Entropy and Economics

TL;DR

This paper explores the concept of entropy from both macroscopic and microscopic perspectives, highlighting its relevance in physics and potential implications for economic systems.

Contribution

It discusses the dual explanations of entropy and emphasizes the importance of integrating macro and micro views using entropy in economic analysis.

Findings

Entropy relates to disorder at microscopic level.

Reversible vs. irreversible systems are distinguished.

Connecting macro and micro entropy analysis is uncommon.

Abstract

Entropy is a very useful concept from physics that tries to explain how a system behaves from a point of view of the thermodynamics. However, there are two ways to explain entropy, and it depends on if we are studying a microsystem or a microsystem. From a macroscopically point of view, it is important to describe if the system is a reversible system or not. However, form the microscopically point of view, the concept of chaos is related to entropy. In such case, entropy measures the amount of disorder into the system. Otherwise, the idea of connecting at the same time the analysis of the macro and micro system with the use of entropy it is not very common.