MODELING COMPLEX SYSTEMS FOR PUBLIC POLICIES Editors Bernardo Alves Furtado Patrícia A. M. Sakowski Marina H. Tóvolli MODELING COMPLEX SYSTEMS FOR PUBLIC POLICIES Editors Bernardo Alves Furtado Patrícia A. M. Sakowski Marina H. Tóvolli Federal Government of Brazil Secretariat of Strategic Affairs of the Presidency of the Republic Minister Roberto Mangabeira Unger A public foundation affiliated to the Secretariat of Strategic Affairs of the Presidency of the Republic, Ipea provides technical and institutional support to government actions – enabling the formulation of numerous public policies and programs for Brazilian development – and makes research and studies conducted by its staff available to society. President Jessé José Freire de Souza Director of Institutional Development Alexandre dos Santos Cunha Director of Studies and Policies of the State, Institutions and Democracy Daniel Ricardo de Castro Cerqueira Director of Macroeconomic Studies and Policies Cláudio Hamilton Matos dos Santos Director of Regional, Urban and Environmental Studies and Policies Marco Aurélio Costa Director of Sectoral Studies and Policies, Innovation, Regulation and Infrastructure Fernanda De Negri Director of Social Studies and Policies André Bojikian Calixtre Director of International Studies, Political and Economic Relations Brand Arenari Chief of Staff José Eduardo Elias Romão Chief Press and Communications Officer João Cláudio Garcia Rodrigues Lima URL: http://www.ipea.gov.br Ombudsman: http://www.ipea.gov.br/ouvidoria MODELING COMPLEX SYSTEMS FOR PUBLIC POLICIES Editors Bernardo Alves Furtado Patrícia A. M. Sakowski Marina H. Tóvolli Brasília, 2015 © Institute for Applied Economic Research – ipea 2015 Modeling complex systems for public policies / editors: Bernardo Alves Furtado, Patrícia A. M. Sakowski, Marina H. Tóvolli. – Brasília : IPEA, 2015. 396 p. : il., gráfs. color. Includes bibliographical references. ISBN: 978-85-7811-249-3 1. Public policies. 2. Development Policy. 3. Complex Systems. 4. Network Analysis. 5. Interaction Analysis. 6. Planning Methods. I. Furtado, Bernardo Alves. II. Sakowski, Patrícia A. M. III. Tóvolli, Marina H. IV. Institute for Applied Economic Research. CDD 003 The opinions expressed in this publication are of exclusive responsibility of the authors, not necessarily expressing the official views of the Institute for Applied Economic Research and the Secretariat of Strategic Affairs of the Presidency. Reproduction of this text and the data it contains is allowed as long as the source is cited. Reproductions for commercial purposes are prohibited. Cover photo National Aeronautics and Space Administration (Nasa) Available at: https://www.flickr.com/photos/nasa2explore/8380847362 CONTENTS FOREWORD ...............................................................................................7 PREFACE.....................................................................................................9 PART I COMPLEXITY: THEORY, METHODS AND MODELING CHAPTER 1 A COMPLEXITY APPROACH FOR PUBLIC POLICIES ...........................................17 Bernardo Alves Furtado Patrícia Alessandra Morita Sakowski Marina Haddad Tóvolli CHAPTER 2 COMPLEX SYSTEMS: CONCEPTS, LITERATURE, POSSIBILITIES AND LIMITATIONS ..37 William Rand CHAPTER 3 METHODS AND METHODOLOGIES OF COMPLEX SYSTEMS ...............................55 Miguel Angel Fuentes CHAPTER 4 SIMULATION MODELS FOR PUBLIC POLICY.....................................................73 James E. Gentile Chris Glazner Matthew Koehler CHAPTER 5 OPERATIONALIZING COMPLEX SYSTEMS ........................................................85 Jaime Simão Sichman PART II OBJECTS OF PUBLIC POLICY AND THE COMPLEX SYSTEMS CHAPTER 6 UNDERSTANDING THE ENVIRONMENT AS A COMPLEX, DYNAMIC NATURAL-SOCIAL SYSTEM: OPPORTUNITIES AND CHALLENGES IN PUBLIC POLICIES FOR PROMOTING GLOBAL SUSTAINABILITY .........................127 Masaru Yarime Ali Kharrazi CHAPTER 7 THE COMPLEX NATURE OF SOCIAL SYSTEMS ................................................141 Claudio J. Tessone CHAPTER 8 THE ECONOMY AS A COMPLEX OBJECT .......................................................169 Orlando Gomes CHAPTER 9 MODELING THE ECONOMY AS A COMPLEX SYSTEM .....................................191 Herbert Dawid CHAPTER 10 CITIES AS COMPLEX SYSTEMS .....................................................................217 Luís M. A. Bettencourt PART III COMPLEX SYSTEMS APPLICATIONS TO OBJECTS OF PUBLIC POLICIES CHAPTER 11 COMPLEXITY THEORY IN APPLIED POLICY WORLDWIDE .................................239 Yaneer Bar-Yam CHAPTER 12 COMPLEX SYSTEMS MODELLING IN BRAZILIAN PUBLIC POLICIES ...................261 Bernardo Mueller CHAPTER 13 COMPLEXITY METHODS APPLIED TO TRANSPORT PLANNING .........................279 