Cold War physics contraction pushed scientists into banks as quants, fueling the crisis

Evidence

Actually, it is known among the cognoscenti that physicists have again been tumbling head over heels into economics since the 1980s, as their own field experienced severe contraction at the cessation of the Cold War. And where did most of them end up? Why, in the banks, of course, inventing all those ultracomplex models for estimating and parceling out risk. Some of these Exiles on Wall Street bothered to attain some formal degree in economics, while others felt it superfluous to their career paths. In any event, the exodus of natural scientists into economics was one of the (minor) determinants of the crisis itself—without “rocket scientists” and “quants,” it would have been a whole lot harder for banks and hedge funds to bamboozle all those gullible investors, not to mention turning privatized trading into a robot operation (Patterson, Dark Pools). — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 481

Categorization

• XREF: Connects to the ‘thought collective’ theme of the book and to Scott Patterson’s Dark Pools on quant trading. — connects to: Nobel prestige surged after World War II as America’s Cold War science hegemony rose — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 455

Broader Connections

• Nobel prestige surged after World War II as America’s Cold War science hegemony rose #corroborates (0.72) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 455