Regensburg 2004 – scientific programme

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AKSOE: Physik sozio-ökonomischer Systeme

AKSOE 10: Mikro-ökonomische Modelle und Multi-Agenten-Systeme

AKSOE 10.1: Invited Talk

Thursday, March 11, 2004, 14:00–14:45, H8

Physicists’ Insights into Wealth Distributions — •František Slanina — Institute of Physics, Academy of Sciences of the Czech Republic, Na Slovance 2, CZ-18221 Praha, Czech Republic

Distribution of wealth in human society was one of first features of socio-economic systems which was attempted to approach scientifically. Empirical analysis performed by Vilfredo Pareto lay down the foudation of the quantitative analysis of social inequality which was of first concern throughout the 19th century. The famous Pareto law, claiming power-law distribution of wealth, robust in time and valid in all diverse societies, was re-examined many times since then. Several other functional dependencies were suggested, but the essential message that the tail of the distribution follows a power-law passed all tests.

However, the explanation of the Pareto tail was less straightforward than it might have seemed. In our talk we summarise several approaches, including Lotka-Volterra equations, random directed polymers and ideal-gas analogies. We will present a new model of wealth exchange which yields exact analytical solution for the wealth distribution.

We will be stressing that the essence of all these approaches can be boiled down to random multiplicative processes with appropriate boundary conditions. In so doing we indirectly argue against the presence of self-organized criticality in economic systems and suggest the triviality of ubiquitous power-law distributions.
15 min. Pause