An out-of-equilibrium model of the distributions of wealth

Nicola Scafetta, Sergio Picozzi and Bruce J. West

Papers from arXiv.org

Abstract: The distribution of wealth among the members of a society is herein assumed to result from two fundamental mechanisms, trade and investment. An empirical distribution of wealth shows an abrupt change between the low-medium range, that may be fitted by a non-monotonic function with an exponential-like tail such as a Gamma distribution, and the high wealth range, that is well fitted by a Pareto or inverse power-law function. We demonstrate that an appropriate trade-investment model, depending on three adjustable parameters associated with the total wealth of a society, a social differentiation among agents, and economic volatility referred to as investment can successfully reproduce the distribution of empirical wealth data in the low, medium and high ranges. Finally, we provide an economic interpretation of the mechanisms in the model and, in particular, we discuss the difference between Classical and Neoclassical theories regarding the concepts of {\it value} and {\it price}. We consider the importance that out-of-equilibrium trade transactions, where the prices differ from values, have in real economic societies.

Date: 2004-03
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://arxiv.org/pdf/cond-mat/0403045 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:cond-mat/0403045

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().