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Interview with Eugene H. Stanley

Kausik Gangopadhyay
IIM Kozhikode Society & Management Review 2013 2: 73
DOI: 10.1177/2277975213507763
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Notes and Interview

Interview with Eugene H. Stanley

IIM Kozhikode Society & Management Review
2(2) 73–78© 2013 Indian Instituteof Management Kozhikode
SAGE Publications
Los Angeles, London,
New Delhi, Singapore,
Washington DC
DOI: 10.1177/2277975213507763
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Kausik Gangopadhyay

Eugene H. Stanley

Dr Eugene H. Stanley (1941–) is one of the most influencing figures in the discipline of Econophysics. He wasborn in Oklahoma City, US, and was awarded the PhD inphysics at Harvard University.1 In 1976 he joined Boston
University as Professor of Physics, and was promoted
to Professor of Physiology and University Professor, in1978 and 1979, respectively. In 2007 he was offeredjoint appointments with the Chemistry and Biomedical
Engineering Departments, and in 2011 he was madeWilliam Fairfield Warren Distinguished Professor.
Dr Stanley holds concurrent positions of ‘Honorary
Professor’ at East China University of Science andTechnology, Shanghai University Institute for Advanced
Studies, University of Pavia, and at Eotvos Lorand
University, Budapest. He has received nine Doctorates
Honoris Causa from Northwestern University, Messina
University, Bar-Ilan University, Eotvos Lorand University,
University of Liege, University of Dortmund, University
of Wroclaw, IMT Lucca and Universidad Federal de Ceara(Fortaleza, Brazil). He has been appointed the 2013 Lorentz
Professor of Theoretical Physics at University of Leiden,
which is a rare honour. He has been elected to the US
National Academy of Sciences (NAS) and the Brazilian

Academy of Sciences, and has been selected as an Honorary
Member of the Hungarian Physical Society.
Prof. Stanley works in collaboration with students andcolleagues attempting to understand puzzles of interdisciplinary science. In fact, he has acted as thesis advisor for
112 PhD candidates at MIT and Boston University, and has
worked with 146 research associates. In addition to his
principal focus of understanding the anomalous behaviourof liquid water in bulk, nanoconfined, and biologicalenvironments, he has also worked on a range of other topics in complex systems, such as quantifying correlations
among the constituents of the Alzheimer brain, and quantifying fluctuations in noncoding and coding DNA
sequences, interbeat intervals of the healthy and diseased
heart. His publications have received an enormous 66,089
citations, so far.
Dr Stanley is Co-Editor-in-Chief (with Dawson,
Indekeu, Parisi, and Tsallis) for the prestigious journal of
Physica A, from 1988 till date. He is the Chief Editor
for the series Graduate Texts in Physics published by
Springer-Verlag. As far as his present or past association
with various journals are concerned, a long list follows:
New Journal of Physics, Quantitative Finance, Granular

Kausik Gangopadhyay is at the Indian Institute of Management Kozhikode, Kunnamangalam, India. E-mail: kausik@iimk.ac.in
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Kausik Gangopadhyay

