How chaos helps explain why small market corrections can produce major economic instability

Learn how natural systems exhibit characteristics of chaos theory

In biology, some mathematical models of ecosystem populations and heart irregularities show strong sensitivity to initial conditions, which scientists can simulate to determine quantitative tipping points at which these systems become unstable. Within the social sciences, crowd behavior and the virality of social media posts have shown how human behavior fits within the framework of chaos theory.

Chaos theory—informally known as the butterfly effect—is the reason why weather forecasts are presented with probabilities rather than certainties.

Herd behavior is one cause of economic bubbles

A video breaks down the core forces behind economic bubbles, illustrating how forces including cheap credit, soaring optimism, and feedback loops push asset prices far beyond fundamentals—until a single shock triggers panic, selling and a rapid collapse.

The role stories play in mass economic trends like bitcoin, crashes

Economics is dominated by numbers, but stories play a huge role in the emotional shifts seen within macroeconomic trends. For example, bitcoin is not just a cost-benefit winner, but a compelling tale of decentralization and independence. This is a 20-minute summary of Nobel prize-winning economist Robert Shiller's "Narrative Economics."

COVID-19's shock to employment rates sparked some economists to fear deflation

COVID-19 simultaneously disrupted the supply chain and the labor market. Since the unemployment rate had hit record highs, some economists were worried that the supply chain would recover before the labor market. If that had happened, businesses would have been producing goods, but no one would have been able to buy them because they wouldn't have the disposable income to do so.

Recessions are considered to be inevitable by modern economic standards

Recessions are caused by imbalances in the market and are guaranteed to happen in capitalist systems, but predicting them is a complex task.

Researchers identify a hidden instability pattern in simple ocean wave models

Stokes waves—a solution to the mathematics of water waves—were once assumed to be stable. Italian mathematicians have proven disturbances cause these waves to collapse and such collapses follow an infinite repeating pattern. To complete the proof, the team offered a $100 donation to solicit online help.

Hear Ray Dalio's principles for navigating a changing world order

Dalio argues that there aren't new events in history, per se, and that people are taken by surprise by events because they just haven't happened in their lifetimes—not because they are actually novel.

Explore chaos in this simulation of two double pendulums, where small differences in the release angles produce wildly different outcomes.

An explanation distinguishing the butterfly effect from causality, necessity, and sufficiency

In pop culture, the analogy has conveyed the impression that the flapping of a butterfly's wings has a cascading effect that directly produces a tornado somewhere else on Earth. However, butterfly-wing flapping alone is insufficient to cause tornadoes, as the complexity of atmospheric systems requires many more conditions to produce them, any of which can be the tipping point to initiate tornadogenesis.

Modern monetary theory argues that governments can spend more without worrying about debt

In this discussion, economists Stephanie Kelton and Rohan Grey join Jon Stewart to explain modern monetary theory and debate whether expansive government spending can address inequality and economic crises without traditional debt constraints.

Proponents argue that abandoning the rules-based order risks a return to the chaos that led to 2 world wars

Brookings scholar Robert Kagan warns that if China and Russia gain regional dominance, the world could return to the unstable conditions of the late 19th century—the same chaos that led to two devastating world wars.

Why some nations reach economic success and others don’t

The 2024 Nobel Prize in Economics winners, Daron Acemoglu, Simon Johnson, and James A. Robinson, were honored for their compelling research on the factors that influence a nation’s prosperity. Spanning two decades, their work presents insights into how societal organization can explain the income discrepancies between different countries. In general, their research shows that economic success favors more free and open societies. Listen for more fascinating insights.

The business models behind vaccines

Watch experts weigh in on the prevailing business models of vaccine production, including how the Covid-19 pandemic has disrupted the industry for good in this 20-minute video from Financial Times.

Using cryptocurrency to turn traditional financial arrangements on their head

Cryptocurrency is poised to drastically change everything in the financial world, including financial arrangements. Decentralized finance makes it easier for virtually anyone to take advantage of financial markets without the need for a bank. However, there are new risks involved as well. Professor of Legal Studies and Business Ethics Kevin Werbach, an expert on Bitcoin and blockchains discusses it all in detail in The Conversation.

Relive the biggest swings in the Dow’s history

From the 1929 crash to the Coronavirus Pandemic in 2020, this piece spotlights five of the most dramatic single-day moves in the Dow’s 125-year history.

Political science professors say dystopias are defined by government coercion

Shauna Shames and Amy Atchison, two political science professors and the authors of "Survive and Resist: The Definitive Guide to Dystopian Politics,” argue that defining a real-world dystopia depends on whether a government is using coercion to protect its citizens or to control them. Shames and Atchison seek to provide a more nuanced understanding of the word “dystopia,” one they note they began hearing more and more as the COVID-19 pandemic progressed.

Commodity traders are the most powerful people you've never heard of

Just beneath the surface of the global economy is a hidden layer of dealmakers for whom war, chaos, and sanctions can be a great business opportunity—they're called commodity traders. Their power partly stems from the fact that commodities are essentially the building blocks of the economy at large.

