Condmat

Research in Econophysics

Victor M. Yakovenko

Department of Physics, University of Maryland, College Park, Maryland 20742-4111 (Dated: 13 February 2003, cond-mat/0302270) This article is written for the online newspaper “The Photon” published by the Department of Physics, University of Maryland. The article describes econophysics research done in the group of Victor Yakovenko. INTRODUCTION

During the last several years, in addition to his research in condensed matter theory, Victor Yakovenko has been working in a recently emerged field of studies often called “econophysics”. Econophysics applies statistical physics methods to economical, financial, and social problems. Detailed references to the econophysics research in Victor Yakovenko’s group are given in his Web page http://www2.physics.umd.edu/~yakovenk/ econophysics.html. The results have been published in refereed journals [1–6] and presented at international conferences and seminars. His research has been reviewed in a popular article in the American Scientist magazine [7], and Australian Financial Review, the leading Australian business newspaper, has published an op-ed column about his studies [8]. His student Adrian Dragulescu received Ph.D. in 2002 and now works as a risk analyst at the Constellation Energy Group in Baltimore, which is the owner of Baltimore Electric and Gas Company. Currently Victor Yakovenko works with another graduate student A. Christian Silva.

STATISTICAL MECHANICS OF MONEY, INCOME, AND WEALTH

shown in Fig. 1. It is interesting to compare this result with the actual PDF of money in the society. Unfortunately, it is very difficult to find the data on distribution of money m. On the other hand, a lot of statistical data is available for distribution of income r (for revenue). Fig. 2 shows that the PDF of individual income in USA is very well fitted by the exponential function P (r) = Ce−r/T [2]. The standard plot of PDF inevitably puts an upper limit on the horizontal axis (120...