Matter, Fractals, International Journal of Molecular
Sciences (IJMS), Heterogeneous Chemical Reviews,
Phys. Chem. Comm., International Journal of Theoretical& Applied Finance, Fluctuation and Noise Letters: An,QWHUGLVFLSOLQDU\6FLHQWL¿F-RXUQDORQ5DQGRP3URFHVVHVin Physical, Biological, and Technological Systems,
COMPLEXUS: Modelling and Understanding Functional
Interactions in Life Sciences; Nonlinear Dynamics,
Psychology, and Life Sciences; International Journal ofPortfolio Analysis & Management (IJPAM).
For his interdisciplinary contributions to physics, chemistry, and biology, Stanley received the 2004 Boltzmann
Medal, awarded by IUPAP (International Union of Pureand Applied Physics), the 2008 Julius Edgar Lilienfeld
Prize awarded by the American Physical Society, and theTeresiana Medal in Complex Systems Research given by
the University of Pavia. He also received the ‘Distinguished Teaching Scholar’ Director’s Award from the
National Science Foundation, the Nicholson Medal for
Human Outreach from the American Physical Society, a
Guggenheim Memorial Fellowship, the David Turnbull
Prize from the Materials Research Society, a BP Venture
Research Award (with J. Teixeira), the Floyd K. Richtmyer
Memorial Lectureship Award, the Memory Ride Award for
Alzheimer Research (with B. T. Hyman) and Zenith
Fellowship Award, both for Alzheimer research, andthe Massachusetts Professor of the Year awarded by theCouncil for Advancement and Support of Education. He
has delivered the Ramanujan Memorial Lecture, Calcutta,
John G. Kirkwood Memorial Lecture, Kanpur, Platinum
Jubilee Lectures, Indian Academy of Sciences, Karlheinz
Schmidt Memorial Lecture, Chiemsee, Germany, Sigma
Xi National Lecturer, Centennial Lecturer, American
Physical Society, Thirtieth Saha Memorial Lecture,
Calcutta, and the Fourth Bose Memorial Lecture, Calcutta.
With Nicole Ostrowsky, Stanley co-founded a series ofNATO Advanced Study Institutes in interdisciplinary physics in Cargese (in 1985, 1988, and 1990). With Francesco
Mallamace, he co-directed the 1996, 2003, and 2010
Enrico Fermi Schools of Physics, also on interdisciplinary
physics. Stanley chaired the 1998 Gordon Conference on
Water and the 1986 IUPAP International Conference on
Statistical Mechanics, STATPHYS16. Stanley has served
since 2002 on the International Jury for the 500,000 euro
‘Women in Science’ L’Oreal-UNESCO Prize.
He was elected chair of the 2008 NAS/Keck Futures
Initiative on Complexity, and is an active member of the
NAS Committee Forefronts of Science at the Interface ofPhysical and Life Sciences, charged with finding ways forfostering useful collaborations between physicists and life
scientists. He also serves on three NAS committees concerned with threat networks and threatened networks.
One of the guest editors, Kausik Gangopadhyay, interviewed Prof. Stanley on 16 May 2013. An edited transcript2
follows.
KAUSIK: Gene, what is the story behind Econophysics?
You are a pioneer in this field and also named econophysics as ‘Econophysics’. Could you throw some lighton your personal journey towards econophysics?
GENE: As a matter of fact, it was in your city of Kolkata
that for the first time it was publicly named. This happenedin the STATPHYS conference which was a meeting thatBikas Chakrabarti organized in 1995; and when I used theword in this kind of important conference, the word
appeared in the proceedings and it stuck. So let’s talk very
easily about the word. The word is very simple. Then, I’ll
try to talk about the field.
The word tries, as anyone would guess, to coin something that reflects the fact that Econophysics is a little like
Biophysics or Geophysics or Astrophysics which tells youthat people involved in these fields are interested in Biology
or Geology or Astronomy, which they connect from aphysics point of view. And those first three spheres are notmuch different, because Scientists are Scientists—they are
all empirical. Sometimes all they are doing is that they
are introducing a new piece of equipment or something ofthat sort.
But in Economics, it is different…shall we say, a different culture, meaning a physicist’s culture and a typicaleconomist’s culture, are really quite different. I mention
this because you’ll understand the backdrop of my personal journey better.
The personal journey was very simple. My students inBoston University, some of them wanted to study economics and when I would go to Economics Department (whichmeans even if I managed to get this far), I would just ask
people, ‘Are you going to give a PhD in physics to thisperson?’ To which they replied, ‘Of course not, it would bein economics.’
But then in Economics Department, you have to startwith undergraduate Economics and by the time you areable to do something, already quite a lot of time are gone.
Most importantly, what you do under the guidance of an
economist will not be as revolutionary (from a physics perspective) like what you might do with a background ofphysics.

