statistical mechanics vs economics

Nov28-04, 06:03 AM

<jabberwocky><div class="vbmenu_control"><a href="jabberwocky:;" onClick="newWindow=window.open('','usenetCode','to olbar=no,location=no,scrollbars=yes,resizable=yes, status=no,width=650,height=400'); newWindow.document.write('<HTML><HEAD><TITLE>Usene t ASCII</TITLE></HEAD><BODY topmargin=0 leftmargin=0 BGCOLOR=#F1F1F1><table border=0 width=625><td bgcolor=midnightblue><font color=#F1F1F1>This Usenet message\'s original ASCII form: </font></td></tr><tr><td width=449><br><br><font face=courier><UL><PRE>Hello to everybody,\n\nI am new in this newsletter. I have a question, and I would like to\nknow if somebody has some input on it.\n\nThe question is the following:\n\nfor a perfect monoatomic gas, the entropy is of the form:\n\nS(U,V,N) = 3/2 * N * kb * log (U/N) + N*kb* log(V/N) + N*kb*c\n\nThis function is additive, i.e., S(aU,aV,aN) = aS(U,V,N)\n\nwith first partial derivatives (with respect to U and V) that are\npositive, and with second partial derivatives (with respect to U and\nV) that are negative.\n\nAlso, some conditions for S when U and V go to 0 and infinity apply.\n\nThis is standard, I think.\n\nNow, economics: in economics there is a very basic principle that\nstates that what they call the production function, Y (aka GDP), that\ndepends on 2 variables (K and L), has the properties that the first\npartial derivatives are positive, the second partial derivatives are\nnegative, they have some conditions for the first partial derivatives\nwhen K and L go to 0 and infinity, and Y is additive.\n\nSo, apparently the analogy is between these two systems is high.\nHowever, the main example in economics for Y is what they call the\nCobb-Douglas production function: Y = A*L^b * K^(1-b), where A and b\nare constants.\n\nIt seems that there is an analogy between log(Y) and S, where S is the\nentropy for a perfect gas. However, is there some physical system that\nyou know whose entropy is directly of the form of A*U^b * V^(1-b)? (it\nshould be a simple system, not with 3 variables, like N, U and V, but\nonly with two, i.e., U and V, whatever the interpretation these U and\nV can have).\n\nThis would be interesting, because the economists always have problems\nin relating microeconomy with macroeconomy. But statistical mechanics\njust does that.\n\nI do not know if anybody have any comments and / or time to answer my\nquestion.\n\nThank you\n\nJordi\n\n</UL></PRE></font></td></tr></table></BODY><HTML>');"> <IMG SRC=/images/buttons/ip.gif BORDER=0 ALIGN=CENTER ALT="View this Usenet post in original ASCII form">  View this Usenet post in original ASCII form </a></div><P></jabberwocky>Hello to everybody,

I am new in this newsletter. I have a question, and I would like to
know if somebody has some input on it.

The question is the following:

for a perfect monoatomic gas, the entropy is of the form:

S(U,V,N)

log

LaTeX Code: (U/N) + N*kb* log(V/N) + N*kb*c

This function is additive, i.e., S(aU,aV,aN)

with first partial derivatives (with respect to U and V) that are
positive, and with second partial derivatives (with respect to U and
V) that are negative.

Also, some conditions for S when U and V go to and infinity apply.

This is standard, I think.

Now, economics: in economics there is a very basic principle that
states that what they call the production function, Y (aka GDP), that
depends on 2 variables (K and L), has the properties that the first
partial derivatives are positive, the second partial derivatives are
negative, they have some conditions for the first partial derivatives
when K and L go to and infinity, and Y is additive.

So, apparently the analogy is between these two systems is high.
However, the main example in economics for Y is what they call the
Cobb-Douglas production function:

where A and b
are constants.

It seems that there is an analogy between log(Y) and S, where S is the
entropy for a perfect gas. However, is there some physical system that
you know whose entropy is directly of the form of

? (it
should be a simple system, not with 3 variables, like N, U and V, but
only with two, i.e., U and V, whatever the interpretation these U and
V can have).

This would be interesting, because the economists always have problems
in relating microeconomy with macroeconomy. But statistical mechanics
just does that.

