Wednesday, March 17, 2010

Economics and Econophysics

In an earlier blog entry, I pointed to an essay that argues why economics will never be like physics, no matter how much it tries to assimilate concepts and mathematical models of physics. Now comes an article in the latest issue of Am. J. Phys. that argues that even in two areas of study that deals with the economy, even they are not like each other. Christophe Schinckus of the University of Quebec argues in an opinion piece on why the fields of econophysics is a rather completely separate field of study that economics[1].

Are econophysics and economics complementary fields or totally separated disciplines? In this paper I argue that econophysics is not a subfield of economics, and these two fields are separate disciplines.

There are two kinds of gaps between economics and econophysics. The methodological gap refers to a way of doing science. Although economists base their work on a priori methodology, econophycisists use a data-driven methodology. The other gap concerns the way they think about reality. Econophycisists and economists do not see the world in the same way.

In contrast to econophysics, economics is not an empirical discipline. Even if there are debates about the empirical dimension of economics, the empirical dimension in economics is exaggerated. According to econophysicists, complexity studies need an empirical basis. “The real empirical data are certainly at the core of this whole enterprise econophysics and the models are built around it, rather than some non-existent, ideal market as in economics.” This empirical dimension is frequently mentioned in econophysical research and is often presented as the main difference with economics.

Well, there ya go. If economics is not even similar to a field of study in physics that also deals with the same subject matter, then it is even further away from other fields of physics. There are some who don't even think it is a science.


[1] C. Schinckus, Am. J. Phys. v.78, p.325 (2010).

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