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Interview with Eugene H. Stanley

75

So, I decided to give a name to the synergism, like a
revolutionary country has to have a name, you know! You
need to have some name and this was a nice name, I
thought. The other attempts which were made to give nameto this subject never really stuck. I am very happy with thisword because it makes clear that we are really physicists
who are addressing the questions that economists, some
economists, care about and some don’t.
KAUSIK: Could you please throw some more light on
the Kolkata connection of econophysics?
GENE: That is very simple. There are some very goodpeople there and Bikas Chakrabarti is one of them, someone who—as you probably know—likes to see change.
He likes to make something really happen. So he started tohave meetings on econophysics and I think the first one
was probably in 1995 (he decided to start it in 1993–1994).
Probably the first meeting in my life on this field that I
went to was this meeting. In that sense Kolkata is—you
can say—the nest from which the chicken was born andBikas gets, deservingly so, a lot of credit for that because it
takes a lot of work to have a meeting on a field that does
not really exist, so to say! After all who is going to come?
If you have a meeting on standard fields like super conductivity there are many people who were happy to cometo India to attend that meeting, but econophysics was
something different. So he should get a lot of credit for this.
KAUSIK: Let us talk about something different—
something to do with this field’s academic credentials,
if I may say so. You are an editor of Physica A which isone of the few journals that publish articles on econophysics on a regular basis. Do you think econophysics
has gained enough prominence in academic journals?
GENE: Yes, it is doing well. I, for one, am not disappointed.
It is a fact however, that pure economics journal, such as
Econometrica, as also the other top journals, almost neverpublished a paper from physicists. My group has one paper3
in one of the top four economics journals called the
Quarterly journal of Economics. But we have a co-author
who is a very accomplished economist. He wrote the paperin the language that’s expected in the economics journals.
This means a much more mathematical language making
very clear what the assumptions are and making very
organized definition of each thing, very precise just likemathematicians do. Physicists are much more empiricaland they say, you know, the question is how you are goingto answer some questions by looking at the data and comeout with the findings. But often without a definite ex-antetheory or anything of this sort.
So a typical experience is that author (and this applies
also to economists by the way) submits some piece of work
to a good journal but journal returns it, sometimes not evenwith a referee report, saying since you don’t have a theory
yet, you first have a theory and then resubmit it, which wewould be happy to consider.
But as you know econophysics is a little like a regularphysics discipline in the sense that there is simply no theory of many things; for that matter a lot many things inphysics have no theory what so ever. One of the most dramatic discoveries in physics, which happened about
25 years ago, that is high temperature super-conductivity,
was made empirically. People who discovered even won
Nobel prizes. However no one ever knows why this works.
And the same for regular super conductivity which was
discovered here in Netherlands at the beginning of the lastcentury and it was not until roughly 50 years later that there
was a theory of regular superconductivity.
So we don’t have that rule that you cannot publish what
seems to be true until you have a theory and that should
hold particularly true in economics as well because it is notclear to me (or anyone else) if there is a correct theoryof anything that goes on in economics. Something that fits
all the day and not just, you know, the central part of a
distribution or something of that sort.
So I think, our biggest success story is that we arefocussing primarily on asking the question of what are thedata telling us and we don’t look at the subset of the data,
we look at every piece of data you can get, which in the last
10 years or so has really grown immensely. In economics
there was always a lot of data but economists did not want
to look at the whole dataset for whatever reasons.
In physics, however, we closely look at the data if weare trying to explain something. In fact, it looks almost likea crime not to look at the data. Anyway it’s sitting there,
free. All you need to do is look at it and of course you needsomeone who knows how to programme and not all economists are expert (programmers) on computers—who arekeen to handle terabytes of data—whereas physicists generally tend to be so. So you need someone willing to reallyanalyze the data in ways that are not highly original but
at least they do require a lot of work and that’s the real
success story.
I think another way of success [of econophysicists] isthat by looking at data we then covered laws which economists like to call stylized facts. We even covered stylized