I do not know if anybody have any comments and / or time to answer my
question.

Thank you

Jordi

Nov30-04, 12:47 PM

<jabberwocky><div class="vbmenu_control"><a href="jabberwocky:;" onClick="newWindow=window.open('','usenetCode','to olbar=no,location=no,scrollbars=yes,resizable=yes, status=no,width=650,height=400'); newWindow.document.write('<HTML><HEAD><TITLE>Usene t ASCII</TITLE></HEAD><BODY topmargin=0 leftmargin=0 BGCOLOR=#F1F1F1><table border=0 width=625><td bgcolor=midnightblue><font color=#F1F1F1>This Usenet message\'s original ASCII form: </font></td></tr><tr><td width=449><br><br><font face=courier><UL><PRE>Yahoo search for "econophysics": about 11,100 hits.\n\n</UL></PRE></font></td></tr></table></BODY><HTML>');"> <IMG SRC=/images/buttons/ip.gif BORDER=0 ALIGN=CENTER ALT="View this Usenet post in original ASCII form">  View this Usenet post in original ASCII form </a></div><P></jabberwocky>Yahoo search for "econophysics": about 11,100 hits.

Nov30-04, 12:48 PM

<jabberwocky><div class="vbmenu_control"><a href="jabberwocky:;" onClick="newWindow=window.open('','usenetCode','to olbar=no,location=no,scrollbars=yes,resizable=yes, status=no,width=650,height=400'); newWindow.document.write('<HTML><HEAD><TITLE>Usene t ASCII</TITLE></HEAD><BODY topmargin=0 leftmargin=0 BGCOLOR=#F1F1F1><table border=0 width=625><td bgcolor=midnightblue><font color=#F1F1F1>This Usenet message\'s original ASCII form: </font></td></tr><tr><td width=449><br><br><font face=courier><UL><PRE>Jordi Molins wrote:\n> Hello to everybody,\n>\n> I am new in this newsletter. I have a question, and I would like to\n> know if somebody has some input on it.\n>\n> The question is the following:\n....\n> Now, economics: in economics there is a very basic principle that\n> states that what they call the production function, Y (aka GDP), that\n> depends on 2 variables (K and L), has the properties that the first\n> partial derivatives are positive, the second partial derivatives are\n> negative, they have some conditions for the first partial derivatives\n> when K and L go to 0 and infinity, and Y is additive.\n>\n> So, apparently the analogy is between these two systems is high.\n> However, the main example in economics for Y is what they call the\n> Cobb-Douglas production function: Y = A*L^b * K^(1-b), where A and b\n> are constants.\n\nThe Cobb-Douglas production function is merely a mathematical convenience in\nacademic econometrics. The "constant returns to scale" aspect is built into\nthe function, and is unrealistic. In real life, scale-free network theory\nhas much more to offer (models of nodes which grow and then wither).\n\n</UL></PRE></font></td></tr></table></BODY><HTML>');"> <IMG SRC=/images/buttons/ip.gif BORDER=0 ALIGN=CENTER ALT="View this Usenet post in original ASCII form">  View this Usenet post in original ASCII form </a></div><P></jabberwocky>Jordi Molins wrote:
> Hello to everybody,
>
> I am new in this newsletter. I have a question, and I would like to
> know if somebody has some input on it.
>
> The question is the following:
....
> Now, economics: in economics there is a very basic principle that
> states that what they call the production function, Y (aka GDP), that
> depends on 2 variables (K and L), has the properties that the first
> partial derivatives are positive, the second partial derivatives are
> negative, they have some conditions for the first partial derivatives
> when K and L go to and infinity, and Y is additive.
>
> So, apparently the analogy is between these two systems is high.
> However, the main example in economics for Y is what they call the
> Cobb-Douglas production function:

where A and b
> are constants.

The Cobb-Douglas production function is merely a mathematical convenience in
academic econometrics. The "constant returns to scale" aspect is built into
the function, and is unrealistic. In real life, scale-free network theory
has much more to offer (models of nodes which grow and then wither).

