Econophysics: An Introduction to Correlations & Complexity

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Discussion Overview

The discussion revolves around the field of econophysics, particularly its application to finance and the complexities involved in modeling economic phenomena. Participants explore introductory literature, the relevance of physics to economics, and specific modeling questions related to economic systems.

Discussion Character

  • Exploratory
  • Debate/contested
  • Technical explanation

Main Points Raised

  • One participant expresses interest in writing a master's thesis on econophysics and seeks recommendations for introductory literature, noting a lack of accessible resources outside of research papers.
  • Another participant argues that economics is fundamentally a human invention and suggests that physicists should focus on traditional scientific pursuits.
  • A participant highlights the limited application of econophysics by physicists in Wall Street, implying a disconnect between the two fields.
  • Links to various papers in quantitative finance are shared, indicating a resource for further exploration.
  • Two modeling questions are proposed: the possibility of modeling economic meltdowns as first-order phase transitions and the impact of financial models on the economy.

Areas of Agreement / Disagreement

Participants express differing views on the relevance of physics to economics, with some questioning the applicability of econophysics, while others are interested in exploring its potential. The discussion remains unresolved regarding the effectiveness and acceptance of econophysics in practical financial contexts.

Contextual Notes

Participants note limitations in available literature and the complexity of modeling economic phenomena, suggesting that assumptions and definitions may vary significantly across different approaches.

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Just considering writing a masters thesis on Econophysics. Currently reading the book "An Introduction to Econophysics: Correlations and Complexity in Finance" by Mantegna and Stanley. Could you recommend me some introductory literature on the subject, not just on econophysics, but econometrics would be welcome too. Thanks.
 
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Economy is not for physicists as it is a human invention. If you got a physics degree keep on doing science of good quality ;)
 
tt said:
Just considering writing a masters thesis on Econophysics. Currently reading the book "An Introduction to Econophysics: Correlations and Complexity in Finance" by Mantegna and Stanley. Could you recommend me some introductory literature on the subject, not just on econophysics, but econometrics would be welcome too. Thanks.

I don't think that there is very much in the way of intro literature to the field. It's all research papers.

One thing that you might find interesting is how little econophysics is used by physicists working in Wall Street.
 
Here's a link to a lot of papers in quantitative finance

http://arxiv.org/archive/q-fin

Also take a look at

http://cob.jmu.edu/.../Debating%20the%20Role%20of%20Econophysics.doc

http://www.debunking-economics.com/Papers/Econophysics/GallegattiKeenLuxOrmerod2006WorryingTrendsInEconophysics_PhysicaA370pp1-6.pdf

Two questions that I've been thinking about are:

1) it is possible to model the economic meltdown as a first order phase transition and thereby calculate the amount of required capital that is needed for a stable financial system, and

2) in finance you have a situation in which models can change the economy. How can this be modeled.
 
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