Taking the pulse of the economy
At a first glance, there seems to be very little linking human heart rate and the stock index level, unless of course one is a trader or has invested a considerable amount of money... There may, however, be a much closer and physically/fundamentally more meaningful link than meets the eye between the heartbeat neuroregulation and market self-regulation. To support this claim, we draw parallels between two complex systems: that of the heart, as observed through the rate of heartbeat, and the economy, measured by the stock index record. As a suggestive illustration, we draw a comparision using particularly sensitive effects, the `crash' and `rally'. We argue that even though these effects clearly belong to the dynamical range of the phenomenon, they may, in fact follow a different mechanism than the bulk of the stochastic behaviour. In particular, we suggest that an economic system under prolonged stress may have it in its nature to plunge to lower performance levels but recover without suffering damage. Similarly, the ultimate stress situation of fetal heartbeat during labour provides a conceptual basis for accommodating heavy crashes. From this perspective we also suggest a different strategy for evaluating crashes and post crash recovery in order to diagnose, and (ultimately) make a prognosis of, `economic health', in addition to monitoring the stock index value.
|MODELS AND PRINCIPLES (acm H.1), PATTERN RECOGNITION (acm I.5), MISCELLANEOUS (acm J.m), PHYSICAL SCIENCES AND ENGINEERING (acm J.2), DATA STORAGE REPRESENTATIONS (acm E.2)|
|Fractals (msc 28A80), Pattern recognition, speech recognition (msc 68T10), Searching and sorting (msc 68P10)|
|Information (theme 2)|
|Information Systems [INS]|
Struzik, Z.R. (2003). Taking the pulse of the economy. Information Systems [INS]. CWI.