Activation Energies and Uncertainty — LessWrong

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Activation Energies and Uncertainty

by [anonymous]

1st Nov 2017

2 min read

21

21

Activation Energies and Uncertainty

1William the Kiwi

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Promoted to frontpage for being fairly short, having useful diagrams and making a point relevant to the current conversation.

[-]William the Kiwi3y10

I would like to thank you, whpearson, for writing this post as I found it very validating to read.

I realise this may be considered a Necro post as the thread is 5 years old, however I wanted to show my appreciation to you for writing it. I have often thought of many choices I make in my life in terms of activation energy and freed energy, when deciding to make them. I have also used it to estimate the likelihood of society engaging in behaviours, and the viability of potential business projects. Having read your post and seen how you applied the concepts (activation and freed energy) to something outside of chemistry, namely economics, made me feel validated in my own behaviours of doing a very similar thing. I realize others may have also written about this concept, but yours is the first I have read. If you would like to talk more about this concept and related ones, I would be happy to have a conversation.

Thank you for writing this post.

Interesting post.

This may also help explain some of the problems involved with centralizing decision making e.g. making all medical innovations go through the expensive FDA process. Saving 100 babies lives per year is illegal for this reason because no-one can afford the approvals.

If you have decentralized decision making, only one person/firm of millions has to overcome a potential barrier. Centralized decision making means that a particular decision making body has to overcome it.

[+][comment deleted]8y10

Curated and popular this week

From "An Equilibrium of No Free Energy"

We can see the notion of an inexploitable market as generalizing the notion of an efficient market as follows: in both cases, there’s no free energy inside the system. In both markets, there’s a horde of hungry organisms moving around trying to eat up all the free energy. In the efficient market, every predictable price change corresponds to free energy (easy money) and so the equilibrium where hungry organisms have eaten all the free energy corresponds to an equilibrium of no predictable price changes.

This idea resonates with me and I have been thinking about a related concept for a while now. If you should't expect to get easy money, what then is hard money and can you get that?

Obligatory: Not an economist, lapsed chemist.

Chemistry has a handy concept called the activation energy, which I shall lean on as an intuition pump. This is the amount of energy you need to start a reaction going. One salient example is a spark landing on some gunpowder, you need the small amount of energy from the spark to start the reaction, but once it is started it is self-sufficient. The energy from the initial decomposition of the fragment of gunpowder in to gases is enough to kick the other fragments over the activation energies and decompose them etc.

There are handy energy diagrams that chemists use. The below represents an energy releasing (or Exothermic) reaction:

It is exothermic because the net energy of the end constituents is less than energy of the starting constituents.

The net energy released is the Freed Energy- Activation Energy. This is your payoff, your hard money.

So hard money, in this analogy, is money trapped behind a large activation energy. Things like spinning up new rocket companies fall under this.

For actually real world economies it is worse, because we have large amounts of uncertainty in the system. When trying to do something hard and new you do not know the activation energy or the freed energy. The more these levels are known or can be reasoned about, the more you should expect investors or other economic actors to have put up the money to get over the activation energy. You might be able to exploit the fact knowledge is not spread equally through economic actors, normal rich people do not have the background knowledge to be able to evaluate rocket engineering ideas.

So if you think you see lots of easy unexploited energy somewhere you should maybe expect that the activation energy is higher than you think or there to be more uncertainty in the pay off than you think.

On the other hand, if what you are doing is very uncertain and has a large activation energy, things are different. You might be on a path to some money, but then again it is not an easy path and you might end up chasing a mirage.

There are other paths you can take to try and get society to get the hard money. One is make catalysts, that is something that reduces the activation energy by its existence. Examples of economic catalysts are computers or the banking system. Although those have their own equilibria, they are somewhat improving over time, so it might make your hard money easier to get (you may not get it, if someone else has more energy to get over the activation energy hurdle). The other is to try and reduce the uncertainty of the activation energy or the freed energy so that you might better convince big economic actors of the opportunity.