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Econophysics and Networks Across Scales
This workshop celebrated the ‘marriage’ between Econophysics and Network Theory. With respect to 'mainstream' Economics, the unconventional approach of Econophysics is the investigation of complex economic and financial systems through statistical induction from empirical data, rather than mathematical deduction from (often unreasonable) postulates such as perfect rationality, complete knowledge, homogeneity, stability, and equilibrium. As Physics in general, Econophysics aims at reconciling theories with observations. On the other hand, since socioeconomic and financial interactions are invariably combined into networks with intricate topology, Network Theory is becoming a more and more popular approach in modern economic studies. This theory aims at developing tools to analyse real-world complex networks and understand their dynamics.
The workshop was organized around four main ‘challenges’: micro-scale challenges (interactions among individuals in financial markets and social systems), meso-scale challenges (interactions among firms, banks, institutions, etc.), macro-scale challenges (interactions among and across countries) and cross-scale challenges (interactions extending across all the above scales). Different days where devoted to different challenges, and this helped organize the knowledge accumulated so far and put it in a broader perspective.
The workshop was very successful in gathering together, from all over the world, top scientists, young researchers, practitioners, and experts in both Econophysics and Network Theory. Participants shared their expertise in a joint effort to discuss their different perspective while emphasizing the common challenges. Each day hosted invited talks and contributed talks, and left ample time for moderated and informal discussion among the participants. The “wine and cheese” party at the end of the first day was very appreciated, to the point that the participants asked to repeat it each of the following days! This gave the workshop an additional and enjoyable dimension of interaction.
While the majority of the participants were physicists, every day was opened by an invited talk by a renowned economist. Both physicists and economists appreciated the very positive and constructing level of interaction that was achieved among participants from different communities. This resulted in the desire of all participants to later on explore the possibility of publishing a special issue of an international interdisciplinary journal, with contributions from physicists, economists and possibly other experts, all focusing on the themes of the workshop. This exploration is underway, and we already received a positive response from a respected journal.
Another important output was the possibility to revive the figure of Jan Tinbergen within the context of Econophysics. Tinbergen, the first Nobel Memorial Prize winner in Economics, was trained as a physicist at Leiden University. His PhD thesis (defended in 1929 and entitled ‘Minimumproblemen in de natuurkunde en de economie’) was supervised by the famous physicist Paul Ehrenfest. After that, Tinbergen started an academic career as an economist and in 1969 he was awarded the Nobel Prize for ‘having developed and applied dynamic models for the analysis of economic processes’. While Tinbergen was not previously credited by the Econophysics community for being one of its pioneers, he introduced a strongly quantitative approach to economic problems. This kind of approach is now at the core of Econophysics. Curiously, Tinbergen can also be regarded as a pioneer in ‘the network approach’ to macroeconomic systems: the ‘gravity model’ that he first used in 1962 to describe international trade can now be viewed as one particular case of a large class of network models that have been recently devised in order to study the international trade network and many other complex socioeconomic networks. Therefore, Tinbergen’s work surprisingly integrates elements that are nowadays present both within Econophysics and Network Theory, an intersection to which the workshop was devoted.
For the Netherlands, and for Leiden University in particular, the workshop was a very important step towards the consolidation of Econophysics and Network theory as novel research themes. In 2011, the Leiden Institute of Physics decided to expand its research program into these interdisciplinary fields, which were not previously present in the Netherlands. The organization of this workshop was an important step towards achieving an international visibility of the newly launched research program.
All the participants immediately recognized the expertise of the Lorentz Center staff in coordinating the workshop and facilitating its functioning. In general, the support of the Lorentz Center was amazing.