Inability to Quantify and Predict Human Behavior

Economics uses statistical tools that allow for isolation of variables to detect which connections repeat themselves, and under what conditions. Using these statistical tools, researchers learn from past events and build models of behavior over time. They can use these mathematical tools because it is possible to quantify the various parameters. However, what happens when the models need to include unquantifiable parameters? Human behavior is just such a parameter, and because economics relates directly to human behavior, it renders the entire field of study limited and inexact.

The reason why human behavior is unpredictable is that making decisions includes elements that are not always rational. Only by combining different methods of research, different paradigms—such as classical economics, which relates to quantifiable elements, and behavioral economics, which relates to human nature—is it possible to study the entire system. This allows researchers to understand human behavior, recognize the boundaries of the system, and understand the connections that bring it into balance. Only when we achieve all that can we accurately detect the causes of the imbalance that has led to the current crisis.

The integrative approach is a precondition, valid particularly today when a whole new economic system that is radically different from its predecessor is being built. The new system is founded on the laws of integration of the entire system. As in the study of organisms as closed systems, in the new economic system an economist will be able to follow changes, define causalities, and quantify parameters for the proper functioning of the interrelations among the elements in the system.