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facts that were not suspected previously—even now some
economists have not accepted them because they are nottested with the most rigorous statistical models. But there
is no question that they are true. Even economists agree
they are true but they don’t want to take them too seriously
because of whatever reasons.
I think our success story is focusing on data; three words‘focusing on data’, just as we do in physics. Physics, as I
have said already, is an empirical subject. Of course, there
are a few examples where theory came first, but in majorityof examples data came first. This is even true for (Sir) Isaac
Newton with the apple falling on his head, or the laws ofelectricity which began with making animals twitch by
putting some current through them all of which reinforce
this idea. I mean all of these things start with the experiment and then sometimes very slowly and sometimes not
so slowly emerges some law like Newton’s law or the lawsof electricity. They all emerge from an effort to describe thedata and from my point of view, this is what we probably
need in economics; we need to find laws which describe
the economic data and that’s exactly what we have tried.
KAUSIK: Are you saying that the biggest success storyof econophysics so far is, facing the data?
GENE: Starting with data and not starting with sometheory.
Although it is different story that some accuse us ofcheating because we are not even making a theory. We arejust looking at data and coming up with things and if we
did have to make a theory we would all know the answer
because we know the data! It is just like if you take a courseof math and you look at the back of the book for the solution manual before you know the problem, then of course
you are much more likely to get the problem solved because
you know what the answer is.
So the difference primarily arises simply because mosteconomists like yourself are trained in mathematics. So
this is what they like to do and this is how they, let us say,compete with each other: your theory is more elegant orsomething than mine, you would get the prize, and not me.
Whereas, in physics, it doesn’t matter whose theory ismore elegant. If your theory does not describe the data sowell as mine, then I’ll get the prize. And that’s quite adifferent thing. So the whole reward system, everythingis different between economics and physics.
KAUSIK: There is a field in economics called econometrics which deals with statistical testing of economic
theories using available data. So a set of economists is

also dedicated to deal primarily on data. How are theydifferent from the econophysicists?
GENE: Econometrics starts with a theory and then test
them with data. If you look into the published articles on
econometrics, there is ample evidence of what I said.
KAUSIK: What are the biggest challenges facing theworld where econophysics can hope to make an inroad?
GENE: I think the main challenge is, knowing the statistical laws which describe fluctuations, fluctuations offinance, fluctuations in economies or anything that is a partof economic systems. And you would think why these laws
were not discovered by traditional economists.
However, the reason they are not discovered or sometimes they are discovered but they are not correct is thatamount of data that was available till recently was not sohuge. If you are doing statistics and you have fat tails thenevents in the fat tail don’t show up unless you have a lot of
data. For example, when we study things with the order ofa giga (109) worth of real economic numbers, we can findlaws that describe data and are as rare as one part in 108,
because there is some information available even for thoserare events in that data. On the other hand, if you only havesay 1,000 data, even more 10,000 data, you are unlikely to
track the rare events because the rare events are one part in
108. In fact it cribs you that you have never even seen
them—one just sparked up.
It’s a little like earthquakes you experience every day. If
you look at 1,000 earthquakes, you would say that there are
two kinds of earthquakes. The big ones, the ones we readabout, and then the everyday ones that we don’t read aboutbecause they are too minor. However we know they exist
because (if you are educated) you would know that theseismic stations pick up the very tiny weak trembles.
Though we would just say there are two kinds of earthquakes when earthquake scientists study them, they findthat all the earthquakes, big and small, obey the identicallaw which tell them that, they only have to find one explanation for earthquakes, not two explanations. They don’t
have one explanation for the little ones and then anotherfor the big ones. It is catastrophic if we have to invoke
the theory of rare events which is something that themathematicians like to do.
In the same way, in economics the big crashes obey theexact same laws as the little slight jerks that nobody cares
about. So, we believe what econophysics has contributed is
the recognition that these fluctuations are quantifiable; youcan really assign law to them and not only that but once
you have this law, it can be useful in planning.

