Thermodynamics Formulation of Economics
Abstract
We consider demand-side economy. Using Caratheodory's approach, we define empirical existence of equation of state (EoS) and coordinates. We found new insights of thermodynamics EoS, the {\it effect structure}. Rules are proposed as criteria in promoting and classifying an empirical law to EoS status. Four laws of thermodynamics are given for economics. We proposed a method to model the EoS with econometrics. Consumer surplus in economics can not be considered as utility. Concepts such as total wealth, generalized utility and generalized surplus are introduced. EoS provides solid foundation in statistical mechanics modelling of economics and finance.
Keywords
Cite
@article{arxiv.2012.01505,
title = {Thermodynamics Formulation of Economics},
author = {Burin Gumjudpai},
journal= {arXiv preprint arXiv:2012.01505},
year = {2021}
}
Comments
5 pages, 5 figures, This is an extended abstract for an oral presentation at the International Conference on Thermodynamics 2.0. This work is awarded Richard Newbold Adams Medal for integration of natural and social sciences (https://iaisae.org/index.php/honors/). In the later versions, minor corrections and other corrections to Sec. III(G) are made