IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v17y2024i11p2478-d1399330.html
   My bibliography  Save this article

Looking at Economics through the Eyes of Thermodynamics

Author

Listed:
  • Vítor A. F. Costa

    (TEMA—Centro de Tecnologia Mecânica e Automação, Departamento de Engenharia Mecânica, Universidade de Aveiro, Campus Universitário de Santiago, 3810-193 Aveiro, Portugal)

Abstract

Based on Thermodynamics and its well-established First and Second Laws, this work presents and explores their economics counterparts, introducing new concepts, variables, and equations. This includes, among others, the economic counterparts of temperature, reversibility and irreversibility, and entropy and entropy generation resulting from economic irreversibility. The meaning of the new concepts, variables, equations, and their messages are introduced and discussed considering simple yet relevant economic processes. The economic counterparts of the First and Second Law balance equations are set in addition to the base concepts and Laws. These are effective and valuable tools for the analysis of economic processes. Observations from selected economic activities are analyzed using the new concepts, variables, and equations.

Suggested Citation

  • Vítor A. F. Costa, 2024. "Looking at Economics through the Eyes of Thermodynamics," Energies, MDPI, vol. 17(11), pages 1-41, May.
    • Handle: RePEc:gam:jeners:v:17:y:2024:i:11:p:2478-:d:1399330
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/17/11/2478/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/17/11/2478/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. McCauley, Joseph L., 2003. "Thermodynamic analogies in economics and finance: instability of markets," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 329(1), pages 199-212.
    2. Elias L. Khalil, 2004. "The Three Laws of Thermodynamics and the Theory of Production," Journal of Economic Issues, Taylor & Francis Journals, vol. 38(1), pages 201-226, March.
    3. Ayres, Robert U., 1998. "Eco-thermodynamics: economics and the second law," Ecological Economics, Elsevier, vol. 26(2), pages 189-209, August.
    4. Jing Chen, 2005. "The Physical Foundation of Economics:An Analytical Thermodynamic Theory," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 5819, August.
    5. H. Quevedo & M. N. Quevedo, 2009. "Statistical thermodynamics of economic systems," Papers 0903.4216, arXiv.org, revised May 2011.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vítor A. F. Costa, 2024. "A Four Laws Structure for Looking at Economics through the Eyes of Thermodynamics," Energies, MDPI, vol. 17(17), pages 1-39, August.
    2. Florian Fizaine & Victor Court, 2016. "The energy-economic growth relationship: a new insight from the EROI perspective," Working Papers 1601, Chaire Economie du climat.
    3. Jeroen van den Bergh & John Gowdy, 2000. "Evolutionary Theories in Environmental and Resource Economics: Approaches and Applications," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(1), pages 37-57, September.
    4. Sousa, Tania & Domingos, Tiago, 2006. "Is neoclassical microeconomics formally valid? An approach based on an analogy with equilibrium thermodynamics," Ecological Economics, Elsevier, vol. 58(1), pages 160-169, June.
    5. Arthur Matsuo Yamashita Rios de Sousa & Hideki Takayasu & Misako Takayasu, 2017. "Detection of statistical asymmetries in non-stationary sign time series: Analysis of foreign exchange data," PLOS ONE, Public Library of Science, vol. 12(5), pages 1-18, May.
    6. Clive L. Spash, 2013. "The Ecological Economics of Boulding's Spaceship Earth," SRE-Disc sre-disc-2013_02, Institute for Multilevel Governance and Development, Department of Socioeconomics, Vienna University of Economics and Business.
    7. Foster, John, 2011. "Energy, aesthetics and knowledge in complex economic systems," Journal of Economic Behavior & Organization, Elsevier, vol. 80(1), pages 88-100.
    8. Victor Court & Pierre-André Jouvet & Frédéric Lantz, 2015. "Endogenous economic growth, EROI, and transition towards renewable energy," Working Papers 1507, Chaire Economie du climat.
    9. Bucsa, G. & Jovanovic, F. & Schinckus, C., 2011. "A unified model for price return distributions used in econophysics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 390(20), pages 3435-3443.
    10. BoroumandJazi, G. & Rismanchi, B. & Saidur, R., 2013. "A review on exergy analysis of industrial sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 27(C), pages 198-203.
    11. Wayne, James J., 2013. "Fundamental Equation of Economics," MPRA Paper 50695, University Library of Munich, Germany.
    12. Valero, Alicia & Valero, Antonio & Calvo, Guiomar, 2015. "Using thermodynamics to improve the resource efficiency indicator GDP/DMC," Resources, Conservation & Recycling, Elsevier, vol. 94(C), pages 110-117.
    13. Mark Roseland & Maria Spiliotopoulou, 2016. "Converging Urban Agendas: Toward Healthy and Sustainable Communities," Social Sciences, MDPI, vol. 5(3), pages 1-20, July.
    14. Hoang, Viet-Ngu & Rao, D.S. Prasada, 2010. "Measuring and decomposing sustainable efficiency in agricultural production: A cumulative exergy balance approach," Ecological Economics, Elsevier, vol. 69(9), pages 1765-1776, July.
    15. Kakarot-Handtke, Egmont, 2010. "Axiomatic Basics of e-Economics," MPRA Paper 24331, University Library of Munich, Germany.
    16. Agudelo, Andrés & Valero, Antonio & Torres, César, 2012. "Allocation of waste cost in thermoeconomic analysis," Energy, Elsevier, vol. 45(1), pages 634-643.
    17. Ayres, Robert U., 2004. "On the life cycle metaphor: where ecology and economics diverge," Ecological Economics, Elsevier, vol. 48(4), pages 425-438, April.
    18. Remig, Moritz C., 2017. "Structured pluralism in ecological economics — A reply to Peter Söderbaum's commentary," Ecological Economics, Elsevier, vol. 131(C), pages 533-537.
    19. Court, Victor & Fizaine, Florian, 2017. "Long-Term Estimates of the Energy-Return-on-Investment (EROI) of Coal, Oil, and Gas Global Productions," Ecological Economics, Elsevier, vol. 138(C), pages 145-159.
    20. Chen, Jing, 2018. "An entropy theory of value," Structural Change and Economic Dynamics, Elsevier, vol. 47(C), pages 73-81.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:17:y:2024:i:11:p:2478-:d:1399330. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.