Tuesday, November 29, 2011

Econophysics is a joke

     A nascent economic field is emerging where physics attempt to compensate for economists' failures by applying the mathematical rigor inherent in physics. An article in Science News might confuse the economist, for it wrongly suggests that economists only assume normality in data, and describes how the econophysicists have rediscovered the log-normal distribution (and other transformations of normality) that economists have used for decades.  Consider the quote below...

Economic theory suffers from ideological differences that render policy decisions dependent on the predispositions of those in power.  Physics transcends partisan political debates—the speed of light is the same for all parties, gravity warps everybody's spacetime in precisely the same way and quantum physics confuses everybody regardless of age, sex or national origin.

—Tom Siegfried. "From the Editor: Perhaps physics can also solve economics puzzles." ScienceNews. November 5, 2011. Page 2.

Economists: try not to laugh.  
This quote is incredibly naive. Economics cannot operate independent of political debate, because political debate is inherently a part of economics—economic questions often involve a political answer.  
Plus, economists disagree on the efficacy of a fiscal stimulus for the same reasons physicists disagree on whether the universe has twelve dimensions or an infinite number of dimensions. Data do not allow a final verdict on the stimulus question, nor do data precisely reveal the number of dimensions our universe possesses.
Moreover, before physicists believe their mathematical skills could be fruitfully applied to political economy, they should do two things. First, drop in on a Ph.D economics course to see just how much mathematics economics already employs. Second, they should think about the complexity of human psychology and social culture. They might conclude that people are as evasive and frustrating source of study as the electron.

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