Tipping Points: What Wall Street and Nature Have in Common

Clara Moskowitz

Date: 02 September 2009 Time: 12:42 PM ET

When a big change is coming – be it in ocean circulation patterns, wildlife populations, or even the global economy – it is often heralded by telltale signs, scientists have found.

In many man-made and natural systems, conditions reach a tipping point when a major transition occurs and the system shifts from one state to another. Now researchers say they can begin to predict these tipping points by searching for universal early warning signs.

"At first we were surprised that yes, actually critical transitions in the brain could have a fundamental similarity to critical transitions in financial markets or ecology," said lead researcher Marten Scheffer of Wageningen University in the Netherlands. "It’s a radical idea but when you think about it, it makes sense. Whatever system it is, if it has a tipping point, the universal laws of behavior for dynamical systems apply."

The researchers reviewed data from many different types of systems, including ecological systems such as the Earth's climate and ocean patterns, economic systems such as global stock market patterns, as well as medical systems in the human body such as asthma attacks, epileptic seizures and migraines.

In each of these examples, the scientists found that tipping points occurred and conditions changed dramatically over a relatively short period of time.

"Most systems change gradually most of the time, and tipping points are the exception," Scheffer told LiveScience. "But they are a very interesting exception, because they usually imply radical change."

Warning signs

One of the common warning signs of an impending tipping point is when a system takes longer to recover to equilibrium after it is disturbed. Most systems exist in temporarily stable states of equilibrium. If the system is perturbed by some force and pushed in a new direction, it usually moves back toward equilibrium quickly. But if the system is approaching a tipping point, it tends to take longer to recover its balance.

Another universal warning sign is when fluctuations in the system slow down. For example, in a climate approaching a tipping point, the weather tends to look more similar day to day leading up to the big change. In a brain before an epileptic seizure, neighboring patches of neurons look more like each other than they would in a regular brain. Prior to major economic change, stock markets in different areas start to act similarly to each other.

While fluctuations take longer in these systems, they often are greater in magnitude. That is, under normal circumstances fluctuations tend to be short and small. When a drastic transition approaches, conditions fluctuate between greater extremes, and the fluctuations take longer to pass.

"Close to a tipping point the system becomes more inert," Scheffer said. "If you displace it, there is less of a tendency to come to its own equilibrium value."

The scientists were excited to find connections between such vastly different systems, and hope to eventually apply their work toward practical early warning systems for, say, a seizure or a stock market crash.

"There is a lot of work still do to do when it comes to practical applications," Scheffer said. "That’s far from easy. It's really an area of research that is in an exciting early development."

The research, which is detailed in the Sept. 3 issue of the journal Nature, was supported by the National Science Foundation's Division of Environmental Biology and Division of Ocean Sciences.