Then again, perhaps it is not surprising that so many physicists wind up working in finance. After all, they are good at using mathematics to solve real-world problems and the money is good. There is more to it than that though. There are mathematical links between physics and finance that go back at least to 1900, when Frenchman Louis Bachelier wrote his Theory of Speculation, in which he used the mathematics of a random walk to analyse fluctuations on the Paris stock exchange. Five years later, the same ideas were used by a young Albert Einstein to explain why pollen grains zigzag when they are suspended in water. His explanation invoked the idea that very large numbers of tiny molecules, much smaller than the pollen grains, are responsible for kicking the grains around. This was a crucial insight and provided one of the earliest convincing confirmations of the existence of atoms. To make the parallel with the financial markets, we might say that stock prices are kicked around by myriad unknown factors in the marketplace. Today, these ideas have been developed into a means of computing the value of sophisticated financial instruments and the management of risk.
Now, I'm skeptical with the first assumption that there are physicists who "gravitate" towards a job in finance. I am not sure to what extent these people AIMED for such a job, or rather if they took it due to other circumstances. Would they have taken it if they had other jobs in physics that pay close to what they would be making? Did they graduate with the intention of take such jobs in finance?
Furthermore, I've mentioned a few articles in which these theoretical model in finance and areas dealing with social and human interactions and activities (what is often called as psychophysics) are being called into question.
In any case, this is an article that covers what is going on in the UK, and it doesn't look to be that much different than what is happening here in the US.
Zz.
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