Some universal patterns in income distribution: An econophysics approach

Abstract

The econophysics “two-class” approach yields a novel theoretical and empirically robust relation: The per capita income $\bar{y}\left(x\right)$ of any bottom fraction (x) of the population equals a(x)∙(1−G) $\bar{y}$, where a(x) is a coupling coefficient, G the Gini, and $\bar{y}$ is national per capita income. For the bottom 70%, a(70) = 1, which yields the Sen inequality adjustment to the 1993 UNDP Human Development Index, without any reliance on social welfare functions. Alternately, a(80) = 1.1 yields the bottom 80% per capita income (Vast Majority Income). We propose the latter as a new inequality-adjusted measure of wellbeing.