0:00:00so we are today with vector you are combined co was a professor of physics
0:00:04at the university of marilyn and also one of our grantees most recent grantees for
0:00:09very interesting project called statistical physics approach to income and wealth distribution were compared to
0:00:15thank you
0:00:17so i just read your proposal and refresh my memory of this and so this
0:00:22is basically a kind of physics yes that's gonna start value s and just before
0:00:25we started talking you said it's basically money is a gas okay so that the
0:00:30this is a joke so we just translate is from my understanding
0:00:35you're thinking about the distribution of well as we shouldn't come up in the same
0:00:39way that you think about the distribution of energy states in a gas and you
0:00:44know in a confined in our
0:00:45yes i get this idea actually quite a long time ago all in fact when
0:00:50i was undergraduate that wasn't so it you know
0:00:53and i was three the statistical physics for the first time that x local statistical
0:00:56theory for the first time and i was deeply impressed that the duration of this
0:01:02fundamental the low statistical physics recyclables one gives distribution
0:01:06is also present a simple was based on very few assumptions so essentially multimodal problem
0:01:11we consider the physics of the fallen suppose we consider aaron this rule so that
0:01:14more tickles moving around
0:01:16and now which is that more equal say with the same time to oxygen wanted
0:01:19to the exactly the same identical
0:01:21and yet if you measure instantaneous the distribution of the and that's just and this
0:01:25experiments have been done
0:01:26you find a very broad distribution
0:01:28in experiment that has a high energy that's moving fast that's right some a low
0:01:33energy i think there is like absolutely some model system articles move very fast to
0:01:38verify kinetic energy and some of the movement with a slower and everything between but
0:01:42what is important is this but that a few works as you more details that
0:01:46have high energy
0:01:47and menu oxygen what could have a low energy and it comes out automatically that
0:01:51we can derive the that the of the shape of the distribution is exactly like
0:01:55that few is kind is you many was low energy but i still is for
0:02:00the first m s is so general must be applicable to sound though places outside
0:02:04the physics
0:02:05and the so what whether to take economics was used really not physics and in
0:02:08the normal equations of motion or newton said that a in the economics the big
0:02:12statistical ensemble and that sounds in there that sensitive to resemble statistical physics and by
0:02:18serological so maybe one can transfer this ideas the difference that use the consumption economics
0:02:22and particular to this problem of in the what'd you
0:02:25she people have a lot and many people have a little now so we need
0:02:28actually looked at the data
0:02:30okay what you find as far as i gather is that this belt and gives
0:02:35distribution fits most of the data you okay but that there's a little piece in
0:02:40the upper tail
0:02:41that doesn't really fit yes absolutely that was very surprising finding i would have expected
0:02:46that well we'll distribution of if it by a very simple exponential functions one of
0:02:51the simple six is a mathematical functions
0:02:53and what the founder started looking at they to be downloaded data from i address
0:02:58the task tax data from your of sensors and other government agencies soda found is
0:03:03that most of this datum is starting from the bottom and map two hundred two
0:03:07hundred some sense out of the sounds and dollars per year and your income
0:03:11it is very will feel of exponential but then we found that the pool table
0:03:15to verify pale
0:03:18show for a different distribution which describe a power law subject by fitting the data
0:03:23and this is a my proposal one can describe the whole distribution by two different
0:03:27distinct mathematical functions an exponential for the majority a population say at the bottom also
0:03:33to say all the ipod lower class overlap about the throngs but for the upper
0:03:37class
0:03:37which is few percent one three percent of two three percent is described by powerful
0:03:43now one of the things that i think probably made our referees really attracted by
0:03:48your proposal is that you try to go a bit for than that and to
0:03:54suggest that perhaps this to distribution characterisation
0:04:00is it is an indication that there's something well okay is that there's a kind
0:04:05of what you talk about is a kind of i think with normal inequality and
0:04:10abnormal in yes
0:04:11yes absolutely so cycle that the nature of inequality
0:04:15because of the inequality exist and also sizes even and socially society where we assume
0:04:20that wasn't what is the last night less than in market but nevertheless so in
0:04:24order to some degree of an which is apparently inevitable and but question is by
0:04:30one last question what is kind of nature of the words with this view on
0:04:34angel
0:04:35so we make a mathematical conjecture that the exponential distribution that the two d was
0:04:39measured network but what we see on top of these naturalness what is your
0:04:44that will be something different would be not nature a lot of abnormal or something
0:04:48like that and once we once with the this the composition of the whole distributions
0:04:52the two classes then there are able to analyze the trends historical chance so what
0:04:57the found is that first of all the exponential what is extremely stable real data
0:05:01for ten twenty thirty years
0:05:03it is just the same meaning the scale changes because it has a scale which
0:05:07is that it was you come up with evolution continuum and audible or say double
0:05:10in twenty years i mean doors not adjusted for the shape of that is really
0:05:14she's distributions this exact the same so it's extremely stable but then the look and
0:05:18the share
0:05:19of total income that goes to the upper class upper-class me of the spiral on
0:05:23top of exponential and the father had it then a vehicle variable so basically it
0:05:28was same the level of maybe ten percent also one and two ninety five but
0:05:32from ninety five to two thousand example tomb almost twenty percent that was the bubble
