Is economics the new physics?

I heard of this discipline a little more than a year ago, it is the physics of finance and markets. It attempts to separate itself from the neoclassical realm of economics and apply empirical methods of research into economics.

I recently read Physics Today and in the most recent issue several readers had sent in opinions regarding the topic of these mathematical models. They were letters to the editor no longer than a couple paragraphs, but they extinguished some interesting criteria for determining econophysics place. Physicist, as one reader stated, attempt to prove the existence of physical phenomena and study its charactersitics (ie trends and other properties). Although this particular reader was making the case against econophysics I enjoy this expert because I believe it is true: physicist attempt to offer proofs of physical phenomena, study and explain these phenomena. So why not a stock market ?

By and large, econphysics is simply mathematical modeling: complexity, chaos and statistical mechanics. There is a growing number of physicists (statistical, non-linear and of the sorts) who are treating econophyics as a physics discipline. In fact, in that same issue of Physics Today there was a listing in the back for a qualified researcher to make mathematical models of the stock market, and the qualification was a PhD in either Computer Science, Statistics or Physics or Astronomy. There is also the little known fact that PhD's in the astrophyics department at MIT do not become astrophysicist (for the large majority) but instead use their skills in physics and math to make mathematical models for Wall Street.

All said, is economics the new physics?

Here are a few links to give you an idea of what econophysics is (to the best of my ability):

University of Houston
Book Listings
Wiki


[edit on 29-6-2006 by enaught]

[edit on 29-6-2006 by enaught]

[edit on 29-6-2006 by enaught]

I haven't heard of econophyiscs before, but from the wikipedia description, it sounds like normal economics to me, just using some of the same math that physics uses. Except for being more quantitative than economics usually is, I don't really see how this is different, myself.

Since both disciplines are fundamentally expressed through statistical methods it makes sense that a certain amount of crossover between the disciplines could take place.

I worked at CERN for four years as a particle physicist and the amount of people who leave our subject for the banks in Zurich is staggering. Then they appear three years later with their Porsches and Manhatten apartments!

I have always considered economics to be the physics of civilisation. Just as physics is a toll for exploring and explaining tye natural world, Economics is a tool for exploring and explaining civilisation.

Yes, in graduate school they are classes called "quantum finances" just as an example. One of my good friends is getting his PhD in the spring in condensed matter physics, and plans on going into finances. He will be filthy rich for sure.