Guest Editorial

Frank Schweitzer, Dirk Helbing
 

Can physicists contribute to the field of economics? In fact, the recent progress in the understanding of non-equilibrium phenomena in complex systems has initiated a lot of activities in analyzing, modelling and simulating ``living'' systems with methods from statistical physics. Already in the early seventies, physicists have also realized that these methods can help to understand social phenomena, such as opinion formation, migration, and settlement formation. But only very recently, physicists have focussed their interdisciplinary interests to particular economic processes, such as trading, market dynamics, or company growth. Especially, the dynamics of financial markets attracted a considerable research potential within statistical physics. It is the availability of huge databases which makes this field so attractive and promising, since it allows not only to perform empirical studies, but also to develop, calibrate and test models of economic dynamics.

The joint efforts of many research groups spread over the world eventually lead to the establishment of econophysics - a young and fast growing field, the potential importance of which can be hardly overestimated. Even with the analysis of financial time series as its current focus, econophysics is meant to be a more comprehensive enterprise. Basically, econophysics focusses on the question how and to what extent methods from statistical physics can be used for the analysis, modeling, simulation, and optimization of economic systems.

In order to broaden this perspective, we were happy to conduct an international workshop on Economic Dynamics from the Physics Point of View, which was organized as the the 229th WE-Heraeus Seminar and took place in the Physics Center Bad Honnef between 27th and 30th of April, 2000 (see ./WEH-workshop.html for details). In spite of the coincidence with the big spring meeting of the German Physical Society, we received more than 160 applications for participation, from which we could consider only 40 percent because of limitations of capacities. Finally, 73 scientists from 22 countries attended the workshop and presented about 60 contributions. In order to establish a contructive dialog between the disciplines, we had also invited a number of renowned economists, and we were really impressed about the engaged interdisciplinary discussions that emerged. Of course, it is not only economists who are interested in a methodological transfer. Statistical physicists are also looking for new scientific challenges, where they can use the various methods from statistical physics and non-linear dynamics for a deeper understanding of complex systems with potential applications.

Basically, the workshop concentrated on two main problems: (i) the analysis of economic time series and other data with the aim of determining scaling laws and correlations, (ii) the investigation of microscopic models which mimic economic systems based on non-linear interactions of a large number of elements. Further topics were the statistical modeling of decision processes, the emergence of collective dynamics and chaos in socio-economic systems, as well as possibilities to control them.

The particular emphasis of the workshop on dynamic micro-models intends to provide insight into economic interactions, which may eventually explain the complex dynamics in the data observed. Similar to physics, where the structure, properties and dynamics of matter can be deduced from microscopic interaction laws, one would finally like to explain the observed macroscopic dynamics of organizations or companies, markets, and prizes based on non-linear interactions among a huge number of different individuals (agents).

The various contributions of the workshop are published in the present issue of Physica A and in a special issue of Advances in Complex Systems. Both special issues have their own focus: Contributions with a close relation to statistical physics, especially those dealing with time series analysis of economic data, have been selected for Physica A, while papers focussing on multi-agent approaches to market behavior, technological evolution and applications of neural network techniques have been selected for Advances in Complex Systems.

It is the wish of the guest editors, that the present special issue, with its overview of the application potential of physical methods to economic subjects, will stimulate fruitful discussions among physicists and experts in the socio-economic sciences and further the international activities and cooperation in the field of econophysics. Finally, we would like to thank the WE-Heraeus foundation for its generous financial support and the Physics Center Bad Honnef for the warm hospitality, which has very much supported the scientific exchange among the participants of the workshop.