Statistical Mechanics of Money, Income, Debt, and Energy ConsumptionFebruary 22, 2012
American Center for Physics
College Park, MD
Date: Wednesday, February 22, 2012
Speaker: Victor Yakovenko, Department of Physics, University of Maryland, College Park
Topic: Statistical Mechanics of Money, Income, Debt, and Energy Consumption
Time and Location: 1:00 PM, with Q&A to follow; in a 1st floor conference room at the American Center for Physics, 1 Physics Ellipse, College Park, MD-- off River Rd., between Kenilworth Ave. and Paint Branch Parkway.
Abstract: By analogy with the probability distribution of energy in statistical physics, I argue that the probability distribution of money in a closed economic system should follow the exponential Boltzmann-Gibbs law. Analysis of the empirical data shows that income distribution in the USA has a well-defined two-class structure. The majority of the population (about 97%) belongs to the lower class characterized by the exponential ("thermal") distribution. The upper class (about 3% of the population) is characterized by the Pareto power-law ("superthermal") distribution, and its share of the total income expands and contracts dramatically during bubbles and busts in financial markets. The probability distribution of energy consumption per capita around the world also follows the exponential Boltzmann-Gibbs law.
Bio: Victor Yakovenko received a Ph.D. from the Landau Institute for Theoretical Physics in Moscow in 1987. In 1991-1993, he was a postdoc at Rutgers University. In 1993, he became a faculty member at the University of Maryland, where he is a full professor now. His research primarily focuses on theory of unconventional superconductors, such as organic, cuprates, and ruthenates. In 2000, he also started working in the new interdisciplinary field of "econophysics", which applies methods of statistical physics to economics and finance. For more information, see http://physics.umd.edu/~yakovenk/econophysics/