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The Principle of Social Scaling

Paulo dos Santos ()
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Paulo dos Santos: Department of Economics, New School for Social Research

No 1606, Working Papers from New School for Social Research, Department of Economics

Abstract: This paper motivates the content and analytical significance of processes of “social scaling” in competitive economic settings, postulating a general Principle that describes the regulations they impose on the functioning of certain economic systems. Economic competition often defines behavioral relationships between individual measures of certain variables and average or social measures of themselves. These relationships ensure a number of behaviorally significant economic variables are socially scaled measures. Individual values of such variables are subject to systemic interdependences, which may take the form of aggregate first-moment constraints on their distributions. The paper shows how processes of social scaling in capital and labor markets can help account for the observed frequency distributions of wage income and Tobin’s q, suggesting such processes may be a pervasive in economic systems. Finally, the paper’s discussion illustrates and motivates the distinctive usefulness of statistical-mechanical methods in Economics, both in defining new conceptualizations of the relationship between individual agencies and aggregate regulations in economic systems, and in the development of logically robust observational methods in economic analysis.

Keywords: Social Scaling; Economic Distribution; Statistical Mechanics; Observational Economics (search for similar items in EconPapers)
JEL-codes: B41 C18 C69 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe and nep-pke
Date: 2016-09
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http://www.economicpolicyresearch.org/econ/2016/NSSR_WP_062016.pdf First version, 2016 (application/pdf)

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