Dec1-04, 11:05 AM

<jabberwocky><div class="vbmenu_control"><a href="jabberwocky:;" onClick="newWindow=window.open('','usenetCode','to olbar=no,location=no,scrollbars=yes,resizable=yes, status=no,width=650,height=400'); newWindow.document.write('<HTML><HEAD><TITLE>Usene t ASCII</TITLE></HEAD><BODY topmargin=0 leftmargin=0 BGCOLOR=#F1F1F1><table border=0 width=625><td bgcolor=midnightblue><font color=#F1F1F1>This Usenet message\'s original ASCII form: </font></td></tr><tr><td width=449><br><br><font face=courier><UL><PRE>Jordi Molins <jordi_molins@hotmail.com> wrote:\n\n> This would be interesting, because the economists always have problems\n> in relating microeconomy with macroeconomy. But statistical mechanics\n> just does that.\n>\n> I do not know if anybody have any comments and / or time to answer my\n> question.\n\nYour question is not a very original one.\nEhrenfest already thought about the analogy\nbetween the optimum theorems of classical economics\nand Boltzmann\'s H-theorem. (on which he was expert)\n\nHe inspired his student Jan Tinbergen\nto start working on these kind of problems.\nAs a result Tinbergen wrote his PhD thesis (Leyden 1930)\non "Minimum Problems in Physics and Economics"\n\nAs is well known, Tinbergen went on to become a full-time economist.\n(and winner of the first so-called Nobel prize for economics.)\n\nHowever, the relation between real-world economics\nand the statistical mechanics of gas molecules\nis not that straightforward,\n\nJan\n\n</UL></PRE></font></td></tr></table></BODY><HTML>');"> <IMG SRC=/images/buttons/ip.gif BORDER=0 ALIGN=CENTER ALT="View this Usenet post in original ASCII form">  View this Usenet post in original ASCII form </a></div><P></jabberwocky>Jordi Molins <jordi_molins@hotmail.com> wrote:

> This would be interesting, because the economists always have problems
> in relating microeconomy with macroeconomy. But statistical mechanics
> just does that.
>
> I do not know if anybody have any comments and / or time to answer my
> question.

Your question is not a very original one.
Ehrenfest already thought about the analogy
between the optimum theorems of classical economics
and Boltzmann's H-theorem. (on which he was expert)

He inspired his student Jan Tinbergen
to start working on these kind of problems.
As a result Tinbergen wrote his PhD thesis (Leyden 1930)
on "Minimum Problems in Physics and Economics"

As is well known, Tinbergen went on to become a full-time economist.
(and winner of the first so-called Nobel prize for economics.)

However, the relation between real-world economics
and the statistical mechanics of gas molecules
is not that straightforward,

