{"id":1739,"date":"2007-09-17T09:20:33","date_gmt":"2007-09-17T09:20:33","guid":{"rendered":"http:\/\/scienceblogs.com\/principles\/2007\/09\/17\/dismal-physics\/"},"modified":"2007-09-17T09:20:33","modified_gmt":"2007-09-17T09:20:33","slug":"dismal-physics","status":"publish","type":"post","link":"http:\/\/chadorzel.com\/principles\/2007\/09\/17\/dismal-physics\/","title":{"rendered":"Dismal Physics"},"content":{"rendered":"

Sean Carroll takes a look at economics<\/a> from the point of view of a physicist:<\/p>\n

\n

Economists have a certain way of looking at the world, in which (to simplify quite a bit) people act rationally to maximize their utility. That sort of talk pushes physicists’ buttons, because maximizing functions is something we do all the time. I’m not deeply familiar with economics in any sense; everything I know about the subject comes from reading blogs. Any social science is much harder than physics, in the sense that constructing quantitative models that usefully describe the behavior of realistic systems is made enormously difficult by the inherent nonlinearities of human interactions. (“Ignoring friction” is the basis of 98% of physics, but nearly impossible in social sciences.) But I can’t help speculating, in a completely uninformed way, how economists could improve their modeling of human behavior. <\/p>\n<\/blockquote>\n

Elsewhere, in a totally unrelated development, Cosma Shalizi unleashes a rant about “econophysics,”<\/a> and wishes that physicists who must<\/strong> meddle in economics would do a better job of it:<\/p>\n

<\/p>\n

\n

From here on, the “Worrying Trends” authors imply, it’s all down hill, and I
\nhave to agree. When you are dealing with a very, very large amount of very
\nhigh quality data, you can get away with using sloppy, not-too-reliably means
\nof analysis, because your data will save you unless your analytical procedures
\nare actively malicious. (That goes double if the data are generated by active
\nprocesses over which you have considerable control, as in real physics
\nexperiments.) It also helps if you are merely trying to describe patterns in
\nthe data, without framing serious hypotheses about the mechanisms which produce
\nthem. Note, also, that none of the genuine accomplishments really draw on any
\nof the distinctive concepts or mathematical structures of theoretical physics,
\nas opposed to the more elementary reaches of probability and stochastic
\nprocesses. In other words, these are things economists could have done
\nthemselves, if they’d read better books on random processes
\n(e.g.<\/a>)
\nearly in their training.<\/p>\n

If econophysicists were content to stick to this sort of thing, to the
\nphenomenology of financial time series (etc.), the situation would
\nbe almost<\/em> OK. Almost, because even there it is far too common to see
\n(for example) claims that such-and-such a distribution is a power law, because
\nthere’s a straightish bit on a log-log plot. I have discussed that particular
\nfallacy ad<\/a> nauseam<\/a><\/em> elsewhere,
\nand will just note in passing that even here, the refusal to do statistics
\ndooms people to talk nonsense. The real point is that econophysicists
\nare not<\/em> content with phenomenology based on overwhelmingly large data
\nsets, but want to get at mechanisms, in all kinds of social and economic
\nsystems, and there things get really ugly. There is a large literature in
\neconophysics, for instance,
\non agent-based
\nmodels<\/a> of financial markets and (supposedly) other forms of collective
\nbehavior, including the formation of public opinion, but not even the authors
\nof “Worrying Trends”, who are about maximally sympathetic to the movement, list
\nit as a success<\/em>. (I will return to the minority game and why I’m so
\ndown on it below.) This is a shame, because it’s actually in the area of
\nmechanistic models that one might imagine (as I have) that
\nphysicists could<\/em> make a distinctive contribution.<\/p>\n<\/blockquote>\n

That’s not a sarcastic comment, by the way. As far as I can tell, they really are totally unrelated. But it’s interesting to see them appear at around the same time.<\/p>\n","protected":false},"excerpt":{"rendered":"

Sean Carroll takes a look at economics from the point of view of a physicist: Economists have a certain way of looking at the world, in which (to simplify quite a bit) people act rationally to maximize their utility. That sort of talk pushes physicists’ buttons, because maximizing functions is something we do all the… Continue reading Dismal Physics<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"1","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,11],"tags":[],"class_list":["post-1739","post","type-post","status-publish","format-standard","hentry","category-physics","category-science","entry"],"_links":{"self":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/posts\/1739","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/comments?post=1739"}],"version-history":[{"count":0,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/posts\/1739\/revisions"}],"wp:attachment":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/media?parent=1739"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/categories?post=1739"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/tags?post=1739"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}