The Physics of Wall Street: A Brief History of Predicting the Unpredictable
by James Owen Weatherall
Houghton Mifflin Harcourt, 2013 (($27))
Weatherall, a doctoral student in physics and math at the time of the 2007–2008 financial crisis, delves into the question of how physics and finance came together. In clear, lively prose, he traces the evolution of the mathematical ideas behind derivatives and hedge funds, from the early papers of a student working on the floor of the Paris Bourse at the end of the 19th century to the late fractal geometry founder Benoît Mandelbrot's thoughts on the randomness of cotton prices. Weatherall argues that the blame for the financial collapse lies not with sophisticated mathematical models but with those who misused them. Economists and physicists must work together to prevent future crises.