5 ms·
Thermodynamics is derived from statistical mechanics though. Economics models use too simplistic approximations of the behavior of human brains.
by cblconfederate 5y ago
Thermodynamics is derived from statistical mechanics though. Economics models use too simplistic approximations of the behavior of human brains.
- sjtindell 5y agoAs I understand there are some models in both Econ and Finance where they literally took equations from thermodynamics and just said “what if this variable represented money instead of heat”.
- cblconfederate 5y agobut humans are not atoms in brownian motion. they need reliable models of human behavior informed by neuroscience/psychology
- deleted 5y ago[deleted]
- michaelscott 5y ago99% of models developed in open view in both fields are either generally wrong in practice or are "correct" insofar as they were correct at one point in history or set of circumstances, but have since been factored into the efficiency of the system and are no longer relevant. Thermodynamics is a nice analogy for a lot of effects in economics, but it's important not to stretch that analogy like butter over too much bread
- sprafa 5y agoNot even approximations - they use a bunch of assumptions, many of which don’t hold up over time, so they then proceed to invent new ones as to say “well these assumptions are obviously better” even though they will inevitably be falsified because they share the same conceptual origin error.