Jan

Dec2-04, 06:12 AM

<jabberwocky><div class="vbmenu_control"><a href="jabberwocky:;" onClick="newWindow=window.open('','usenetCode','to olbar=no,location=no,scrollbars=yes,resizable=yes, status=no,width=650,height=400'); newWindow.document.write('<HTML><HEAD><TITLE>Usene t ASCII</TITLE></HEAD><BODY topmargin=0 leftmargin=0 BGCOLOR=#F1F1F1><table border=0 width=625><td bgcolor=midnightblue><font color=#F1F1F1>This Usenet message\'s original ASCII form: </font></td></tr><tr><td width=449><br><br><font face=courier><UL><PRE>"Paul Danaher" <watwinc@verizon.net> wrote in message news:<eMwqd.4717\\$6o5.263@trnddc08>...\n&gt ; Jordi Molins wrote:\n> > Hello to everybody,\n> >\n> > I am new in this newsletter. I have a question, and I would like to\n> > know if somebody has some input on it.\n> >\n> > The question is the following:\n> ...\n> > Now, economics: in economics there is a very basic principle that\n> > states that what they call the production function, Y (aka GDP), that\n> > depends on 2 variables (K and L), has the properties that the first\n> > partial derivatives are positive, the second partial derivatives are\n> > negative, they have some conditions for the first partial derivatives\n> > when K and L go to 0 and infinity, and Y is additive.\n> >\n> > So, apparently the analogy is between these two systems is high.\n> > However, the main example in economics for Y is what they call the\n> > Cobb-Douglas production function: Y = A*L^b * K^(1-b), where A and b\n> > are constants.\n>\n> The Cobb-Douglas production function is merely a mathematical convenience in\n> academic econometrics. The "constant returns to scale" aspect is built into\n> the function, and is unrealistic. In real life, scale-free network theory\n> has much more to offer (models of nodes which grow and then wither).\n\nPaul, I understand your point. However, it is good to show a bit of\nhumility. Economists are not stupid. The fact that physics reaches a\nmuch higher precision in its forecasts than economics is not due to\nthe fact that physicists are more intelligent than the economists, but\njust that they have been luckier when they have chosen their thesis\nsubject.\nWith the previous argument I am trying to say that it makes sense to\ntry to reproduce what the economists have done in the past via\n"physics" language before starting to generate new models and\nextensions. In general, economists are happy with Cobb-Douglas-like\nproduction functions (of course, with extensions), so why not accept\nthem?\nAlso, and referring to also the first reply to my email, econophysics\nrefers more to the financial aspect of economics. However, the\nrelationship of "old-fashioned" macroeconomics to physics has been\nmuch less studied.\nThen, I repeat my question: is there some physical system whose\nentropy can be describe by a Cobb-Douglas-like entropy? Thank you.\n\n</UL></PRE></font></td></tr></table></BODY><HTML>');"> <IMG SRC=/images/buttons/ip.gif BORDER=0 ALIGN=CENTER ALT="View this Usenet post in original ASCII form">  View this Usenet post in original ASCII form </a></div><P></jabberwocky>"Paul Danaher" <watwinc@verizon.net> wrote in message news:<eMwqd.4717$6o5.263@trnddc08>...
> Jordi Molins wrote:
> > Hello to everybody,
> >
> > I am new in this newsletter. I have a question, and I would like to
> > know if somebody has some input on it.
> >
> > The question is the following:
> ...
> > Now, economics: in economics there is a very basic principle that
> > states that what they call the production function, Y (aka GDP), that
> > depends on 2 variables (K and L), has the properties that the first
> > partial derivatives are positive, the second partial derivatives are
> > negative, they have some conditions for the first partial derivatives
> > when K and L go to and infinity, and Y is additive.
> >
> > So, apparently the analogy is between these two systems is high.
> > However, the main example in economics for Y is what they call the
> > Cobb-Douglas production function:

where A and b
> > are constants.
>
> The Cobb-Douglas production function is merely a mathematical convenience in
> academic econometrics. The "constant returns to scale" aspect is built into
> the function, and is unrealistic. In real life, scale-free network theory
> has much more to offer (models of nodes which grow and then wither).

Paul, I understand your point. However, it is good to show a bit of
humility. Economists are not stupid. The fact that physics reaches a
much higher precision in its forecasts than economics is not due to
the fact that physicists are more intelligent than the economists, but
just that they have been luckier when they have chosen their thesis
subject.
With the previous argument I am trying to say that it makes sense to
try to reproduce what the economists have done in the past via
"physics" language before starting to generate new models and
extensions. In general, economists are happy with Cobb-Douglas-like
production functions (of course, with extensions), so why not accept
them?
Also, and referring to also the first reply to my email, econophysics
refers more to the financial aspect of economics. However, the
relationship of "old-fashioned" macroeconomics to physics has been
much less studied.
Then, I repeat my question: is there some physical system whose
entropy can be describe by a Cobb-Douglas-like entropy? Thank you.

