Econophysics of Wealth Distribution: A Comment

Abstract

Some recent papers have proposed models of trading which produce realistic-looking distributions of wealth. This Comment argues that, while the models are correct arithmetically and the papers claim that the empirical support is persuasive, they involve undeclared simplifications that limit their application and that point to empirical propositions that are easily refuted. Since many of the simplifications involve dismissing the economists' favorite price mechanism, it is important to realize why the models do not propose a coherent alternative. This Comment suggests several directions for future research on this important topic.1,2.