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Title: Modelling income, wealth, and expenditure data by use of Econophysics
Author: Oltean, Elvis
ISNI:       0000 0004 5372 4360
Awarding Body: Loughborough University
Current Institution: Loughborough University
Date of Award: 2016
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In the present paper, we identify several distributions from Physics and study their applicability to phenomena such as distribution of income, wealth, and expenditure. Firstly, we apply logistic distribution to these data and we find that it fits very well the annual data for the entire income interval including for upper income segment of population. Secondly, we apply Fermi-Dirac distribution to these data. We seek to explain possible correlations and analogies between economic systems and statistical thermodynamics systems. We try to explain their behaviour and properties when we correlate physical variables with macroeconomic aggregates and indicators. Then we draw some analogies between parameters of the Fermi-Dirac distribution and macroeconomic variables. Thirdly, as complex systems are modelled using polynomial distributions, we apply polynomials to the annual sets of data and we find that it fits very well also the entire income interval. Fourthly, we develop a new methodology to approach dynamically the income, wealth, and expenditure distribution similarly with dynamical complex systems. This methodology was applied to different time intervals consisting of consecutive years up to 35 years. Finally, we develop a mathematical model based on a Hamiltonian that maximises utility function applied to Ramsey model using Fermi-Dirac and polynomial utility functions. We find some theoretical connections with time preference theory. We apply these distributions to a large pool of data from countries with different levels of development, using different methods for calculation of income, wealth, and expenditure.
Supervisor: Not available Sponsor: Loughborough University
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Econophysics ; Fermi-Dirac function ; Decile ; Pdf ; Complementary cumulative distribution function ; Polynomial ; Hamiltonian ; Utility ; Logistic distribution ; Income ; Wealth ; Expenditure ; Upper limit on income ; Lower bound ; Mean income