Dec2-04, 06:17 AM

<jabberwocky><div class="vbmenu_control"><a href="jabberwocky:;" onClick="newWindow=window.open('','usenetCode','to olbar=no,location=no,scrollbars=yes,resizable=yes, status=no,width=650,height=400'); newWindow.document.write('<HTML><HEAD><TITLE>Usene t ASCII</TITLE></HEAD><BODY topmargin=0 leftmargin=0 BGCOLOR=#F1F1F1><table border=0 width=625><td bgcolor=midnightblue><font color=#F1F1F1>This Usenet message\'s original ASCII form: </font></td></tr><tr><td width=449><br><br><font face=courier><UL><PRE>J. J. Lodder wrote:\n> Jordi Molins <jordi_molins@hotmail.com> wrote:\n>\n> > This would be interesting, because the economists always have\nproblems\n> > in relating microeconomy with macroeconomy. But statistical\nmechanics\n> > just does that.\n> >\n> > I do not know if anybody have any comments and / or time to answer\nmy\n> > question.\n>\n> Your question is not a very original one.\n> Ehrenfest already thought about the analogy\n> between the optimum theorems of classical economics\n> and Boltzmann\'s H-theorem. (on which he was expert)\n>\n\nThe fact that some people (much more intelligent than me) have already\nlooked at the problem does not mean that *everything* in the\ninterconnexion between economics and physics has already been done.\n\nAlso, "the analogy between the optimum theorems of classical economics\nand Boltzmann\'s H-theorem" is (at least for me) not obviously the same\nkind of analogy I was trying to analyze: production function of\nCobb-Douglas type vs statistical mechanics of free particles. I repeat:\ndoes this ring the bell on somebody\'s head?\n\n> He inspired his student Jan Tinbergen\n> to start working on these kind of problems.\n> As a result Tinbergen wrote his PhD thesis (Leyden 1930)\n> on "Minimum Problems in Physics and Economics"\n>\n\nFinally, macroeconomics has evolved quite a lot since the 30s ... so,\nthere is still an opportunity window! ;->\n\n\n> As is well known, Tinbergen went on to become a full-time economist.\n> (and winner of the first so-called Nobel prize for economics.)\n>\n> However, the relation between real-world economics\n> and the statistical mechanics of gas molecules\n> is not that straightforward,\n\nNo, and for this reason I ask to wiser people than me for help.\n>\n> Jan\n\n</UL></PRE></font></td></tr></table></BODY><HTML>');"> <IMG SRC=/images/buttons/ip.gif BORDER=0 ALIGN=CENTER ALT="View this Usenet post in original ASCII form">  View this Usenet post in original ASCII form </a></div><P></jabberwocky>J. J. Lodder wrote:
> Jordi Molins <jordi_molins@hotmail.com> wrote:
>
> > This would be interesting, because the economists always have
problems
> > in relating microeconomy with macroeconomy. But statistical
mechanics
> > just does that.
> >
> > I do not know if anybody have any comments and / or time to answer
my
> > question.
>
> Your question is not a very original one.
> Ehrenfest already thought about the analogy
> between the optimum theorems of classical economics
> and Boltzmann's H-theorem. (on which he was expert)
>

The fact that some people (much more intelligent than me) have already
looked at the problem does not mean that *everything* in the
interconnexion between economics and physics has already been done.

Also, "the analogy between the optimum theorems of classical economics
and Boltzmann's H-theorem" is (at least for me) not obviously the same
kind of analogy I was trying to analyze: production function of
Cobb-Douglas type vs statistical mechanics of free particles. I repeat:
does this ring the bell on somebody's head?

> He inspired his student Jan Tinbergen
> to start working on these kind of problems.
> As a result Tinbergen wrote his PhD thesis (Leyden 1930)
> on "Minimum Problems in Physics and Economics"
>

Finally, macroeconomics has evolved quite a lot since the 30s ... so,
there is still an opportunity window! ;->

> As is well known, Tinbergen went on to become a full-time economist.
> (and winner of the first so-called Nobel prize for economics.)
>
> However, the relation between real-world economics
> and the statistical mechanics of gas molecules
> is not that straightforward,

No, and for this reason I ask to wiser people than me for help.
>
> Jan

Dec8-04, 06:54 AM

<jabberwocky><div class="vbmenu_control"><a href="jabberwocky:;" onClick="newWindow=window.open('','usenetCode','to olbar=no,location=no,scrollbars=yes,resizable=yes, status=no,width=650,height=400'); newWindow.document.write('<HTML><HEAD><TITLE>Usene t ASCII</TITLE></HEAD><BODY topmargin=0 leftmargin=0 BGCOLOR=#F1F1F1><table border=0 width=625><td bgcolor=midnightblue><font color=#F1F1F1>This Usenet message\'s original ASCII form: </font></td></tr><tr><td width=449><br><br><font face=courier><UL><PRE>Jordi Molins wrote:\n[..]\n\n> However, is there some physical system that\n> you know whose entropy is directly of the form of A*U^b * V^(1-b)?\n\n\nReminds me of adsorbtion on a surface.\n\nEntropy ~ N log( b^b * (1-b)^(1-b))\n\nWhere N is the number of adsorbion sites, and b is\nthe fraction that is occupied.\nBasically, this is just saying it is improbable\n(low entropy)\nthat all sites are occupied or all sites are empty.\n\nBut the analogy would require some relation between\nb and V, and b and U. You\'ll see this if you plot\na few functions in a spreadsheet.\n\n\nGerard\n\n</UL></PRE></font></td></tr></table></BODY><HTML>');"> <IMG SRC=/images/buttons/ip.gif BORDER=0 ALIGN=CENTER ALT="View this Usenet post in original ASCII form">  View this Usenet post in original ASCII form </a></div><P></jabberwocky>Jordi Molins wrote:
[..]

