3 ms·
The equations from physics say "if we have some quantity X distributed among bins Y, and X is randomly exchanged between pairs of Y over and over, then P(bin y
by scottmsul 10y ago
The equations from physics say "if we have some quantity X distributed among bins Y, and X is randomly exchanged between pairs of Y over and over, then P(bin y has amount x) is proportional to exp(-x)". In physics, X is energy and Y is atoms, while in economics, X is money and Y is people. If the money were truly being exchanged randomly, then the distribution should look exponential, that is, the probability person p has money m is proportional to exp(-m). What we observe is that the probability of having money m is actually m^(-alpha). Therefore the money is not being exchanged randomly, and the richest agents probably aren't lucky.
- timr 10y ago"What we observe is that the probability of having money m is actually m^(-alpha). Therefore the money is not being exchanged randomly, and the richest agents probably aren't lucky." No, it means that you're using the wrong model. There are lots of models of "random" behavior. You can't just pick one out because you like it, and conclude that a system isn't "random" because the model you've chosen doesn't fit the data. The article isn't especially convincing either, but at least they're describing a model that looks somewhat like money, and produces a distribution that matches what's observed in reality. You're describing a model that looks like atoms, and concluding that money isn't random because it doesn't look like atoms.
- mcguire 10y agoIs that a zero sum game? What happens if you add a heat source to the model?