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An analytic treatment of the Gibbs–Pareto behavior in wealth distribution

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  • Das, Arnab
  • Yarlagadda, Sudhakar

Abstract

We develop a general framework, based on Boltzmann transport theory, to analyze the distribution of wealth in societies. Within this framework we derive the distribution function of wealth by using a two-party trading model for the poor people, while for the rich people a new model is proposed, where interaction with wealthy entities (huge reservoir) is relevant. At equilibrium, the interaction with wealthy entities gives a power-law (Pareto-like) behavior in the wealth distribution, while the two-party interaction gives a Boltzmann–Gibbs distribution.

Suggested Citation

  • Das, Arnab & Yarlagadda, Sudhakar, 2005. "An analytic treatment of the Gibbs–Pareto behavior in wealth distribution," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 353(C), pages 529-538.
    • Handle: RePEc:eee:phsmap:v:353:y:2005:i:c:p:529-538
    DOI: 10.1016/j.physa.2005.02.018
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    References listed on IDEAS

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    1. Favero, Carlo A., 2001. "Applied Macroeconometrics," OUP Catalogue, Oxford University Press, number 9780198296850.
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    Cited by:

    1. Newby, Michael & Behr, Adam & Feizabadi, Mitra Shojania, 2011. "Investigating the distribution of personal income obtained from the recent U.S. data," Economic Modelling, Elsevier, vol. 28(3), pages 1170-1173, May.
    2. Patriarca, Marco & Chakraborti, Anirban & Germano, Guido, 2006. "Influence of saving propensity on the power-law tail of the wealth distribution," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 369(2), pages 723-736.
    3. Ines Heck & Jakob Kapeller & Rafael Wildauer, 2020. "Vermögenskonzentration in Österreich," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 206, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    4. Heck, Ines & Kapeller, Jakob & Wildauer, Rafael, 2020. "Vermögenskonzentration in Österreich: Ein Update auf Basis des HFCS 2017," Greenwich Papers in Political Economy 30683, University of Greenwich, Greenwich Political Economy Research Centre.

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