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Thermodynamic description of wealth inequality in the world

Author

Listed:
  • Klaus M. Frahm
  • Leonardo Ermann
  • Dima L. Shepelyansky

Abstract

According to the recent Wealth Thermalization Hypothesis (WTH) the wealth inequality in the world is described by the Rayleigh-Jeans (RJ) thermal distribution of interacting agents in a society with social stratification. In this concept, the wealth layers of society are associated with energy levels from a nonlinear dynamical system conserving two integrals of motion being total energy and probability norm. This leads to RJ condensation and the formation of a huge poverty phase of low wealth and a tiny oligarchic phase that captures a main part of total society wealth. This RJ phenomenon has similarities with self cleaning in multimode optical fibers and constraint driven condensation in various physical systems. We analyze real Lorenz and Pareto curves for wealth of households in countries and the world, Gross Domestic Product of countries, market capitalization of companies at stock exchange of Hong Kong, Shanghai, London, bitcoin transactions, world trade between countries and show that the WTH theory gives a good description of these curves. On the basis of this comparison we argue that the RJ thermal distribution provides a universal description of wealth inequality in the world.

Suggested Citation

  • Klaus M. Frahm & Leonardo Ermann & Dima L. Shepelyansky, 2026. "Thermodynamic description of wealth inequality in the world," Papers 2606.17965, arXiv.org.
    • Handle: RePEc:arx:papers:2606.17965
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    References listed on IDEAS

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