nobody in the "mainstream" media is going to talk about his sf roots - or anything even remotely related to his work for that matter.

It's all gonna be about how he only won because of his NYT column.
Carlos Hernandez
2. Yokozuna
This is brilliant! Thanks for tracking this down.

The paper you linked to is especially awesome and full of winning humor. Two quick quotes:

"These complications make the theory of interstellar trade appear at first quite alien to our usual trade models; presumably it seems equally human to alien trade theories."

"It should be noted that, while the subject of this paper is silly, the analysis actually does make sense. This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics."

Tom Gittings
3. pintail
I was never convinced by the "science" of psychohistory as illustrated in the Foundation Series. It is a long time since I read it, but my recollection is that it was very precise in predicting specific events. I can see a possible statistical psychohistory, where it is possible to make probabilistic predictions about general future trends, but that is not what the Foundation describes.

I am surprised that a Nobel laureate seems impressed by Asimov's conception of psychohistory...but then maybe that is why they call economics the dismal science?
scott hhhhhhhhh
4. wsp_scott
It has been a long time since I read I read the Foundation trilogy, but I seem to remember lines like "a dictator will have taken power with a probability of 85%" or something to that effect.

FWIW, I really liked history growing up, but I ended up with a PhD in economics. Of course, I am no where near as smart a Krugman (the economics Krugman, not the political columnist Krugman) :)
Alexander Gieg
5. alexgieg
I myself prefer the economists who see Economics not as a hard science, but as what it proves now and ever again to be: an human science, as "weaker" (as far as mathematics go) as all other human sciences, but fun for the same reason (at least for me). Economics, History, Politics etc. as hard sciences is a fictional concept, and thus one that works well in the field of science fiction. But as long as the real world is about actual, chaotic people taking non-rational decisions, both disciplines will continue being soft, no matter what.

In fact, Friedrich Hayek once calculated that you might turn Economics into a hard science if you apply infinite (literally) computing power to an infinite (literally) amount of external data, not to mention having the measurement apparatus to detect and deal instantaneously with changes in any of it. Absent that, and absent Ludwig von Mises' alternative, namely, the simultaneous reading and computation in real time of the deepest subjective contents of each, every and all human brains to detect punctual variations in needs, wants, likes, dislikes and such to react to them in time, well, sorry, but no luck.
James Nicoll
6. JamesDavisNicoll
I correct only to be polite and by polite I mean that someone else corrected me on this and I am not going to be only one who gets corrected in public on this point.

Krugman won the Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne (Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel), which is named after Nobel but which is not actually a Nobel. It's kind of the John W. Campbell award for Best New Writer of Nobels.
Patrick Nielsen Hayden
7. pnh
Of course, as Daniel Davies pointed out on Crooked Timber, a number of people and organizations seem to not fully agree with the idea that the economics prize is "not a Nobel," and among those people and organizations are the Nobel foundation and HM Carl XVI Gustav of Sweden. Economics winners are listed on the Nobel website, the winners are referred to as Nobel laureates, they go to Nobel ceremonies and dance with Swedish royalty, etc etc etc and also etc.

Which is not to say I disdain the honor of James Nicoll "correcting me to be polite"--indeed I welcome it and return the favor. (Hello, James!)
James Nicoll
8. JamesDavisNicoll
(Hello, James!)

I've been on for a while but my net effect seems to be to kill threads. Not sure what I am doing wrong.
9. Alvis
Actually, there's a guy name James Flyyn who calls himself a cognitive historian and is doing amazing leading-edge research on intelligence.

Here's an interview I conducted with the fellow (one of the best I've ever done, right up there with Will Wright):

Very cool that Krugman was inspired in such a manner.
10. rogerothornhill
Please, someone, make sure the link to the Krugman/Stross discussion once it is up. I seriously can't wait!

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