Econophysics

Econophysics is intimately related to Complex Networks and Social Systems. Nowadays it is one of the fields that grows faster and where more efforts are being invested.

Financial markets are remarkably well-defined complex systems. A huge number of variables make the research on this field extremely tough. It is no wonder why many methods from mathematics or physics are now introduced in the study of economic systems. A well-known example of this common behaviour on economics and other fields is the “random walk” followed by particles in a fluid, studied by Albert Eintein in the early XX century. As we can see in the graph below, the stock market (a) seems to evolve in a similar way as a particle in a fluid (b).

But it was some decades later, during the Second World War, that another mathematical method was revealed as essential for the economic theory. The Montecarlo Method was developed by physicists with the goal of solving the equations that led to nuclear weapons. 

Computation progresses achieved during the second half of the XX century, were revealed as the most powerful tool in that field. Similarly, the large amount of data available from stock markets, concerning all kinds of transactions, helped scientists to understand the behaviour of economic systems. 

Nevertheless, those technological improvements have not been enough to avoid the economic crashes, as the ones known as the Black Monday in 1973 or the subprime crisis in 2008.