> However, is there some physical system that
> you know whose entropy is directly of the form of

?

Reminds me of adsorbtion on a surface.

Entropy ~ N log(

Where N is the number of adsorbion sites, and b is
the fraction that is occupied.
Basically, this is just saying it is improbable
(low entropy)
that all sites are occupied or all sites are empty.

But the analogy would require some relation between
b and V, and b and U. You'll see this if you plot
a few functions in a spreadsheet.

Gerard

Dec9-04, 02:03 AM

<jabberwocky><div class="vbmenu_control"><a href="jabberwocky:;" onClick="newWindow=window.open('','usenetCode','to olbar=no,location=no,scrollbars=yes,resizable=yes, status=no,width=650,height=400'); newWindow.document.write('<HTML><HEAD><TITLE>Usene t ASCII</TITLE></HEAD><BODY topmargin=0 leftmargin=0 BGCOLOR=#F1F1F1><table border=0 width=625><td bgcolor=midnightblue><font color=#F1F1F1>This Usenet message\'s original ASCII form: </font></td></tr><tr><td width=449><br><br><font face=courier><UL><PRE>Hmmm.... I think the two models you are looking at arent really related\nin any way bar their functional form. The CD production function is a\nVERY basic and hopeless tool to enable to one group of economists to\ndemonstrate their unrealistic view of how GDP can be modelled.\n\nModels created in the physical sciences often have their methodolgy\nrouted in experimental data, not observed data as in the social\nsciences. In your example how the entropy for a perfect monoatomic gas\ndirectly derived from some relationship is not how model making in\neconomics is performed.\n\nEconomics is full of examples where mathematical methods from physics\nhave been applied to attempt to encapulsate economic behavour but in\nreality the data generation process for the two sciences is too\ndifferent to justify this approach.\n\nOf much more interest is the use of econometric (and statistical\ntechniques) being developed for use on economic data, and their\napplication to physics, which I think will be directly useful to\ncertain experiments in the physical sciences.\n\nFor me, quantum mechanics and the radomness it displays mirrors in many\nrespects quantum behavour, where as this is relatively strange in\nphysics economists have been dealing with random actions since the days\nof Smtih, Ricardo and Malthus.\n\nI\'ve read many physics comments that forward a view saying because they\ncan\'t see the determinants of the seemingly random behavour they indeed\ndecide to call it random. In econometrics the situation is similar\nwith regard to macroeconomic variables (there are just too many\nvariables to add to a regression to perfectly model GDP), however\nrather than just saying its random behavour they are developing more\ncomplex statistical techniques of forecasting and analysing the so\ncalled randomness in an attempt to identify any trends and underlying\nrelationships (for example the progress in time series analysis\ntechniques by Granger). Furthermore the sucess of these new methods in\neconometrics in recent years demonstrates their potential to shine light\non what previously where thought as truely random variables.\n\nBecuase of the physical scienes ability to recreate experiments with a\nhigh degree of homogenity statistical tehniques similar to those\ndeployed in economtric analysis indeed prove useful to certain groups\nof physical science academics\n\n\nSORRY FOR THE LONG POST!\n\n------------------------------------------------------------------------\nThis post submitted through the LaTeX-enabled physicsforums.com\nTo view this post with LaTeX images:\nhttp://www.physicsforums.com/showthread.php?t=54419#post385364\n\n</UL></PRE></font></td></tr></table></BODY><HTML>');"> <IMG SRC=/images/buttons/ip.gif BORDER=0 ALIGN=CENTER ALT="View this Usenet post in original ASCII form">  View this Usenet post in original ASCII form </a></div><P></jabberwocky>Hmmm.... I think the two models you are looking at arent really related
in any way bar their functional form. The CD production function is a
VERY basic and hopeless tool to enable to one group of economists to
demonstrate their unrealistic view of how GDP can be modelled.

