An old saying in financial markets is that economists suffer from physics envy.
And this quote from BNP Paribas about how central banks and market interact with each other proves, once and for all, that economists do in fact suffer from physics envy no matter what they say.
Newton’s third law of motion states that “when one body exerts a force on a second body, the second body simultaneously exerts a force equal in magnitude and opposite in direction on the first body.” This is observable in the current financial market landscape. While there is a search for the causality between risk assets and the FOMC’s tone, the truth may be that the action and reaction are simultaneous and neither exists without the other.
But so in thinking about this idea of “physics envy” existing in the world of economics, the argument would say that this “envy” has made economics more mathy than the discipline really requires. Economics, at heart, is really a social science as opposed to a hard one.
Said another way, economics is about the people and the dynamic interactions of unpredictable systems both financial, political, cultural, and so on. Physics, in turn, is about objects in a vacuum.
And so while saying that economists suffer from physics envy is on some level an insult — and we could argue if the economist or the discipline is being insulted depending on the origin of the barb — the fact of the matter is that lots of physics references come up in economic commentary.
Now, no one wants to hear that they envy anything or anyone because it sort of implies that you’re not satisfied in your current discipline but really want to be something else. It’s like the thing about how those who can’t do, teach. (Which is the absolute worst sort of non-insult lobbed by people who wouldn’t last one day in a classroom.)
But these are the facts.
Economists like physics. Maybe even more than economics.
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