Physics to Economics -- possible?

sakky · October 13, 2008, 11:17am

Sure, of course you can do that.

To clarify a perhaps small point, there really is no such thing as the “Nobel Prize in Economics”, strictly speaking, for the prize that supposedly carries that name is in fact a prize bestowed and funded by the Sveriges Riksbank (the central bank of Sweden) in memory of Alfred Nobel. However, that prize has nothing to do with the five actual Nobel Prizes that were funded by the estate of Alfred Nobel. The full name of the Economics Prize belies its tenuous relationship: “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel”. Numerous observers, including Alfred Nobel’s relatives and former winners Gunnar Myrdal and F.A. Hayek have called for the Prize to either drop the Nobel brand name association or be abolished completely.

But in any case, given that people continue to call the Prize the “Nobel for Economics”, allow me to point out a few winners who did not major in economics as undergrads, the years that they won, as well as their actual majors and at what schools. Note, the list is not complete, as I may have missed a few.

Roger Myerson, 2006, applied mathematics, Harvard
Eric Maskin, 2006, mathematics, Harvard
Leonid Hurwicz, 2006, law, University of Warsaw
Robert Aumann, 2005, mathematics, MIT
Edward Prescott, 2004, mathematics, Swarthmore
Clive Granger, 2003, mathematics, University of Nottingham
Robert Engle, 2003, physics, Williams
Vernon Smith, 2002, electrical engineering, Caltech
Daniel Kahneman, 2002, psychology, Hebrew University
Michael Spence, 2001, philosophy, Princeton (then mathematics at Oxford under Rhodes Scholarship)
Daniel McFadden, 2000, physics, University of Minnesota
James Heckman, 2000, mathematics, Colorado College
Robert Merton, 1997, Engineering mathematics, Columbia
Robert Lucas, 1995, history, Chicago
John Nash, 1994, mathematics, Carnegie Tech (now Carnegie-Mellon)
John Harsanyi, 1994, pharmacology, University of Budapest
Douglass North, 1993, General curriculum- humanities, Berkeley
Robert Fogel, 1993, history, Cornell
Harry Markowitz, 1990, physics/philosophy, Chicago
Maurice Allais, 1988, physics/engineering, Ecole Polytechnique
Theodore Schultz, 1979, agriculture, South Dakota State College (now South Dakota State University)
Herbert Simon, 1978, political science, Chicago
Gunnar Myrdal, 1974, law, University of Stockholm
Jan Tinbergen, 1969, physics/mathematics, University of Leiden

mikemac · October 14, 2008, 4:48pm

while this debate goes back and forth, has anybody noticed (or cared?) that the OP isn’t part of this thread anymore and never even answered a simple question about what schools she/he is considering that don’t permit switching?

Seiken · October 14, 2008, 8:28pm

Hey now,

I never said I believed economics was a science. I was merely pushing the idea that scientific minds can have a unique, and beneficial, impact within the subject.

And yes, if certain models been 100% correct then we might not be in the current mess we are in now. However, I believe the main problem was the non-economists who were trying to use these approximate models as if they WERE 100% true. And on top of that, I dont think they should have been doing anything related to those models; the subprime mortgages were a just a dumb dumb DUMB idea (and thus there shouldnt have been a needed model to evaluate their worth). When 17 year olds kill people when driving while drunk, do we blame their ‘model’ that they had in their mind that they could have done it safely? If their model had worked out, did what they do become justified? Of course the answer is no, they should not have driving like that in the first place.

In short, greenspan should have killed the loans that lead to the housing crisis years ago.

Also, I invoked Black Scholes because it was a cool idea within the realm idea of economics that came from scientific thinking. I never tried to say that it was a remotely good idea to actually implement it in the financial sector. (I consider finance and economics almost entirely separate) Hell, the Heisenberg uncertainty principal is a better ‘tool’ in the financial world.

Sam_Lee · October 15, 2008, 12:10am

OP,

Physics and economics are almost always in the same school (college of arts and sciences) within a university. In most top privates, you don’t declare your major until your sophomore year and by the time you do that, nobody cares what you checked off on your college application.

sakky · October 17, 2008, 10:31pm

I keep pushing back on this point, because Black-Scholes did not come from scientific thinking, strictly speaking. We have to be careful to define what we really mean by scientific. To be scientific means to apply the scientific method, that is, to use real-world results to create theories and then to use those theories to generate testable predictions which are then experimentally proven or disproven.

But, as I’ve been saying, that didn’t happen with Black-Scholes. If you actually read the original 1973 JPE article where Black-Scholes first appeared, the authors never actually demonstrated that empirical evidence conformed to the Black-Scholes model. Quite the opposite, in fact. The paper actually states “We have done empirical tests of the valuation formula on a large body of call-option data. These tests indicate that the actual process at which options are bought and sold deviate in certain systematic ways from the values predicted by the formula.” In other words, Black-Scholes states what the authors believe should happen, but not what actually happens in the real world. That is not scientific, for true scientists attempt to describe real-world phenomenon as they actually are, not what they believe should be.

Look, I agree that the derivation of Black-Scholes is deductive. It’s logical. It’s rigorous. Of those adjectives, I would agree with you. But that’s not the same thing as being scientific.

Physics to Economics -- possible?

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