Models created in the physical sciences often have their methodolgy
routed in experimental data, not observed data as in the social
sciences. In your example how the entropy for a perfect monoatomic gas
directly derived from some relationship is not how model making in
economics is performed.

Economics is full of examples where mathematical methods from physics
have been applied to attempt to encapulsate economic behavour but in
reality the data generation process for the two sciences is too
different to justify this approach.

Of much more interest is the use of econometric (and statistical
techniques) being developed for use on economic data, and their
application to physics, which I think will be directly useful to
certain experiments in the physical sciences.

For me, quantum mechanics and the radomness it displays mirrors in many
respects quantum behavour, where as this is relatively strange in
physics economists have been dealing with random actions since the days
of Smtih, Ricardo and Malthus.

I've read many physics comments that forward a view saying because they
can't see the determinants of the seemingly random behavour they indeed
decide to call it random. In econometrics the situation is similar
with regard to macroeconomic variables (there are just too many
variables to add to a regression to perfectly model GDP), however
rather than just saying its random behavour they are developing more
complex statistical techniques of forecasting and analysing the so
called randomness in an attempt to identify any trends and underlying
relationships (for example the progress in time series analysis
techniques by Granger). Furthermore the sucess of these new methods in
econometrics in recent years demonstrates their potential to shine light
on what previously where thought as truely random variables.

Becuase of the physical scienes ability to recreate experiments with a
high degree of homogenity statistical tehniques similar to those
deployed in economtric analysis indeed prove useful to certain groups
of physical science academics

SORRY FOR THE LONG POST!

------------------------------------------------------------------------
This post submitted through the LaTeX-enabled physicsforums.com
To view this post with LaTeX images:
http://www.physicsforums.com/showthr...419#post385364

Dec14-04, 10:18 AM

<jabberwocky><div class="vbmenu_control"><a href="jabberwocky:;" onClick="newWindow=window.open('','usenetCode','to olbar=no,location=no,scrollbars=yes,resizable=yes, status=no,width=650,height=400'); newWindow.document.write('<HTML><HEAD><TITLE>Usene t ASCII</TITLE></HEAD><BODY topmargin=0 leftmargin=0 BGCOLOR=#F1F1F1><table border=0 width=625><td bgcolor=midnightblue><font color=#F1F1F1>This Usenet message\'s original ASCII form: </font></td></tr><tr><td width=449><br><br><font face=courier><UL><PRE>\n\ndavidmerritt wrote:\n\n> Models created in the physical sciences often have their methodolgy\n> routed in experimental data, not observed data as in the social\n> sciences. In your example how the entropy for a perfect monoatomic gas\n\nSpeaking from a position of complete ignorance...\nIt might be a lot more productive to actually model a real population on a\nsupercomputer using data recovered from datamining of govt records, esp\ntaxation, plus things like loyalty card data. Throw in some heuristics or neural\nnetworks to control the data weightings (and input psychological weightings) and\nsomething interesting might pop out.\n\nWhy use statistics when one can model each \'molecule\' and its economic interactions?\n\n--\nDirk\n\nThe Consensus:-\nThe political party for the new millenium\nhttp://www.theconsensus.org\n</UL></PRE></font></td></tr></table></BODY><HTML>');"> <IMG SRC=/images/buttons/ip.gif BORDER=0 ALIGN=CENTER ALT="View this Usenet post in original ASCII form">  View this Usenet post in original ASCII form </a></div><P></jabberwocky>davidmerritt wrote:

> Models created in the physical sciences often have their methodolgy
> routed in experimental data, not observed data as in the social
> sciences. In your example how the entropy for a perfect monoatomic gas

Speaking from a position of complete ignorance...
It might be a lot more productive to actually model a real population on a
supercomputer using data recovered from datamining of govt records, esp
taxation, plus things like loyalty card data. Throw in some heuristics or neural
networks to control the data weightings (and input psychological weightings) and
something interesting might pop out.

Why use statistics when one can model each 'molecule' and its economic interactions?

--
Dirk

The Consensus:-
The political party for the new millenium
http://www.theconsensus.org