0:05:37the dot com babble
0:05:39okay when the bubble collapse the should decrease dropped down by a factor of two
0:05:43then the house and babble
0:05:44babble doubled again extra more than double six to twenty percent and rocked again during
0:05:49the next christ assassinate and so crisis another indication is actually cover and median we
0:05:54have recovered image means a class is recovering
0:05:57we see missing become very strange situation and i to state a class is recovering
0:06:01what is global class
0:06:03is this is not recoverable but is so one of the things you're trying to
0:06:07do in this project no as far as i understand is to think about what
0:06:11kind of process could be driving the parallel corpus so you talk about maybe competitive
0:06:16markets to talk about campus production problem profits and cm primary s
0:06:23that's right the size so far this was a disk empirical observations knowledge we want
0:06:27to do this within this proposal is actually to develop some models
0:06:31to explain it all to follow the in n x the set or and one
0:06:35reading kind of input a conceptual question but was it is make use of relevant
0:06:39is that
0:06:42the share of the upper class discover uncommon to six plus was recorded at least
0:06:47sure and the question is where well it wasn't one and so for example is
0:06:52possible that the a this work was showgirls to such a degree
0:06:56the economic activity will essentially stop for the for the reason because the word classing
0:07:02blue loses position power so they can a byproduct so there's no point to produce
0:07:06a new product because it a proportion power
0:07:09and said that his different incarnations within this mc and cm by coming from economics
0:07:15background is me
0:07:16you're essentially talking about the kind of aggregate demand probably say that might arise because
0:07:21of rising inequality that that's a sort of drag one and demanded the way it
0:07:27shows up in your models
0:07:29is different than the way we do it in economics of so i'm interested in
0:07:33the dialogue that you been having i suppose with the contrast
0:07:37because use you saying a proposal that you join this the kind of physics group
0:07:41in two thousand
0:07:42but you also just told me now that you were thinking this way back as
0:07:46an undergraduate so tell me about that how you came in a kind of is
0:07:50i
0:07:51right okay so right so that's very interesting still save as a set in the
0:07:55i got this idea of source files and the right advisories the text with the
0:07:58force time that was actually ten volume words
0:08:01or of a theoretical physics bilateral relations that will five like in a bit always
0:08:05statistical physics so again this idea but the key but the kind of from the
0:08:08back of my mind because well i was added value that was i wanted to
0:08:11the would then i wouldn't the was it was important for you
0:08:14so anyway so i finish the wardens i get my p d and theoretical physics
0:08:19a get the if faculty positions contrastive might also always that the kind of is
0:08:23why around here two thousand actually that one reason
0:08:28i related to get tenure so to use a i difficulty of thirty coffee is
0:08:32gonna get my junior and then i actually decided this time actually well i and
0:08:36the you know present this idea but second reason was around your two thousand this
0:08:41on the physics one but start
0:08:43so it was is that you can the physics was invented by agents ten thirty
0:08:47of is so anyway this movement
0:08:49most of not by need by mike what physicists late nineties
0:08:53and i realise move with the start and so i by that you in it
0:08:57because if a bit longer to know somebody else will do so the agenda second
0:08:59if it is normal but this almost decreases
0:09:02no and since then a punishment yours paper about all statistical mechanics of money of
0:09:06this year two thousand and says that start to propagate this idea because it is
0:09:10not enough to write the paper to publish paper and the standard great your work
0:09:14to propagate this idea to what economics and social science
0:09:18and that the that's what it will it with a little you're in our decision
0:09:20here's a time trend this and i think and gradually making progress in propagation this
0:09:25a ds but not easy but for example router you paper two thousand nine with
0:09:29but are also available melodic one i missed us to probably but this by performing
0:09:34some residual the use of modern physics
0:09:37okay that also get to know duncan forty which is very unconventional one and this
0:09:43at in school and winners are trendy and one of great use of mine at
0:09:47and what and usual thing about that can use that he actually took a course
0:09:50of statistical physics
0:09:52he took physics course and then through the paper tonight just before i do my
0:09:57paper proposes similar ideas is possible solutions in economics because you statistical physics of the
0:10:03problem is mostly what i missed don't have this background they have no what they
0:10:06can statistical physics the make and they can mathematic or statistics but
0:10:10that's not the same thing statistical if we discuss the set of ideas like for
0:10:13example is and is just visual for gases so anyway so that's why develop and
0:10:18i like and communication and kind of kind of the synthesis of ideas it's a
0:10:22very non-zero process
0:10:25a request to size of different know which if i gather what you're saying one
0:10:28of the ideas of a being a nine a grantee is to have a larger
0:10:33audience in with some of this is about learning to talk to a condom as
0:10:36and having economist learn to talk to you absolutely beyond rates you're find a unique
0:10:41opportunity
0:10:42to ensure that
0:10:43with was for thinking a quantum is a general just anyone and makes a conan
0:10:47is thinking looking for new economic thinking so when the new ideas not everybody's all
0:10:52and so that's really a the main the main advantage well all of this is
0:10:57you know incredibly fast at me a new way of thinking about data and phenomenon
0:11:02the columns of in studying for centuries and i'm that new economic thinking is new
0:11:09thinking about the economy not necessarily back on a bus so from our way of
0:11:13thinking you and i met economist out and i welcome you
0:11:17the thank you very much