Some universal patterns in income distribution: An econophysics approach

The econophysics two-class approach yields a novel theoretical and empirically robust relation: The per capita income y?(x) $\overline{y}(x)$ of any bottom fraction (x) of the population equals a(x)center dot(1-G) y? $\overline{y}$, where a(x) is a coupling coefficient, G the Gini, and y? $\overline{y}$ 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.

Automated summary

The econophysics two-class approach introduces a novel theoretical and empirically robust relation for calculating the per capita income of the bottom fraction of the population. This method does not rely on social welfare functions and can be used for different inequality-adjusted measurements.