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A Statistical Physics Analysis of Expenditure in the UK

Received: 17 April 2014     Accepted: 8 May 2014     Published: 20 May 2014
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Abstract

Most papers which explored so far macroeconomic variables took into account income and wealth. Equally important as the previous macroeconomic variables is the expenditure or consumption, which shows the amount of goods and services that a person or a household purchased. Using statistical distributions from Physics, such as Fermi-Dirac and polynomial distributions, we try to fit the data regarding the expenditure distribution divided in deciles of population according to their income (gross and disposable expenditure are taken into account). Using coefficient of determination as theoretical tool in order to assess the degree of success for these distributions, we find that both distributions are really robust in describing the expenditure distribution, regardless the data set or the methodology used to calculate the expenditure values for the deciles of income. This is the first paper to our knowledge which tackles expenditure, especially using a method to describe expenditure such as lower limit on expenditure. This is also relevant since it allows the approach of macroeconomic systems using more variables characterizing their activity, can help in the investigation of living standards and inequality, and points to more theoretical explorations which can be very useful for the Economics and business practice.

Published in American Journal of Modern Physics (Volume 3, Issue 3)
DOI 10.11648/j.ajmp.20140303.13
Page(s) 133-137
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Gross Expenditure, Disposable Expenditure, Lower Limit on Expenditure, Mean Expenditure, Fermi-Dirac Distribution, Polynomial Distribution

References
[1] A. Dragulescu, V. M. Yakovenko, “Statistical Mechanics of Money, Income, and Wealth: A Short Survey”, http://www2.physics.umd.edu/~yakovenk/econophysics.html
[2] A. Dragulescu, V.M. Yakovenko, “Statistical mechanics of money”, Eur. Phys. J. B 17, 723-729 (2000).
[3] A.Dragulescu, V.M. Yakovenko, “Evidence for the exponential distribution of in-come in the USA”, Eur. Phys. J. B 20, 585-589 (2001)
[4] A. C. Silva, V. M. Yakovenko, “Tem-poral evolution of the “thermal” and “superthermal” income classes in the USA during 1983–2001”, Europhys. Lett., 69 (2), pp. 304–310 (2005)
[5] K. E. Kurten and F. V. Kusmart-sev,“Bose-Einstein distribution of money in a free-market economy”. Physics Letter A Journal, EPL, 93 (2011) 28003
[6] F. V. Kusmartsev,“Statistical mechanics of economics”, Physics Letters A 375 (2011) 966–973
[7] E. Oltean, F.V. Kusmartsev,“A study of methods from statistical me-chanics applied to income distribution”, ENEC, 2012, Bucharest, Romania
[8] E. Oltean,F.V. Kusmartsev,“A polynomial distribution applied to income and wealth distribution”, Journal of Knowledge Management, Economics, and Information Technology, 2013, Bucharest, Roma-nia
[9] Upper limit on income by decile group in 1987–2009 in Finland, URL: http://www.stat.fi/til/tjt/2009/tjt_2009_2011-0520_tau_005_en.html
[10] Elvis Oltean, “An Econophysical Approach of Polynomial Distribution Applied to Income and Expenditure”, American Journal of Modern Physics. Vol. 3, No. 2, 2014, pp. 88-92. doi: 10.11648/j.ajmp.20140302.18
[11] URL:http://www.ons.gov.uk/ons/search/index.html?newquery=household+income+by+decile&newoffset=0&pageSize=50&sortBy=&applyFilters=true
[12] URL:http://en.wikipedia.org/wiki/Fermi%E2%80%93Dirac_statistics#Distribution_of_particles_over_energy.
Cite This Article
  • APA Style

    Elvis Oltean, Fedor V. Kusmartsev. (2014). A Statistical Physics Analysis of Expenditure in the UK. American Journal of Modern Physics, 3(3), 133-137. https://doi.org/10.11648/j.ajmp.20140303.13

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    ACS Style

    Elvis Oltean; Fedor V. Kusmartsev. A Statistical Physics Analysis of Expenditure in the UK. Am. J. Mod. Phys. 2014, 3(3), 133-137. doi: 10.11648/j.ajmp.20140303.13

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    AMA Style

    Elvis Oltean, Fedor V. Kusmartsev. A Statistical Physics Analysis of Expenditure in the UK. Am J Mod Phys. 2014;3(3):133-137. doi: 10.11648/j.ajmp.20140303.13

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  • @article{10.11648/j.ajmp.20140303.13,
      author = {Elvis Oltean and Fedor V. Kusmartsev},
      title = {A Statistical Physics Analysis of Expenditure in the UK},
      journal = {American Journal of Modern Physics},
      volume = {3},
      number = {3},
      pages = {133-137},
      doi = {10.11648/j.ajmp.20140303.13},
      url = {https://doi.org/10.11648/j.ajmp.20140303.13},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajmp.20140303.13},
      abstract = {Most papers which explored so far macroeconomic variables took into account income and wealth. Equally important as the previous macroeconomic variables is the expenditure or consumption, which shows the amount of goods and services that a person or a household purchased. Using statistical distributions from Physics, such as Fermi-Dirac and polynomial distributions, we try to fit the data regarding the expenditure distribution divided in deciles of population according to their income (gross and disposable expenditure are taken into account). Using coefficient of determination as theoretical tool in order to assess the degree of success for these distributions, we find that both distributions are really robust in describing the expenditure distribution, regardless the data set or the methodology used to calculate the expenditure values for the deciles of income. This is the first paper to our knowledge which tackles expenditure, especially using a method to describe expenditure such as lower limit on expenditure. This is also relevant since it allows the approach of macroeconomic systems using more variables characterizing their activity, can help in the investigation of living standards and inequality, and points to more theoretical explorations which can be very useful for the Economics and business practice.},
     year = {2014}
    }
    

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    T1  - A Statistical Physics Analysis of Expenditure in the UK
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    AU  - Fedor V. Kusmartsev
    Y1  - 2014/05/20
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    DO  - 10.11648/j.ajmp.20140303.13
    T2  - American Journal of Modern Physics
    JF  - American Journal of Modern Physics
    JO  - American Journal of Modern Physics
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    PB  - Science Publishing Group
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    AB  - Most papers which explored so far macroeconomic variables took into account income and wealth. Equally important as the previous macroeconomic variables is the expenditure or consumption, which shows the amount of goods and services that a person or a household purchased. Using statistical distributions from Physics, such as Fermi-Dirac and polynomial distributions, we try to fit the data regarding the expenditure distribution divided in deciles of population according to their income (gross and disposable expenditure are taken into account). Using coefficient of determination as theoretical tool in order to assess the degree of success for these distributions, we find that both distributions are really robust in describing the expenditure distribution, regardless the data set or the methodology used to calculate the expenditure values for the deciles of income. This is the first paper to our knowledge which tackles expenditure, especially using a method to describe expenditure such as lower limit on expenditure. This is also relevant since it allows the approach of macroeconomic systems using more variables characterizing their activity, can help in the investigation of living standards and inequality, and points to more theoretical explorations which can be very useful for the Economics and business practice.
    VL  - 3
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Author Information
  • Department of Physics, Loughborough University, Loughborough, UK

  • Department of Physics, Loughborough University, Loughborough, UK

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