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77

This brings us to business decision-making. The issue
here is, just to take account of the everyday events because
that’s what the business would probably see. When something really bad happens you just go bankrupt. You mightsay, ‘So what! It is not the worst thing in the world.’ But
this is not wise; especially if an entire country like Cyprus
or Iceland or Greece, something at this hour, goes bankrupt
it’s a very serious business!
So we think that every piece of data matters. We cannot
just sit around waiting for the rare ones. If you don’t knowmuch about the rare ones, because there are not that manyof them; then you could make big mistakes.
KAUSIK: Of course. What does emerge as the significance of econophysics in business decision making? Ormaybe I can put it in another way, can findings of
econophysics be taken to the corporate board rooms?
GENE: See, the trouble is that I do not really know whatgoes on in corporate board rooms but if it means do they
have some practical advantage (by the study of econophysics) then I must say any basic laws have much practicaladvantage. In other words, without Newton’s laws you
could not build devices whether it’s a satellite or a canonball or anything else. You have to pay attention to theselaws. And so, businesses have to, in fact, pay attention tobasic laws of economics and the stylized facts.
In economics it is often conventional to not even respectsuch things as laws because they are just so called stylized
facts. We think that businesses have to recognize the factthat these stylized facts are really facts. They are as much afact as it is that the sun will come up tomorrow, except they
are statistical. If we are talking about the sun, then it will be
like: Will I see the sun at all? Someday you just see the sun,someday you just see clouds. There are fluctuations, but
the main thing is that they really are laws of economics,
that are made of lower scale. So businesses have to learn toaccount for the same. In some ways every little thing
matters because if the country goes bankrupt then yourbusiness is going to be in trouble.
KAUSIK: What do you think are major directions of
future research in econophysics?
GENE: It’s a very good question. Of course, once you
know all the empirical facts, then you should try to understand how they interrelate one to the other. In physics, forexample, almost all the facts in classical physics relate to
one another in different ways and students learn these facts.
So I think in economics also, people can do the same; thefuture direction can be to try to understand how the facts
inter-relate. I will give you an example:
Everybody cares about returns on an investment—
2 per cent or 20 per cent or something in between. But thereturn on an investment is not one and only one thing thatis studied; other things are also studied, things such as thevolatility which matters a lot because if the return fluctuates heavily between 2 per cent and 20 per cent, then it isquite different from what would be if it were steady. And
other things like the turnover volume of given stocks. In
fact, all the parameters of stock markets, in principle,
should be related somehow to one another and so I thinkthat’s a very useful future direction to try to figure out.
KAUSIK: Now to our knowledge, the last major interdisciplinary subject, similar to econophysics, was biophysics which is a well established discipline now. If you
consider 1944 as the time of inception of biophysics bypublication of an article entitled ‘What is Life’ by
Erwin Schrödinger, and the eventual ascendance of
this subject to glory with the award of Nobel prize, toFrancis Crick and James Watson in 1962, there’s aspan of 17 years. Econophysics as you mentioned
started in 1995; again it’s coming roughly around thesame time span by now. So what’s your opinion, therelative success (or say failure) of growth of econophysics in this last 17 years when compared to Biophysics inthe similar time span?
GENE: Well, there is no question that Crick & Watson did
their work in 1962; that’s a fact. However as to when
physicists started to get interested in life, it was long
before Schrödinger the physicists were interested in life
may be hundreds of years ago. Inception of biophysics was
not then 17 years before Watson and Crick—there’s noclear beginning. Same is with econophysics, which did not
begin in the year that I named it; in fact, people, I mean,
physicists have been interested in economics for a longtime.
Right here in Leiden, a person got his PhD in Physics
but was interested in Economics so the focus of his thesis
was economics and then went on to win a Nobel prize ineconomics, quite a few years later. His last name is
Tinbergen.
KAUSIK: I know, Jan Tinbergen.
GENE: You know about him? Of course, in economics,
everyone knows him. I know that he studied right here inthis institute under the famous physicist named Ehrenfest.
He studied, if I remember right now, during circa 1925, or

