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Vilfredo Pareto, referring to the equations that determine equilibrium, wrote:

These equations do not seem new to me, they are old friends. They are the equations of rational mechanics.

This quotation appears in the paper On the Economic Phenomenon: A Reply to Benedetto Croce he doesn't make clear what specific equations he's referring to. As someone with a physics background I am curious if anyone knows/could guess what he is referring to.

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  • $\begingroup$ He might be alluding to equations of rational expectations which is economic theory that was developed in the early 60's and 70's. ( see Muth, 1960, 1961 ). Of course, I could be totally wrong here. $\endgroup$ – mark leeds Jan 14 at 18:59
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    $\begingroup$ @markleeds given that this paper pre-dates that theory by at least 30 years, yes. You're totally wrong. :) $\endgroup$ – heh Jan 14 at 20:39
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Pareto believed economics could be studied with the same mathematical rigor as physics, so it's quite possible he was speaking to the similarities between mathematical economics and classical mechanics (the latter of which was just coming into its own in the early 1900s). I'm a physicist by training too, and those similarities helped me rapidly cover a great deal of ground my colleagues in economics had to learn fresh, so your intuition makes sense to me.

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  • $\begingroup$ My guess is that he is associating the utility function with a potential so that equality of specific marginal utilities means balancing forces. $\endgroup$ – UtilityMaximiser Jan 16 at 16:24
  • $\begingroup$ @UtilityMaximiser Could be. The mathematical analogs are pretty clear, but I don't want to speculate on how much physics-of-the-day Pareto actually knew. :P $\endgroup$ – heh Jan 16 at 19:27

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