The Physics of Wall Street: a brief History of Predicting the Unpredictable

“Social Security . . . was first signed into law . . .”: for a history of the 
politics surrounding Social Security, see Beland (2005), Altman (2005), or Baker and 
Weisbrot (1999).
201 “. . . until Daniel Patrick Moynihan and Bob Packwood . . . shared a moment of 

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t h e p h y s i c s o f wa l l s t r e e t
inspiration . . .”: See Sheehan (2010), Moynihan (1996), and Katzmann (2008) for various 
perspectives on the origins of the Boskin commission.
201
“According to notes written by Robert Gordon . . .”: the notes I am alluding to 
are Gordon (2002). Gordon also tells the story of the Boskin commission and its critics 
in Gordon (2006), though this narrative version does not include Moynihan’s role.
202 
“The Boskin Commission’s findings were criticized from all corners”: 
See especially Sheehan (2010), as well as triplett (2006) and Bosworth (1997).
202
“Ultimately, the Boskin Commission’s recommendations were 
squashed . . .”: for an account of how the Bureau of Labor Statistics incorporated some 
of the Boskin commission’s recommendations, see Greenlees (2006). the nAS report 
was published as Schultze and Mackie (2002).
203 
“The plan was to use this conference . . .”: for a discussion of Wein-
stein’s idea, with comments by Weinstein, see Brown et al. (2008). See also Weinstein 
(2009).
1. epilogue: send Physics, Math, and Money!
206 
“. . . to pen the ‘Financial Modelers’ Manifesto’”: this is derman and 
Wilmott (2009).
210 
“In the words of sociologist Donald MacKenzie . . .”: I am alluding to 
the title of MacKenzie (2006), An Engine, Not a Camera. MacKenzie’s central point here 
is that financial markets are shaped by the models that we use to understand them. this 
strikes me as exactly right, and it presents a special difficulty for scientists and mathema-
ticians trying to study markets.
212 “In a 1965 Supreme Court decision . . .”: this decision was Lamont v. Postmaster 
General; it can be found in Sepinuck and treuthart (1999, ch. 2). for more on Brennan’s 
ideas about expression, see the other opinions in that collection or Hopkins (1991).
213 “. . . an argument from psychology and human behavior”: for a sample of this 
view, see Brooks (2010). It is closely related to arguments concerning behavioral eco-
nomics, as seen (for instance) in Ariely (2008), Akerlof (2009), or Shiller (2005). for 
more scholarly work on behavioral finance, one might start with thaler (1993, 2005). 
However, as should be clear in the text, I want to distinguish between behavioral eco-
nomics as a discipline — which has clearly made enormous progress in understanding 
the psychology and sociology of economic decision making — and a specific argument 
based on some results of behavioral economics to the effect that mathematical modeling 
in finance is impossible, or that, as Brooks puts it, economics should be “an art, not a 
science.” It is only the latter argument that I object to here; behavioral economics more 
generally, I think, plays an essential role in identifying how certain assumptions regard-
ing rational behavior are unrealistic and guides the way in the construction of future 
models that (one hopes) are able to account for the “predictably irrational” behaviors of 
real investors.
214 “. . . has found its biggest champion in Nassim Taleb”: See in particular taleb 

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(2004, 2007a). But see also taleb (2007b), where (it seems to me) taleb is more moder-
ate.
216 “. . . Warren Buffett, who has famously warned . . .”: Buffett appears to express 
these opinions regularly, but the specific quote about geeks bearing formulas is from 
Buffett (2008, p. 14).
217 “. . . it’s not as though market crashes . . . are a new phenomenon . . .”: Indeed, 
financial crisis has plagued us for as long as we’ve had economies. for excellent histo-
ries of financial calamity, see reinhart and rogoff (2009) and Kindleberger and Aliber 
(2005).
218 “. . . the SEC has charged Goldman Sachs . . .”: for more on the Sec accusa-
tions and the settlement reached with Goldman Sachs, see U.S. Securities and exchange 
commission (2010a, b).
219 “. . . in Buffett’s words, ‘financial weapons of mass destruction’ . . .”: this quote 
is from Buffett (2002, p. 15).
220