Talk:Financial economics/Archive 1

Notes

Please add here, that the financial markets do not only consider stocks and bonds (which means interest rates), but also currencies and commodities. These four categories being traded at bourses (exchanges) make up the whole cosmos of the markets. Note that there are appr. 250 futures traded at the future exchanges of the world, among them all four categories. I try to cover these four categories on a daily basis on [EarningCharts.COM] at the price of a donut. Hannes Tilgner

WikiProject class rating

This article was automatically assessed because at least one WikiProject had rated the article as stub, and the rating on other projects was brought up to Stub class. BetacommandBot 16:24, 9 November 2007 (UTC)

Important Concepts

I am thinking of adding "Expected Utility Theory" to this section's list of concepts, shall I?--Forich (talk) 02:53, 12 February 2009 (UTC)

Clutter

This article has far too many external links and "See also" wiki-links. The links take up more space than the article text. I strongly recommend removing the less-essential links. --JHP (talk) 12:34, 27 October 2009 (UTC)

Relationship between economics and finance

Across several wikipedia pages the relationship between economics and finance is very poorly described and obviously not written by users with advanced experience in economics or econometrics. I anonymously updated (deleted) several sentences in the page that describe the relationship between mathematical finance and financial economics. These statements were/are not supported with links or citations. They are not accurate statements as they do not reflect the practices of modern macroeconomists and financial economists. The questionable statements about the relationship between financial economics and mathematical finance do not add value to the definition on the page. — Preceding unsigned comment added by 2600:8806:2305:AE00:F5FC:B26B:906B:FE2A (talk) 14:04, 9 July 2022 (UTC)

This is a significant failure of the current article text, and the first, definitional, sentence is very poorly sourced to a self-published document of a finance guy vs. a peer reviewed overview definition by an economist or any widely occurring definition in RS. SPECIFICO talk 18:11, 9 July 2022 (UTC)

I don't understand the first part of the statement by IP, but as far as the link between math and financial economics, it is explicit in the Princeton Lectures by Ross and Merton's seminal book on continuous time finance. I think his Nobel Lecture has a few citable segments. I will revert soon. Limit-theorem (talk) 19:14, 9 July 2022 (UTC)

My concern is that Finance is not the same as "Financial Economics" and certainly not the same as monetary theory or "money and banking" etc. So even the great honorable names in Finance shouldn't be used to draw conclusions about micro- or macro-economics or any other subset of the broader field of "economics". Business schools and finance programs and various finance journals do not treat the subject with the generality and rigor of the best equivalents in the "economics" realm. I haven't looked closely enough to see what needs to be fixed in this article, but quoting a syllabus by a Finance guy, even Sharpe, is not a good start for a page with "economics" in the title. SPECIFICO talk 20:01, 9 July 2022 (UTC)

Officially, in the field, "Finance" and "Financial Economics" are synonymous since a Phd in "finance" has, sometimes, written "financial economics" on it. The academic field is the same. People in Business School are "Prof of Finance", in Econ departments "financial economics". Limit-theorem (talk) 20:07, 9 July 2022 (UTC)

Maybe somewhere, but do you have a source for that generalization? If so, that might resolve part of the issue, but not the article text that blurs various internal distinctions. SPECIFICO talk 20:13, 9 July 2022 (UTC)

Look for example at Columbia's econ department, "financial economics" section. https://econ.columbia.edu/finance/ They list "finance" as a field. Limit-theorem (talk) 20:16, 9 July 2022 (UTC)

And look here for a nice discussion and help in finding references. https://quant.stackexchange.com/questions/36245/financial-economics-vs-finance. The point that "financial economics" is separate from economics can be raised, but that's another matter. Limit-theorem (talk) 20:19, 9 July 2022 (UTC)

Well just to take the example of Columbia, there are parallel PhDs in the GSAS Economics dept and the Business School "Financial Economics". But just because, in the ascendency of the financial sector over the past 40 years Business School has been gaining market share vs. Economics programs does not make them generally identical or even equivalent or possibly even similar. We need to address this in a general way, and I don't see anything on the Columbia website that helps address the general question. There have long been individuals whose work was valued in both B-school and Economics programs. SPECIFICO talk 20:26, 9 July 2022 (UTC)

