Economics made simple with physics models (Vol. 48 No. 2)
Snapshot of the study of economic phenomena using the tools of physics
How would you go about understanding how markets can suddenly be gripped by panic? To physicists, using a model originally developed to explain magnetism might make sense. Yet, economists may find this extremely counter-intuitive. Both physical and economic phenomena may possess universal features that could be uncovered using the tools of physics. The principal difference is that in economic systems — unlike physical ones — current actions may be influenced by the perception of future events. This European Physical Journal Special Topics issue examines the question as to whether econophysics, a physics-based approach to understanding economic phenomena, is more useful and desirable than conventional economics theories. One of the features emerging from the issue is that the much coveted idea of universality may be the exception rather than the rule in the economic and the social world. Also, many of the originally proposed models of econophysics can be argued to be simplistic rather than simple. Most importantly, a clear-cut demonstration of superiority of econophysics models over standard economics models has yet to be delivered.
S. Sinha, A. S. Chakrabarti and M. Mitra, Can economics be a physical science? Eur. Phys. J. ST 225 Issue 17-18 (2016)