Colloquium: Statistical mechanics of money, wealth, and income

Abstract

This Colloquium reviews statistical models for money, wealth, and income distributions developed in the econophysics literature since the late 1990s. By analogy with the Boltzmann-Gibbs distribution of energy in physics, it is shown that the probability distribution of money is exponential for certain classes of models with interacting economic agents. Alternative scenarios are also reviewed. Data analysis of the empirical distributions of wealth and income reveals a two-class distribution. The majority of the population belongs to the lower class, characterized by the exponential ("thermal") distribution, whereas a small fraction of the population in the upper class is characterized by the power-law ("superthermal") distribution. The lower part is very stable, stationary in time, whereas the upper part is highly dynamical and out of equilibrium.

24 pages, 13 figures; v.2 - minor stylistic changes and updates of references corresponding to the published version

References in corpus (16)

• Agent-based Models of Financial Markets
• Kinetic Exchange Models for Income and Wealth Distributions
• A study of the personal income distribution in Australia
• k-Generalized Statistics in Personal Income Distribution
• The Power-law Tail Exponent of Income Distributions
• Response to Worrying Trends in Econophysics
• Generic features of the wealth distribution in ideal-gas-like markets
• Self-similarity and power-like tails in nonconservative kinetic models
• A Unified Framework for the Pareto Law and Matthew Effect using Scale-Free Networks
• Kinetic models for wealth exchange on directed networks
• Modeling wealth distribution in growing markets
• Kinetic market models with single commodity having price fluctuations
• Emergence of Power Law in a Market with Mixed Models
• Geometrical derivation of the Boltzmann factor
• Nonequilibrium Thermodynamics of Wealth Condensation
• A Natural Value Unit - Econophysics as Arbiter between Finance and Economics

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• The Kinetics of Wealth and the Origin of the Pareto Law
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