Eur. Phys. J. Special Topics 229, 1577–1590 (2020)
https://doi.org/10.1140/epjst/e2020-000029-4

Regular Article

Maximum entropy economics

¹ University of Utah, Salt Lake City, UT, USA
² University of Oxford, Oxford, UK

^a e-mail: ellis.scharfenaker@economics.utah.edu

Received: 24 February 2020
Published online: 7 July 2020

Abstract

A coherent statistical methodology is necessary for analyzing and understanding complex economic systems characterized by large degrees of freedom with non-trivial patterns of interaction and aggregation across individual components. Such a methodology was arguably present in Classical Political Economy, but was abandoned in the late nineteenth century with a theoretical turn towards a purely mechanical approach to understanding social and economic phenomena. Recent advances in economic theory that draw from information theory and statistical mechanics offers a compelling statistically based approach to understanding economic systems based on a general principle of maximum entropy for doing inference. We offer a brief overview of what we consider the state of maximum entropy reasoning in economic research.