Economic Inequality

The inequality of wealth among people is a major issue in all societies. It is believed to determine the happiness of the people, and therefore the political stability of the countries.  Can the second law describe well the economic inequality which exists in developed country? The answer is positive. When we apply the Planck Benford distribution namely;


where n is the income rank and E(n) is the relative income of the rank to the wealth distribution in the OECD countries, we obtain a remarkable agreement.

Parameter OECD average Second Law
Gini Index 0.32 0.327
Relative Poverty 9% 9%
Ration between the upper decile and lower decile 9.6 7.5
wealth of the upper percentile 18% 15%
wealth of the upper ten percentiles 50% 52%

The Planck Benford distribution yields also very good agreements to the executive salaries of big companies. If N is the number of employees in a company, according to the second law the highest salary in the company should be the SQRT(N) times the average salary.  We calculated the ratio between the actual top salaries in Fortune 100 companies and the expected theoretical values and found that the average ratio is 0.87. This results are explained in full in the recently published paper.