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Dr.  Victor M. Yakovenko
Department of Physics
University of Maryland, College Park

 

Wed. March 31, 3:30 PM

Thirkield Hall (Physics), room 103

 

Statistical Mechanics of Money, Income, and Wealth

 

By analogy with the probability distribution of energy in physics, I argue that the probability distribution of money in a closed economic system should also follow the exponential Boltzmann-Gibbs law. Analysis of the empirical data shows that income distribution in the USA has a well-defined two-class structure. The majority of the population (about 97%) belongs to the lower class characterized by the exponential ("thermal") distribution. The upper class (about 3% of the population) is characterized by the Pareto power-law ("superthermal") distribution, and its share of the total income expands and contracts dramatically during bubbles and busts in financial markets. I show that the probability distribution of energy consumption per capita around the world also follows the exponential Boltzmann-Gibbs law. References are available at http://www2.physics.umd.edu/~yakovenk/econophysics/.

 

Refreshments will be served at 3:40pm