Entropy and Wealth

Abstract

While entropy was introduced in the second half of the 19th century in the international vocabulary as a scientific term, in the 20th century it became common in colloquial use. Popular imagination has loaded “entropy” with almost every negative quality in the universe, in life and in society, with a dominant meaning of disorder and disorganization. Exploring the history of the term and many different approaches to it, we show that entropy has a universal stochastic definition, which is not disorder. Hence, we contend that entropy should be used as a mathematical (stochastic) concept as rigorously as possible, free of metaphoric meanings. The accompanying principle of maximum entropy, which lies behind the Second Law, gives explanatory and inferential power to the concept, and promotes entropy as the mother of creativity and evolution. As the social sciences are often contaminated by subjectivity and ideological influences, we try to explore whether maximum entropy, applied to the distribution of a wealth-related variable, namely annual income, can give an objective description. Using publicly available income data, we show that income distribution is consistent with the principle of maximum entropy. The increase in entropy is associated to increases in society’s wealth, yet a standardized form of entropy can be used to quantify inequality. Historically, technology has played a major role in the development of and increase in the entropy of income. Such findings are contrary to the theory of ecological economics and other theories that use the term entropy in a Malthusian perspective.

Values and Costs in History: A Case Study on Estimating the Cost of Hadrianic Aqueduct’s Construction

“…Recent studies [14,15] delivered also the same conclusions, presenting the dynamics of stratification in society with an entropic approach [16]. The same conclusions were delivered by Atkinson for modern economies [17].…”

Synchronous Generative Development amidst Situated Entropy

“…Thus, a positive balance of situated entropy between people and environment is a balance that reduces physical disorder and information uncertainty but does not focus on entirely eliminating either. In other words, there is a balance between entropy pessimism [ 26 ] and entropy optimism [ 99 ], within which reducing entropy can increase efficiency but not to such an extent that there is no flexibility to develop amidst disturbances [ 7 , 8 ].…”

Stochastic Evaluation of the Investment Risk by the Scale of Water Infrastructures—Case Study: The Municipality of West Mani (Greece)

“…In prehistory and before the invention of money, the responsibility for the management of big infrastructures was laid on the elite, which was responsible for social stability and the distribution of wealth [16,17]. However, we cannot be certain about the rules and how the elite (for example, the elite of Minoans) performed the management for these World 2023, 4 2 constructions [18], and how they distributed the wealth to society without the exchange of money and taxes [19].…”