Re: [Pen-l] Benoit Mandelbrot and the wildness of financial markets: SciAm

[ravi <ravi@xxxxxxxxxxxxxxx>]

On Mar 16, 2009, at 3:45 PM, Jim Devine wrote:
> ravi wrote:
> > http://www.sciam.com/blog/60-second-science/post.cfm?id=benoit-mandelbrot-and-the-wildness-2009-03-13 
> > <
>
> Mandelbrot says that "A very large part of economic theory is just
> physical theory with the words changed."
>
> But standard economic theory is not like quantum mechanics at all even
> though both give an important role to randomness.



As you point out in a later message, I think Mandelbrot is talking  
about standard physics. His point, as I see it, is the reverse of the  
criticism that Economics lacks the sophistication (or success) of  
Physics... he seems to be saying that, perhaps motivated by the above  
criticism, economic theories have been so closely modelled on physical  
theory (literally taking a physical theory and replacing the terms of  
Physics with those of Economics), even if the ensuing results are  
useless. As the adage goes: nobody got fired for buying IBM!

	--ravi

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