Social studies of finance
Encyclopedia
Social studies of finance is an interdisciplinary research area that combines perspectives from economic sociology
, science and technology studies
, international political economy
, behavioral finance
, cultural studies
and/or economics
in the study of financial markets. Work in social studies of finance emphasize the social and cultural dimension of financial activities, but focus also on technical and economic dimensions such as pricing and trading.
’s Die Börse. The raise of quantitative financial theory in financial economics
from the 1950s onwards has led to an academic specialization on financial markets rather focused on economic modeling, and poorly attentive to sociological aspects. In the 1980s, a number of economic sociologists developed empirical investigation on the social structure and cultural characteristics of financial markets, especially in the US. Such pioneering researcher included contributions from Wayne E. Baker, Mitchel Y. Abolafia and Charles W. Smith, and was based on methods such as ethnographic observation or social network analysis. In the 1990s, a number of researchers from the field of science and technology studies
such as Karin Knorr-Cetina and Donald A. MacKenzie started also developing empirical research in this area, with close attention to the role of expert knowledge and technology in financial activities.
and other professionals in financial markets, the globalization
and regulation
of financial services, the processes of innovation
in the financial industry and the problems of risk
and uncertainty
that characterize such processes.
Economic sociology
Economic sociology studies both the social effects and the social causes of various economic phenomena. The field can be broadly divided into a classical period and a contemporary one. The classical period was concerned particularly with modernity and its constituent aspects...
, science and technology studies
Science and technology studies
Science, technology and society is the study of how social, political, and cultural values affect scientific research and technological innovation, and how these, in turn, affect society, politics and culture...
, international political economy
International political economy
International political economy , also known as global political economy, is an academic discipline within the social sciences that analyzes international relations in combination with political economy. As an interdisciplinary field it draws on many distinct academic schools, most notably ...
, behavioral finance
Behavioral finance
Behavioral economics and its related area of study, behavioral finance, use social, cognitive and emotional factors in understanding the economic decisions of individuals and institutions performing economic functions, including consumers, borrowers and investors, and their effects on market...
, cultural studies
Cultural studies
Cultural studies is an academic field grounded in critical theory and literary criticism. It generally concerns the political nature of contemporary culture, as well as its historical foundations, conflicts, and defining traits. It is, to this extent, largely distinguished from cultural...
and/or economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
in the study of financial markets. Work in social studies of finance emphasize the social and cultural dimension of financial activities, but focus also on technical and economic dimensions such as pricing and trading.
History
Financial markets have been an object for sociological inquiry since, at least, Max WeberMax Weber
Karl Emil Maximilian "Max" Weber was a German sociologist and political economist who profoundly influenced social theory, social research, and the discipline of sociology itself...
’s Die Börse. The raise of quantitative financial theory in financial economics
Financial economics
Financial Economics is the branch of economics concerned with "the allocation and deployment of economic resources, both spatially and across time, in an uncertain environment"....
from the 1950s onwards has led to an academic specialization on financial markets rather focused on economic modeling, and poorly attentive to sociological aspects. In the 1980s, a number of economic sociologists developed empirical investigation on the social structure and cultural characteristics of financial markets, especially in the US. Such pioneering researcher included contributions from Wayne E. Baker, Mitchel Y. Abolafia and Charles W. Smith, and was based on methods such as ethnographic observation or social network analysis. In the 1990s, a number of researchers from the field of science and technology studies
Science and technology studies
Science, technology and society is the study of how social, political, and cultural values affect scientific research and technological innovation, and how these, in turn, affect society, politics and culture...
such as Karin Knorr-Cetina and Donald A. MacKenzie started also developing empirical research in this area, with close attention to the role of expert knowledge and technology in financial activities.
Main topics
Research topics in social studies of finance include the cultural world and work habits of tradersTrader (finance)
A trader is someone in finance who buys and sells financial instruments such as stocks, bonds, commodities and derivatives. A broker who simply fills buy or sell orders is not a trader, as they are merely executing instructions given to them. According to the Wall Street Journal in 2004, a managing...
and other professionals in financial markets, the globalization
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...
and regulation
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...
of financial services, the processes of innovation
Innovation
Innovation is the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets, governments, and society...
in the financial industry and the problems of risk
Risk
Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...
and uncertainty
Uncertainty
Uncertainty is a term used in subtly different ways in a number of fields, including physics, philosophy, statistics, economics, finance, insurance, psychology, sociology, engineering, and information science...
that characterize such processes.
Major references
- Adler, Patricia A. and Adler, Peter (eds) (1984) The Social Dynamics of Financial Markets, Greenwich (Connecticut): The JAI Press. ISBN 0-89232-435-X
- Bernstein, Peter (1993) Capital Ideas: The Improbable Origins of Modern Wall Street, New York: The Free Press. ISBN 0-02-903012-9
- Abolafia, Mitchel Y. (1997) Making Markets: Opportunism and Restraint on Wall Street, Cambridge (Massachusetts): Harvard University Press. ISBN 0-674-54324-6
- Hertz, Ellen (1998) The Trading Crowd: An Ethnography of the Shanghai Stock Market, Cambridge: Cambridge University Press. ISBN 0-521-56497-2
- Carruthers, Bruce (1999) City of Capital: Politics and Markets in the English Financial Revolution, Princeton: Princeton University Press. ISBN 0-691-04455-4
- Smith, Charles W. (1999) Success and Survival on Wall Street: Understanding the Mind of the Market, Lanham (Maryland): Rowman & Littlefield. ISBN 0-8476-9490-9
- Godechot, Olivier (2001) Les Traders: Essai de Sociologie des Marchés Financiers, Paris: La Découverte. ISBN 2-7071-3385-X
- Knorr Cetina, Karin and Preda, Alex (eds) (2004) The Sociology of Financial Markets, Oxford: Oxford University Press. ISBN 0-19-927559-9
- MacKenzie, Donald (2006) An Engine, not a Camera: How Financial Models Shape Markets, Cambridge (Massachusetts): The MIT Press. ISBN 0-262-13460-8