My Life as a Quant

In physics you’re playing against God, and He doesn’t change his laws very often. When you’ve checkmated Him, He’ll concede. In finance, you’re playing against God’s creatures, agents who value assets based on their ephemeral opinions. They don’t know when they’ve lost, so they keep trying. (p. 267)

In physics, when you study a system of many particles, you don’t get to know the trajectories of each particle precisely. You study the statistical properties, i.e., the average properties of the particles. Each particle’s properties may be as ephemeral as human opinions. When we study social systems, we don’t study the ephemeral opinions of each individual. We study the collective impact of many individuals. There is little difference between the methods of statistical physics of particles and human societies. Indeed, many recent studies on the distribution of wealth shows that the same statistical laws apply to human society as well as the molecules.