Beyond lognormal inequality: The Lorenz Flow Structure

Iddo Eliazar

Physica A: Statistical Mechanics and its Applications, 2016, vol. 461, issue C, 339-354

Abstract: Observed from a socioeconomic perspective, the intrinsic inequality of the lognormal law happens to manifest a flow generated by an underlying ordinary differential equation. In this paper we extend this feature of the lognormal law to a general “Lorenz Flow Structure” of Lorenz curves–objects that quantify socioeconomic inequality. The Lorenz Flow Structure establishes a general framework of size distributions that span continuous spectra of socioeconomic states ranging from the pure-communism extreme to the absolute-monarchy extreme. This study introduces and explores the Lorenz Flow Structure, analyzes its statistical properties and its inequality properties, unveils the unique role of the lognormal law within this general structure, and presents various examples of this general structure. Beyond the lognormal law, the examples include the inverse-Pareto and Pareto laws–which often govern the tails of composite size distributions.

Keywords: Wealth distributions; Lorenz and disparity curves; Inequality indices; Lognormal law; Inverse-Pareto and Pareto laws (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:461:y:2016:i:c:p:339-354

DOI: 10.1016/j.physa.2016.05.061

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