Some universal patterns in income distribution: An econophysics approach

Anwar Shaikh and Amr Ragab

Metroeconomica, 2023, vol. 74, issue 1, 248-264

Abstract: The econophysics “two‐class” approach yields a novel theoretical and empirically robust relation: The per capita income y‾(x) $\overline{y}(x)$ of any bottom fraction (x) of the population equals a(x)∙(1−G) y‾ $\overline{y}$, where a(x) is a coupling coefficient, G the Gini, and y‾ $\overline{y}$ is national per capita income. For the bottom 70%, a(70) = 1, which yields the Sen inequality adjustment to the 1993 UNDP Human Development Index, without any reliance on social welfare functions. Alternately, a(80) = 1.1 yields the bottom 80% per capita income (Vast Majority Income). We propose the latter as a new inequality‐adjusted measure of wellbeing.

Date: 2023
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