In just over a day, a powerful computer program accomplished a feat that took physicists centuries to complete: extrapolating the laws of motion from a pendulum’s swings.

Developed by Cornell researchers, the program deduced the natural laws without a shred of knowledge about physics or geometry.

The research is being heralded as a potential breakthrough for science in the Petabyte Age, where computers try to find regularities in massive datasets that are too big and complex for the human mind and its standard computational tools.

The cool part is not just the physics, but the use of an evolutionary algorithm to fit deterministic equations to any data set. The point is to find relationships in real data and see if it has any predictive power.

This approach, of course, misses the stochastic/ probabilistic properties of nature but still a useful tool.

The other cool part is that the the tool is free for the public to download (windows, linux or mac).

I did some little tests to see how it works. In excel I created the simple function f(x) = x^2 / 32 + sin(x). For the x’s I took a list of automatically generated random integers from random.org and set the confidence level at .9 for all numbers.

After about 2 minutes, it came up with this:

x/32 is ~= to .03x so the program did a pretty good job, I think.

Now lets try something more interesting: inputing 2 lists of random numbers for x and y:

If the purpose of the engine is to to find relationships between raw data, it stands to reason that it could find relationships where none exist.

Lets test the meme that LA Lakers wins/loses predict stock market price changes. I used the data from Nasdaq rates (between 1987 and 2007) provided by the LA Time and also converted Lakers performance into quantitative terms. -1 represents a championship loss, +1 a championship win while 0 represents a time when the Lakers didn’t make the finals:

Lets graph the function:

According to our function, a victory is suggestive of stock market losses and a finals loss is indicated by some NASDAQ gains. Of course, the last two years of data have smashed these “predictions.”  Interestingly, our equation predicts the highest gains when the Lakers don’t make the playoffs at all. I think this is suggestive.

I think McWilliams misses a key point in favor of farmers markets, though. You can buy obscure produce that you just can’t find in most supermarkets.

In addition, the centrality of the market, competition is more direct and should theoretically help lower prices. Anecdotally, from my own experience as a consumer and seller in a farmer’s market, most customers don’t feel bad walking away from your booth without trying anything… even after you offer a free sample.

I like farmers markets and the competition they provide for grocery store produce isles, though not for any particular love for locally grown produce.

2. Tyler Cowen talks about the saliva market in South Africa. Apparently, its very competitive.

3. Brazil plans on restricting sugar cane production to prevent deforestation of the Amazon. I guess biofuels aren’t as ecofriendly and environmentalists would like to think. However, I don’t understand why Brazil doesn’t just subsidies rather than legislating more bans. If the costs farmers had to pay where closer to their natural costs, farmers would cut back on their own.

4. Open Economics blogs asks “What is Socialism in 2009?” and is Obama really a socialist? The answer of course is ‘no.’  But, then again, modern liberals are not classical liberals and capitalism was originally a derogatory term, so we’ll see if they left comes to accept the term and try to redefine it for themselves.

5. Toro’s Running of the Bulls blog tackles the large question of market rationality.  It’s a great post, but I think he misstates Jeffery Friedman’s point though. Friedman is trying to point out in the case of the crisis, irrational exuberance came out of government incentives, not market forces. People acted stupidly, but not necessarily irrationally, under the traditional assumptions of what rationality means: they where simply reacting in a predictable way based on the available information. The information turned out to be wrong, but that’s not the fault of 99.9% of investors.

We where talking about how apartment owners overcharge for rent in New York City. He said something along the lines that it was ridiculous that with the housing market what it is, that landlords could justify such a high rent.

What the broker missed was that the part of the housing market that collapsed is the demand for mortgages. That is, owning homes. If fewer people are owning homes, that means more people should be renting. This drives prices up, not down, like my broker thought.

This may be less true for certain markets in New York, where Wall Street and finance people are left in droves. But, I’m not looking at these high rise condos anyway.

I’m not sure if Hanson is continuing our discussion in this post in Overcoming Bias today, but he reaffirms this position, extending it pretty much all of nature:

Yes, nature would be saved if we destroy ourselves without destroying nature in the process, but hopefully we’ll avoid this scenario.  We might also somehow coordinate to prevent competitive growth.  For example, we might empower a world government to protect nature, prevent innovation, or prevent population growth.  But I honestly see little prospect of this.  We now live in a very competitive world, and even governments mainly just redirect competition, toward controlling those governments.

I find it a little odd that he would say this. It contains elements of truth… at what point will governments stop promoting ecological conservationism at the cost of economic competitiveness?

But I think he misses another element. I don’t think it will escape the attention of capitalist that they rely on the earth for natural resources and that technological advanced will decrease, not increase, our reliance and impact on nature and not the other way around.

People have been falsely predicting that we’ve reached the earth’s carrying capacity for centuries, and they’ve all been wrong. This is not because of government incentives (well, not totally) but because of market forces.

I think Hanson’s assumption of continuing population growth is also incorrect. As economic competition produces wealth throughout the globe, population levels will steady out without having to approach the earth’s physical limits. Add the technology of lessening out eco footprints and I don’t think there’s anything to worry about.

Hanson is being alarmist – some will say economic growth needs to happen anyway, so government interventions are just delaying, and worsening, the inevitable, while others will say that we need to stop “progress” to protect the natural rights of mother earth.

As an economist, I find it odd that Hanson would imply that population will keep growing but technology will reach a limit.

I find it much more likely that, in astronomical time, the human population will dwindle out into nothing because we no longer feel the drive to reproduce than we’ll reach the physical carrying capacity of the entire universe.