Abstract

There is a long history of ideas (and people) moving from fields such as physics and mathematics into finance. In the past, the ideas and methods of physicists have been rapidly integrated into economic thought. Beginning around 1990, however, a new movement of physicists attempting to apply methods from statistical physics to economic problems began. Strangely, this time the ideas from physics have not been widely adopted or integrated into mainstream economics. Instead, a new, largely autonomous field of “econophysics” has appeared, in which people trained mostly in physics or by physicists work on problems of economics. In this talk, I will explore some of the reasons for the appearance of this new field. Ultimately I will argue that what make econophysics distinctive—both from economics, and from past attempts to import ideas from physics—is that econophysicists seem to recognize, and attempt to meet, an explanatory demand that economists reject, concerning the relationship between models of individual actors and market-level and economy-level models.