Abstract:
The Inequality Process (IP) is a particle system model similar to that of the Kinetic Theory of Gases. The IP is a parsimonious model of competition among people for wealth. The IP explains a wide scope of stable patterns in the distribution of personal income and wealth. Econophysicists have adopted the IP as part of their field, but the IP has been ignored or rejected by economists even though economists claim expertise on the distribution of personal income and wealth. The academic discipline of statistics in the US claims expertise on data analysis. Yet from the mid-twentieth century on, advances in computationally intensive algorithms for data analysis were developed largely outside of the discipline of statistics. Not until experts on this new paradigm of data analysis diverted resources away from traditional, old paradigm statisticians, was the new paradigm widely accepted in the discipline of statistics, even though a few statisticians had contributed to computationally intensive data analysis all along. This article’s thesis is that the IP will follow a
path into economics similar to that taken by computationally intensive data analysis into statistics, once useful applications of the IP are found and experts on the IP divert resources away from economists. That day is not at hand. There are no applications of the IP to business or government at present. One conceivable application of the IP to market research, small area estimation of personal income distribution, is suggested.
