The Inequality Process Versus the Saved Wealth Model: Which Is the More Likely to Imply an Analogue of Thermodynamics in Social Science?

Abstract

The Inequality Process (IP) and the Saved Wealth Model (SW) are theories of income distribution. The IP's social science metatheory requires its stationary distribution to fit the distribution of labor income conditioned on education. The SW is a modification of the particle system model of the kinetic theory of gases (KTG), the basis of gas thermodynamics. The IP is a particle system similar to the SW and KTG. This article shows that the IP passes the empirical test required of it by social science theory better than the SW. The IP's advantage increases as the U.S. labor force becomes more educated. The IP may the better bet to imply an analogue of thermodynamics in social science.

Keywords:

• goodness of fit
• Inequality Process
• labor income distribution
• particle system model
• Saved Wealth Model

Acknowledgments

This article is a revision of “A Test of Two Similar Particle Systems of Labor Income Distribution Conditioned on Education,” presented to the Joint Statistical Meetings in Washington, DC, in August 2009 and which appears in the unrefereed proceedings of these meetings (Angle, 2009).

Notes

¹Econophysicists are not averse to testing models on stock market data.