Dick Ettema CHAPTER 14 EDUCATION AS A COMPLEX SYSTEM: IMPLICATIONS FOR EDUCATIONAL RESEARCH AND POLICY .......................................................301 Michael J. Jacobson CHAPTER 15 COMPLEX APPROACHES FOR EDUCATION IN BRAZIL ...................................315 Patrícia A. Morita Sakowski Marina H. Tóvolli CHAPTER 16 OVERCOMING CHAOS: LEGISLATURES AS COMPLEX ADAPTIVE SYSTEMS ........337 Acir Almeida CHAPTER 17 THE TERRITORY AS A COMPLEX SOCIAL SYSTEM ..........................................363 Marcos Aurélio Santos da Silva FOREWORD Policy is the means and end of the Institute for Applied Economic Research. Policy evaluation, policy design and monitoring along with advising the State using the best scientific knowledge are at the core of the Institute. Thus, tools that enable policy-makers and academia alike to foster a deeper understanding of policy mechanisms and their intertwined, asynchronous, and spatially-bound effects are at the forefront of our interests. Complexity is a relatively new approach to science, which has integrated knowledge from different fields, trying to understand collective behavior in living systems and complex phenomena such as emergence. It has brought important insights for science, but little has been done trying to explore the policy aspects of this new approach both in Brazil and worldwide. This book tries to help building this bridge between complexity and public policies, by bringing together an international group of prominent researchers, stemming from the very Santa Fe Institute, University of Maryland, University of Tokyo, University of Sidney, ETH Zurich, Bielefeld University, Utrecht University, New England Complex Systems Institute, Polytechnic Institute of Lisbon, MI- TRE Corporation, University of Brasilia, University of São Paulo and EMBRAPA and Ipea researchers. By introducing the major concepts, methods and state-of- the-art research in the area, the book is intended to be a seminal contribution to the application of the complexity approach to public policies, and a gateway for the world of complexity. As an Institute whose middle name is policy, I think it is high time for us to look more and more at the policy aspects of this new approach and to explore the insights and applications they can bring into policy making and analysis. You are invited to join us in this journey. Jessé Souza President of the Institute for Applied Economic Research PREFACE Scott E. Page1 In Norman Juster’s classic The Phantom Toolbooth, the protagonist Milo and his companion, a large dog named Tock, cannot figure out how to get their wagon to move forward. A Duke arrives and tells them that if the wagon to go, they must sit quietly, that it (the wagon) goes without saying. The same might be thought about the relevance of complexity theory to public policy – that it too goes without saying. Given the complexity of the political and bureaucratic processes that generate policies and the complexity of the systems within which most policies are applied, it would seem that complexity’s relevance should go without saying. Yet, that’s not the case. The patchwork of models, concepts, and ideas that comprise the field of complexity studies rarely enter into policy discussions and when they do, they primarily engage at the fringes.2 Therefore, unlike Tock and Milo, complexity scholars cannot sit quietly. If complexity scholars want their ideas to advance and improve public policy, they must speak clearly and loudly. In this volume, many leading scholars choose to do just that. Their impact should be substantial. What follows includes contributions from many of the leading scholars in the field of complex social systems. It should then come as no surprise that the volume achieves multiple, ambitious goals: it introduces the concepts and tools of complex systems, it demonstrates complexity theory’s relevance to public policy, it contrasts the complexity approach to public policy to traditional methods, and, finally, it presents case studies and examples that demonstrate proof of concept by focusing on specific policy domains in Brazil and elsewhere. So what are complex systems? Complex systems consist of diverse, adaptive actors who interact with their neighbors and over networks. These interactions produce both additive outcomes – aggregate oil consumption or the average price of #2 red wheat – as well as emergent phenomena such as traveling waves in traffic patterns, stock market crashes, and even Spanish culture. These aggregate 1. University of Michigan, Santa Fe Institute. 2. Climate change models, which might be seen as a counterexample, can be seen as a type of complex system model, but they tend to be mash ups of standard economic models with geophysical models, lacking many of the