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What If Quantum Physics Were Applied To Economics?

A mathematician argues that ideas that seemed bizarre in classical physics makes perfect sense in economics
David Orrell

Applied mathematician David Orrell offers a look at the difference quantum mechanical thinking would make to economics. The author of Money, Magic, and How to Dismantle a Financial Bomb: Quantum Economics for the Real World (2022) received considerable criticism for an article he wrote four years ago, “Economics is quantum,” which he summarizes in a followup article, published this month:

The idea is that money is best understood as a quantum social technology, with quantum properties of its own. In financial transactions, for example, value can be modelled as a probabilistic wave function which ‘collapses’ down to an exact number when money is exchanged. When you put your house up for sale, you might have a fuzzy idea of its worth, but the actual price is only determined when a deal is made. An idea that seems bizarre in physics makes perfect sense in economics. Financial contracts such as mortgages and other loans entangle the debtor and the creditor in a fashion that can be modelled using quantum mathematics. The debtor is treated as being in a superposed state, balanced somewhere between a propensity to honour the debt and a propensity to default. Methods from quantum cognition can handle those phenomena, such as mental interference between incompatible concepts, that first inspired quantum physicists.

And the argument that quantum effects don’t scale up has no relevance to economics. The idea isn’t that money inherits its quantum properties from subatomic properties, but that its properties can be modelled using quantum mathematics (the aim isn’t to use more maths, just different maths where needed). For example, the creation of money can be expressed using a quantum circuit in a way that captures effects such as uncertainty, power relationships, and so on. The effects of this substance scale up all the time (it’s called the financial system), and, like dark matter, exert a huge pull over the economy that goes undetected by classical approaches.

David Orrell, “A softer economics” at Aeon (February 1, 2022)

What difference would seeing things from a quantum perspective make in practice?

A defining feature of quantum mechanics, after all, is that it looks hard, but the picture that it paints of reality is soft and fuzzy. In many respects it isn’t a hard science, but a soft science. A wave equation, for example, looks hard when it is written out as a mathematical formula – but it is an equation of a wave, which is soft.

David Orrell, “A softer economics” at Aeon (February 1, 2022)

Quantum mechanical thinking might make better sense of markets where social values intersect with economic ones. For example people will pay more for an elite label than for a functionally equivalent house brand. Some zip codes (and universities) cost more than others when the main offering seems to be the prestigious number or name.

The people who respond to such “fuzzy” signals are not necessarily acting irrationally, as a classical economics approach might suppose. They are often responding to genuine realities which, like quantum mechanics, are fuzzy. The realities often collapse into a single situation: An introduction to an influential neighbor in the elite zip code can change a life or a career. But no single, hard number can be assigned to the role of influence during the process.

That said, Orrell leans heavily on claims that quantum mechanics is somehow more female and that women have been deprived and neglected in classical economics. Many women may find this sort of thing — the assumption that femaleness is a reliable marker for having a “different” attitude to economics — off-putting. But his thoughts are well worth reading anyway.

Author and design theorist Eric Anderson offers a note of caution. He is concerned that we make a distinction between what intelligent agents do and what quantum mechanics can do: “Quantum mechanics is a terrible explanation for intelligent decision-making. We might as well argue that a Beethoven sonata resulted from the collapse of probabilistic wave functions as the large number of possible notes eventually “collapsed” to the final notes when he put pen to page. Might there be some interesting analogies between quantum mathematical models and human activities? Perhaps. But we need to be careful to not fall into the trap of thinking that the quantum model is ever an actual explanation for real decision-making.” He develops the point that intelligent agents collapse probabilities to achieve a particular outcome in a podcast, “Probability & Design” (June 6, 2015), 7:00 minute mark.

It appears that Orrell, whose specialty is scientific forecasting, is attempting to model a process rather than its origin.

You may also wish to read: How Erik Larson hit on a method for deciding who is influential. The author of The Myth of Artificial Intelligence decided to apply an algorithm to Wikipedia — but it had to be very specific.

The difference between influence and official power. Do you wonder why some people are listened to and not others, regardless of the value of their ideas? Well, read on…


As money slowly transitions from matter to information… Let’s look at a brief history of cryptocurrencies — which is not quite what we might think. The mysterious Satoshi Nakamoto, founder of Bitcoin, did not invent new concepts in computer science or cryptography; he put them together in a way that worked.

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What If Quantum Physics Were Applied To Economics?