Turns out there are only two classes after all

Very fun statistical analysis on income distribution:

Quote:

Personal income distribution in the USA has a well-defined two-class structure. The majority of population (97–99%) belongs to the lower class characterized by the exponential Boltzmann-Gibbs (“thermal”) distribution, whereas the upper class (1–3% of the population) has a Pareto power law (“superthermal”) distribution. By analyzing income data for 1983– 2001, we show that the “thermal” part is stationary in time, save for a gradual increase of the effective temperature, whereas the “superthermal” tail swells and shrinks following the stock market. We discuss the concept of equilibrium inequality in a society, based on the principle of maximal entropy, and quantitatively show that it applies to the majority of population.

Linky (PDF).



The interesting thing about Boltzmann-Gibbs is that it is used to describe a specific circumstance:

Quote:

As it turns out the distribution for the lower incomes is known as a Gibbs distribution. This statistical distribution happens to have been studied very extensively in statistical physics and so we know a lot about what types of process give rise to the behaviour. The Gibbs is common with random additive processes. A good example in nature is the distribution of energies in a gas at a given temperature. The additive process is the collision between molecules which transports some of the energy from one particle to the other. The Marxist economist Kalecki4 was among the first who recognised that income would also follow such a distribution. He argued that the distribution of incomes of the working class was not log normal distributed. This alternative would come from a very different underlying process which is multiplicative). If we think of what type of process might be giving rise to the income distributions in the working class here, one simple model is that people have monetary transfers amongst themselves which are effectively random. This process type of random particle-to-particle transaction is what is known as memoryless. Each event between the individuals taking part is essentially an isolated random event, like the toss of the dice, with no dependence on the past behaviour. It is really only such random memoryless additive type processes which can lead to Gibbs distributed variables. This memoryless character really calls into question the idea that our economic system is based on meritocracy. How could it possibly be if it is so well modelled by randomness without any memory of past actions?

Linky.

via International Skeptics Forum http://ift.tt/1E1h5PJ