Race, gender and the econophysics of income distribution in the USA

Shaikh, Anwar; Papanikolaou, Nikolaos; Wiener, Noe

doi:10.1016/j.physa.2014.07.043

Cited by 43 publications

(19 citation statements)

References 8 publications

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“…Shaikh et al . () expands Dragulescu and Yakovenko's findings by showing that the mixture of the exponential and the Pareto distribution is also found in the income distribution by race and gender in the United States. A recent study by Toda (, ) shows that not only the upper tail but also the lower tail of the (detrended) income distribution are well described by the power‐law distribution and therefore the distribution follows the double Pareto distribution.…”

Section: Se Models Of Economic Interactionssupporting

confidence: 53%

Information Theoretic Approaches in Economics

Yang

2017

Journal of Economic Surveys

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Economics has seen a recent rise in interest in information theory as an alternative framework to the conventional notion of equilibrium as a fixed state, such as Walrasian marketclearing general equilibrium. The information theoretic approach is predicated on the notion of statistical equilibrium (SE) that takes a distribution over all possible states as an equilibrium, and therefore predicts the endogenous fluctuations of the system along with its central tendency simultaneously. For this reason, SE approaches can explain the observed data without relying on arbitrary assumptions about random noise and provide useful insights for many interesting economic problems that conventional methods have not been able to satisfactorily deal with. In this paper, we review the key elements of information theory focusing on the notions and applications of entropy and SE in economics, particularly paying attention to how entropy concepts open up a new frontline of economic research.

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Section: Se Models Of Economic Interactionssupporting

confidence: 53%

Information Theoretic Approaches in Economics

Yang

2017

Journal of Economic Surveys

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“…A number of studies have established that almost the entire ranges of the distributions of individual income in the US and Britain are extremely well represented by BoltzmannGibbs exponential functions [11][12][13][14]. This finding is easily corroborated by more recent observation, as shown in Figures 2 and 3, which use data from the US Census Bureau Current Population Survey to corroborate earlier findings made with IRS income data.…”

Section: Scaling and A Classical Approach To Wage Incomesupporting

confidence: 65%

“…This includes a number of quantities that are central to the functioning of financial markets and broader capitalist economies: changes in financial asset prices, their correlations over different time horizons, and financial-market trading volumes [4][5][6][7][8][9]; individual income and wealth [10][11][12][13][14]; corporate rates of growth and profitability [15][16][17][18][19]; the measure of corporate security prices given by Tobin's [20,21]; and daily changes in foreign exchange rates [22]. These findings are an interesting development for economic analysis, which confronts complex social systems shaped by evolving patterns of interaction between large numbers of individuals whose own characteristics and behavior are socially conditioned.…”

Section: Introductionmentioning

confidence: 99%

The Principle of Social Scaling

Santos

2017

Complexity

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This paper identifies a general class of economic processes capable of generating the first-moment constraints implicit in the observed cross-sectional distributions of a number of economic variables: processes of social scaling. Across a variety of settings, the outcomes of economic competition reflect the normalization of individual values of certain economic quantities by average or social measures of themselves. The resulting socioreferential processes establish systematic interdependences among individual values of important economic variables, which under certain conditions take the form of emergent first-moment constraints on their distributions. The paper postulates a principle describing this systemic regulation of socially scaled variables and illustrates its empirical purchase by showing how capital-and labor-market competition can give rise to patterns of social scaling that help account for the observed distributions of Tobin's and wage income. The paper's discussion embodies a distinctive approach to understanding and investigating empirically the relationship between individual agency and structural determinations in complex economic systems and motivates the development of observational foundations for aggregative, macrolevel economic analysis.

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“…(), Dragulescu and Yakovenko (), Franke (), Isaac (), Milaković (), Yakovenko (), Scharfenaker and Dos Santos (), Schneider () and Shaikh et al . (), and the recent work of Alfarano et al . () who apply the principle of maximum entropy to profit rate distributions.…”

Section: Statistical Mechanics and Statistical Equilibriummentioning

confidence: 69%

A Statistical Equilibrium Approach to the Distribution of Profit Rates

Scharfenaker

Semieniuk

2016

Metroeconomica

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Motivated by classical political economy we detail a probabilistic, statistical equilibrium approach to explaining why even in equilibrium, the equalization of profit rates leads to a non-degenerate distribution. Based on this approach we investigate the empirical content of the profit rate distribution for previously unexamined annual firm level data comprising over 24,000 publicly listed North American firms for the period 1962-2014. We find strong evidence for a structural organization and equalization of profit rates on a relatively short time scale both at the economy wide and one-and two-digit SIC industry levels into a Laplace or double exponential distribution. We show that the statistical equilibrium approach is consistent with economic theorizing about profit rates and discuss research questions emerging from this novel look at profit rate distributions. We also highlight the applicability of the underlying principle of maximum entropy for inference in a wide range of economic topics. . We are grateful to two anonymous referees for their helpful feedback on an earlier version.

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Race, gender and the econophysics of income distribution in the USA

Cited by 43 publications

References 8 publications

Information Theoretic Approaches in Economics

Information Theoretic Approaches in Economics

The Principle of Social Scaling

A Statistical Equilibrium Approach to the Distribution of Profit Rates

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