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Kausik Gangopadhyay

so way back, and long before 1995, when I introduced thisword. And even (Sir) Isaac Newton is said to have beeninterested in econophysics.
KAUSIK: Oh really!
GENE: Physicists have been fascinated by economics forthe obvious reason that there are fluctuations. I mean wealways tried to understand what we saw; and the principles
that are easier to understand are something that does notfluctuate like (Sir) Isaac Newton dropping the apple andwatching where it is going and how long it is taking to landand so on and so forth. But it is quite different with things
that fluctuate like gas molecules bouncing around randomly, something that has fascinated physicists for, let’ssay 200 years at least, or all the way back to the Greeks,
may be.
What I am trying to say is that there is no magic
17 years or any other magic time and finally the mostimportant thing to understand is that solving one problem
in 17 years like the structure of DNA does not mean you
have understood biology. I mean people are not saying—
Crick Watson solved the problem, so now, we would goback to whatever we want to do. But the fact is, just the
opposite—biology is growing faster and faster. So I think
this question is not an ideal one unless you say that two
big mountains are 17 km apart. But anyone who knows
about mountains, knows that is totally wrong because forevery tall mountain there is quite a few more or little bit
less tall and there is no magic number about 17 km; it could
be a 100 km or whatever.
KAUSIK: Last question. What will be your advice toyoung researchers who are willing to take up social
problems and applied principles of natural sciences tofind solutions?
GENE: Yes, they should do it and they should rememberthat the problem with any discipline is that there is competition and everybody knows something similar. What is the
chance you are going to make the big discovery? What isthe chance you are going to find out whatever you want toaspire to find out, when everybody else is trying to do thesame thing?
My advice to young researchers is to pick new fields
where lots and lots of people have not already tried towork. Econophysics is one of them and of course there aremany other new fields. I think the same is the case forsocial problems and one of the things that makes it very
optimistic is this phrase called Big Data. Big Data justmeans large quantities of data and in social science forexample, until recently, a typical database would be only
order for 1,000 or 2,000 simply because that is as many
interviews a person can do. For PhD, you do 1,000 interviews, and that’s it. But now there are other things, otherways to learn what’s going on which are using things like
Facebook analysis, twitter analysis, Google analysis,
where you can, with computers of course, sample not
1,000–2,000, but one or two million and you get more
likely the right answer.
My advice to them is to pay great attention to the newdata that becomes available and you can take it very seriously and try to figure out what things you can learn fromthis data. Usually, in history the more data, the more you
know, because science is about data. My advice is just to
ask questions like what can I do that is not already done
and if you pick a hard problem like understanding hightemperature superconductivity the chance that you
succeed is not so big because hundreds of others, very
smart people, are already worked on that problem. If you
pick a new problem, chances are more that you succeed(still not 100 per cent! There is no way one can guarantee
success, of course). It is a question of where to put yourenergy. My advice to the young people is that pick up new
problems, definitely not old problems. They must remember they are competing with the best minds in the world
who already know all the things that do work and all thethings that do not work.
Notes
1. The biography of Prof. Stanley is largely based on what is
mentioned in his professional website at http://polymer.
bu.edu/hes/vitahes-wikipedia.html.
2. The editors gratefully acknowledge the help of Ms. Shejina
Sreenivas in transcribing this interview.
3. X. Gabaix, P. Gopikrishnan, V. Plerou, and H. E. Stanley(2006).

Reference
Gabaix, X., Gopikrishnan, P., Plerou, V., & Stanley, H. E. (2006).
Institutional investors and stock market volatility. Quarterly
Journal of Economics, 121, 461–504.

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