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A Polynomial Distribution Applied to Income and Wealth Distribution

Author

Listed:
  • Elvis Oltean

    (Loughborough University)

  • Fedor V. Kusmartsev

    (Loughborough University)

Abstract

Income and wealth distribution affect stability of a society to a large extent and high inequality affects it negatively. Moreover, in the case of developed countries, recently has been proven that inequality is closely related to all negative phenomena affecting society. So far, Econophysics papers tried to analyse income and wealth distribution by employing distributions such as Fermi-Dirac, Bose-Einstein, Maxwell-Boltzmann, lognormal (Gibrat), and exponential. Generally, distributions describe mostly income and less wealth distribution for low and middle income segment of population, which accounts about 90% of the population. Our approach is based on a totally new distribution, not used so far in the literature regarding income and wealth distribution. Using cumulative distribution method, we find that polynomial functions, regardless of their degree (first, second, or higher), can describe with very high accuracy both income and wealth distribution. Moreover, we find that polynomial functions describe income and wealth distribution for entire population including upper income segment for which traditionally Pareto distribution is used.

Suggested Citation

  • Elvis Oltean & Fedor V. Kusmartsev, 2013. "A Polynomial Distribution Applied to Income and Wealth Distribution," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(4), pages 1-2, August.
    • Handle: RePEc:spp:jkmeit:1395
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    References listed on IDEAS

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    1. Adrian Dragulescu & Victor M. Yakovenko, 2000. "Statistical mechanics of money," Papers cond-mat/0001432, arXiv.org, revised Aug 2000.
    2. A. Drăgulescu & V.M. Yakovenko, 2001. "Evidence for the exponential distribution of income in the USA," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 20(4), pages 585-589, April.
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    Cited by:

    1. Elvis Oltean, 2016. "Modelling income, wealth, and expenditure data by use of Econophysics," Papers 1603.08383, arXiv.org.
    2. Elvis Oltean & Fedor V. Kusmartsev, 2014. "Applications of statistical physics distributions to several types of income," Papers 1410.3811, arXiv.org, revised Mar 2016.
    3. Elvis Oltean & Fedor Kusmartsev, 2014. "A statistical physics analysis of expenditure in the UK," Papers 1410.3865, arXiv.org, revised Mar 2016.
    4. Elvis Oltean & Fedor Kusmartsev, 2014. "An Econophysical dynamical approach of expenditure and income distribution in the UK," Papers 1410.3851, arXiv.org, revised Mar 2016.
    5. Elvis Oltean, 2014. "An econophysical approach of polynomial distribution applied to income and expenditure," Papers 1410.3860, arXiv.org, revised Mar 2016.

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