Econophysics

= scientific approach based on the network behavior of human beings, as related to economic and financial issues

Description

Victor M. Yakovenko:

"The term “econophysics” was introduced by analogy with similar terms, such as astrophysics, geophysics, and biophysics, which describe applications of physics to different fields. Particularly important is the parallel with biophysics, which studies living creatures, which still obey the laws of physics. It should be emphasized that econophysics does not literally apply the laws of physics, such as Newton’s laws or quantum mechanics, to humans, but rather uses mathematical methods developed in statistical physics to study statistical properties of complex economic systems consisting of a large number of humans. So, it may be considered as a branch of applied theory of probabilities. However, statistical physics is distinctly different from mathematical statistics in its focus, methods, and results.

Originating from physics as a quantitative science, econophysics emphasizes quantitative analysis of large amounts of economic and financial data, which became increasingly available with the massive introduction of computers and the Internet. Econophysics distances itself from the verbose, narrative, and ideological style of political economy and is closer to econometrics in its focus. Studying mathematical models of a large number of interacting economic agents, econophysics has much common ground with the agent-based modeling and simulation. Correspondingly, it distances itself from the representative-agent approach of traditional economics, which, by definition, ignores statistical and heterogeneous aspects of the economy." (http://arxiv.org/PS_cache/arxiv/pdf/0709/0709.3662v4.pdf)