The Journal of Finance mission statement makes it clear that Finance = Financial Economics. "The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics." Limit-theorem (talk) 20:28, 9 July 2022 (UTC)

That's exactly the problem. Finance guys think they are economists, but economists do not think that all Finance guys are operating within the full understanding and rigor of contemporary economics. You would need a statement from the AEA or a statement in the AER or the JEL that unequivocally states that in general, "Financial Economics" is the same thing as Finance as it exists in the Business School, Management School, Organization School realm. SPECIFICO talk 21:14, 9 July 2022 (UTC)

Hi I will come off anon. I was the IP poster. I thought this was a meaningful edit and I do appreciate your discussion on here. Much of what Specifico says I agree with. I have worked on financial topics, but my training is in development economics. Finance strikes at all parts of economics, credit is the life-blood of the economy. Nearly 100% of firms use credit if they have access. Thus, finance is an essential part of economics.

On the modeling front I think its best to avoid describing any relationship between mathematical finance and financial economics. It seems written with a condescending tone and it adds nothing to the definition on either page. This text only serves to further confuse individuals trying to make sense of this confusing topic. There is no justification, in my view, for saying that mathematicians and physicists who are not trained in economics are "enhancing" macroeconomists or financial economists models or seeing things "in the math" that economists don't see. Economists train in economies and math and statistics and multivariate modeling. Domain-specific knowledge matters and learning about macroeconomic forces from the beginning of econ really reinforces the significance of the macroeconomy and the financial system as a critical part of the micro and macro economy. Thesmeagol2 (talk) 01:16, 10 July 2022 (UTC)

the claim that mathematical finance models are "mathematically consistent" for example, implies that models from financial economics are not consistent. This is not supported by any documenting evidence and it doesn't seem to make much sense. Thesmeagol2 (talk) 01:19, 10 July 2022 (UTC)

There are two overriding problems -- defects -- with the current article text. First, there is an overall lack of sources such as would permit [[WP:NPOV]|neutral weight]] WP:Verification of the content. Second, the story is being told from the viewpoint of practitioners and students of Finance, rather than from the broader vantage point of Economics as a whole, of which the article states Financial Economics is a subset. {{ping|LimitTheorem]] per my previous content, we need a source from a peer-reviewed Economcs journal, not a Finance journal to establish the general premise that Financial Economics is all the things asserted to comprise "financial economcis". It is not enough to tell this story from the point of view of Finance practitioners or scholars, when we are telling the reader what comprises Financial Economics. That would be like citing an American to say that world history is equivalent to American history -- an unfortunate approach that some might claim is all too frequent. SPECIFICO talk 18:42, 12 July 2022 (UTC)

The Journal of Finance is one of the most cited and highest impact journal of all economics (and social science). Now you are saying that citing from it does not count at all (particularly that it is not contradicted elsewhere, which is the central point)? This has an impact on Wikipedia as a whole and the entire definition of RS. Limit-theorem (talk) 21:27, 12 July 2022 (UTC)

No, that's the problem. It is a highly cited source in Finance. You are assuming away the distinction between economics and finance by ignoring that distinction. You needn't even assume the correctness of that distinction, because if it is indeed one of the most widely cited sources in economics, it should be possible to find undisputedly core economics sources that verify your claim. I do not see Journal of Finance cited overwhelmingly in the core article pages for longstanding topics undisputedly acknowledged to fall within "economics". I understand that from your vantage point as a practitioner or teacher of mathimatical finance topics (if I am understanding correctly) you are operating in the less general sphere that draws on and may consider itself a part of economics broadly speaking. This does not entail the conclusion that Financial economics broadly construed, or the economics of finance, is limited to "financial economics". This article starts off more or less OK, but by the third paragraph of the lead, it is making the unverified assertion that "financial economics" as described is the part of economics in general which deals with phenomena of finance. This is not verified, and is basically not true without a great deal of qualification and context. SPECIFICO talk 21:45, 12 July 2022 (UTC)

