Applying physics to economics/finance

  • Context: Undergrad 
  • Thread starter Thread starter rh2014
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    Economics Physics
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Discussion Overview

The discussion revolves around the application of physics concepts to economics and finance, particularly in the context of a senior project for a student majoring in both fields. Participants explore various approaches and resources related to this interdisciplinary research.

Discussion Character

  • Exploratory
  • Technical explanation
  • Debate/contested

Main Points Raised

  • One participant suggests researching C. Schinckus's work and the field of "econophysics," noting skepticism surrounding it.
  • Another mentions the role of "quants" in Wall Street, highlighting their use of physics in hedge fund calculations.
  • There is a claim that physicists may have an advantage over mathematicians in finance due to the applied nature of their training.
  • A participant references the use of diffusion-type models in finance, although they do not provide a source for this information.

Areas of Agreement / Disagreement

Participants present various perspectives on the application of physics to finance, with some expressing skepticism about econophysics while others highlight its practical applications. No consensus is reached on the best approach for the student's project.

Contextual Notes

The discussion includes references to specific literature and concepts but does not resolve the uncertainties regarding the effectiveness or acceptance of applying physics to economics and finance.

Who May Find This Useful

Students and researchers interested in interdisciplinary studies between physics and economics, particularly those exploring innovative approaches to finance.

rh2014
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Hello everybody,

I am currently a junior majoring in physics and economics and I am starting to think about my senior projects.
For my senior project next year, I would like to see if I can apply any physics "concept" to economics or finance. Do you know what would be the best approach for this research?

Thanks!
 
Physics news on Phys.org
You might want to look at C. Schinckus, Am. J. Phys. v.78, p.325 (2010), first, and then do your own search on "econophysics" and why a lot of people are skeptical of it. Rick Bookstaber, a senior policy advisor at the SEC, even have a blog post on this that you might find in your search.

Zz.
 
I believe "quants" are big on wall street calculating hedge funds.
 
Yup. Physicists apparently beat out even mathematicians here due to the applied aspects.
 
I can't quote a source but I heard they use a diffusion type model.
 

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