A prediction market was more accurate than most polls about the 2024 US presidential election

The idea that the median estimate of a group can be more accurate than individual expert estimates is called the "wisdom of the crowd," and dates back to the early 1900s. This theory can help explain the perceived value of prediction markets when it comes to polling and more.

Understanding the power grid and how renewable sources fit in

The power grid is evolving to include ever-higher levels of solar and wind, which don’t provide inertia. Should system planners and operators panic?

Scientists increasingly can't predict what AI will do

Most AI systems are so-called "black box" models, where we only see inputs and outputs while the inner workings remain obscure. This piece, written prior to the launch of ChatGPT, cautions developers to know why and how a system produces its results, and not to sacrifice explainability for accuracy.

Simulation of the coronavirus inside an aerosol droplet

A new simulation shows how the virus survives inside tiny airborne particles of water — and gives clues about how the Delta variant became dominant.

The weakening of dark energy suggests a dynamic universe with evolving forces

The discovery, which came from analyzing extensive data from a major cosmological survey, challenges the assumed constancy of dark energy in modern physics. Understanding dark energy's behavior is crucial for predicting the universe's long-term evolution.

How we frame stress—as good or bad—seems to alter how it affects us

This podcast discusses research that indicates stress perception may drastically affect how we respond to it. In research exploring if our stress is presented as diminishing our health versus if we're told it enhances our performance, it will lead to differences in how successful participants are at performing tasks—with the enhancers doing better.

The university system has an enrollment problem

Enrollment has dropped over the past few years—especially for men. In this Freakonomics podcast episode, educators and economists explain why they think college enrollment has been on the decline. They also offer solutions and make predictions for the future of college.

Minor technology failures can spiral into massive internet outages

A mix of centralized cloud infrastructure and legacy protocols leaves the internet susceptible to downtime from minor cyberattacks or software bugs, infrastructure damage caused by extreme weather, and human error if a DNS service provider—the internet's phone book—or a backend system, such as Amazon Web Services, were compromised.

An explanation of dynamic pricing algorithms and the factors that impact them

Rather than static prices set by manufacturers or retailers based on the costs of goods, online businesses or box stores with electronic price tags can change prices in real time based on supply, demand, time, location, and competitor prices. These algorithms can be programmed to maintain or maximize profit margins based on shoppers' willingness to spend.

Discover the catastrophic consequences of a failure of the US electrical grid—something that is more likely than many Americans think.

How Amazon operates a 'flywheel' business model, a self-reinforcing cycle that drives continuous growth

Watch how viruses like Ebola can spill over from animals to humans—and vice-versa.

The US dollar is the most widely circulated currency in the world, and is involved in nearly 90% of global transactions

Watch how algorithms can be designed to train themselves and self-improve without human input, to the point where the optimized code is too complex for programmers to understand.

While the sun's gravity keeps the planets in orbit, their gravity also pulls on the sun, causing it and everything else in the solar system to orbit around a mutual balance point called the barycenter—the true center of the solar system.

Listen to an in-depth conversation on the links between Parkinson's disease and herbicide exposure and the challenging pace of scientific investigation.

Studies suggest when you sleep is as important as how much you get, and syncing with your circadian rhythms may lead to less fatigue and improved long-term health outcomes

Exploring the Larry Bird punch that almost changed March Madness

Explore our favorite visualization of the immense scale of space, from an astronaut to the size of the observable universe

Play the role of a student in a game where you try to navigate college and remain debt-free, selecting different income levels, high school experience, race, ethnicity, and more.

Fireworks make a loud booming sound after exploding due to air expanding faster than the speed of sound.

Warren Buffett's former professor Benjamin Graham is known as the 'father of value investing,' a strategy in which investors seek to buy stocks trading below their intrinsic worth.

Fear or disgust related to clusters of holes and cracks, called trypophobia, may stem from evolutionary processes to help us avoid pathogens.

A vending machine run with Anthropic's AI went out of business after it was convinced to give away items for free and sell a video game console.

SpongeBob exemplifies Aristotle's philosophy for living well because he understands that happiness doesn't come from external factors like money, recognition, or power.

Clever Hans was a 1900s horse that was believed to be able to solve math equations, tell time, and read and comprehend German, until a psychology student discovered how he got his answers.

The Mona Lisa's celebrity status and repeated restorations have obscured what made the painting so revolutionary for its time

The Nasdaq's 'Magnificent 7' companies are responsible for roughly 40% of the Nasdaq 100 index's gains, while the remaining 93 companies account for the other 60%.

While atoms are normally made of protons, neutrons, and electrons, exotic ones have been built with antimatter—alternate versions of normal matter that live for fractions of a second and are about a billion times as rare.

The rivalry between Alexander Hamilton and Thomas Jefferson centered on federalism—the question of how much power the federal government should hold relative to the states.

Famed poet TS Eliot rejected the manuscript for George Orwell's political fable 'Animal Farm,' writing that its criticism of authoritarianism was not 'the right point of view.'

Waves off the coast of Nazaré, Portugal, can reach over 100 feet and are caused by the area's deep underwater canyon geography