User limit theorem has acknowledged being a "teacher of mathematical finance" in the edit comments. In my opinion, this constitutes a conflict of interest (COI) and it would be best for you to recuse yourself from further editing of the financial economics page. I believe you are making edits that are in your interest to serve your needs as a teacher of mathematical finance who likely is completely untrained in economics, meanwhile you're fending off two (I presume) professional or trained economists who are telling you this is wrong. The citations included in support of this phrasing do not refer in any way to the relationships described in the article as "emphasizing mathematical consistency." Again, writing it in this way makes it seem as if financial economics does not emphasize mathematical consistency or that financial economics models tend to be mathematically inconsistent both of which are untrue. I strongly suggest you move on to focusing on wiki articles where you have no apparent conflict of interest. — Preceding unsigned comment added by Thesmeagol2 (talk • contribs) 07:07, 13 July 2022 (UTC)

This is ludicrous. It means doctors should not discuss medicine? Limit-theorem (talk) 16:04, 14 July 2022 (UTC)

Please just stick to the merits of the edits, and don't claim authority or be offended when the claim is (rightly or not) thrown back at you. SPECIFICO talk 16:49, 14 July 2022 (UTC)

Thesmeagol2, you are incorrect about COI. There is no conflict of interest unless the editor is indiscriminately spamming links to their work, or self-promoting or promoting institutions they are affiliated with. Cullen328 (talk) 18:51, 14 July 2022 (UTC)

Your agenda is clearly to put down econ at the expense of mathematical finance. This is an architype and you're not the only one. I'm here to say you're full of it and you dont get to dictate on wikipedia some belief that economics is bad and mathematical finance people are superior because math. Thesmeagol2 (talk) 15:34, 5 August 2022 (UTC)

I'm inclined to agree w/ Limit-theorem about the deep interconnection between finance and economics. I don't think that the existence of a discipline called finance means things like e.g. Modigliani–Miller aren't economics. I'm not a professionally trained economist (Though I did drop out of an Econ grad school lol), but I think the separation between the two isn't born out in actual practice by academic economists or finance folks or among people working in e.g. macrofinance. Protonk (talk) 18:58, 14 July 2022 (UTC)

The connections between economics and finance are not in dispute. At issue is the garbled OR narratives LT contributed, that appear nowhere in the article text, top quality sources, or anythwere else. It's not even intelligible english prose, let alone well-cited lead material for a page about an academic and scientific discipline. SPECIFICO talk 19:07, 14 July 2022 (UTC)

Is this a personal attack? What are the criteria? Limit-theorem (talk) 19:33, 14 July 2022 (UTC)

In my opinion this is not a personal attack, its a critique. Though the difference might seem small, it's good to learn the difference because otherwise you'll be offended by anyone who does not find your comments to be useful or your work high quality. As I mentioned in some comment above about peer-review, an author/economist/academic who has been through peer review is likely used to these kind of high-level criticisms and insistence on high-quality work. Individuals who get agitated when anyone criticizes them... well let's just say it's very transparent. Thesmeagol2 (talk) 15:37, 5 August 2022 (UTC)

this seems super unnecessary. Protonk (talk) 19:41, 14 July 2022 (UTC)

It'd be helpful if you'd focus on the detail of the thread above and see whether you have any substantive contribution. SPECIFICO talk 19:48, 14 July 2022 (UTC)

It would be helpful for you to be much less rude and think about what your contribution is to be. Protonk (talk) 20:43, 14 July 2022 (UTC)

If you wish to post snark or one-liners,rather than content/sourcing contributions, please do it at my talk page or at AN. I don't see you addressing the issues raised by various editors here and whether LT has resolved them. I asked you to consider the substance. It's not required -- that's up to you. SPECIFICO talk 20:56, 14 July 2022 (UTC)

@Protonk there is an Administrator discussion board Wikipedia:Administrators' noticeboard on the subject. I will proceed to check if this type of behavior by this editor is appropriate in an encyclopedia. It is not the rudeness but the apparent incoherence that is bothersome. Limit-theorem (talk) 00:25, 15 July 2022 (UTC)

Specifico seems to be making significant contributions, in my view, and though they might seem combative I appreciate their dedication to producing high-quality material so users get an actual sense of what math+finance looks like rather than "economics models are mathematically inconsistent." Thesmeagol2 (talk) 15:33, 5 August 2022 (UTC)

Sorry, what was your contribution here? Specifico has been dialoging at-length about the relationship between mathematics, finance and economics which is actually, as evidenced here, a somewhat ambiguous topic worthy of clarification. Thesmeagol2 (talk) 15:39, 5 August 2022 (UTC)