Ram Poudel

A Sketch of Statistical Economics on Energetics (tailor .. focus it)

Ram C. Poudel1, 2, and Jon G. McGowan 1

1Department of Mechanical and Industrial Engineering, University of Massachusetts, Amherst, USA

2Department of Mechanical Engineering, Central Campus Pulchowk, Institute of Engineering, Tribhuvan University, Nepal

In the tradition of Frederick Soddy, scholars are making efforts to extend energetics concept into economic theory. We undertake to do that in a quantitative way utilizing the Social Field Theory. We equate capabilities of an individual, a framework by Amartya Sen as we understand it, with social potential energy. An economy facilitates the transformation of capabilities into capital to characterize economic development.

Physicists Lee Smolin suggested Statistical Economics can provide a pathway between microscopic and macroscopic properties of an economy. We start with the Hamiltonian of an individual and develop a physics-like “micro-equation of an individual”. A first-order statistical model of economy aggregates the micro-equations in the style of non-equilibrium thermodynamics, taking multi-body dynamics into account. The resulting stochastic model for an ensemble of economic agents bases on Hamiltonian of a society, a function of social energy, which can be viewed as a proxy of total wealth in an economy. We will demonstrate a basic statistical model of the economy with pedagogical examples taken from the Survey of Consumer Finances. This model aims to provide insight into the origins and dynamics of wealth in society taking social energetics into account.