Colloquium: Statistical mechanics of money, wealth, and income

Victor M. Yakovenko and J. Barkley Rosser, Jr.
Rev. Mod. Phys. 81, 1703 – Published 2 December 2009

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.

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    DOI:https://doi.org/10.1103/RevModPhys.81.1703

    ©2009 American Physical Society

    Authors & Affiliations

    Victor M. Yakovenko

    • Department of Physics, University of Maryland, College Park, Maryland 20742-4111, USA

    J. Barkley Rosser, Jr.

    • Department of Economics, James Madison University, Harrisonburg, Virginia 22807, USA

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    Issue

    Vol. 81, Iss. 4 — October - December 2009

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