Entropy and wealth

D. Koutsoyiannis, and G.-F. Sargentis, Entropy and wealth, Entropy, 23 (10), 1356, doi:10.3390/e23101356, 2021.



While entropy was introduced in the second half of the 19th century in the international vocabulary as a scientific term, in the 20th century it became common in colloquial use. Popular imagination has loaded “entropy” with almost every negative quality in the universe, in life and in society, with a dominant meaning of disorder and disorganization. Exploring the history of the term and many different approaches to it, we show that entropy has a universal stochastic definition, which is not disorder. Hence, we contend that entropy should be used as a mathematical (stochastic) concept as rigorously as possible, free of metaphoric meanings. The accompanying principle of maximum entropy, which lies behind the Second Law, gives explanatory and inferential power to the concept, and promotes entropy as the mother of creativity and evolution. As the social sciences are often contaminated by subjectivity and ideological influences, we try to explore whether maximum entropy, applied to the distribution of a wealth-related variable, namely annual income, can give an objective description. Using publicly available income data, we show that income distribution is consistent with the principle of maximum entropy. The increase in entropy is associated to increases in society’s wealth, yet a standardized form of entropy can be used to quantify inequality. Historically, technology has played a major role in the development of and increase in the entropy of income. Such findings are contrary to the theory of ecological economics and other theories that use the term entropy in a Malthusian perspective.

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Our works referenced by this work:

1. D. Koutsoyiannis, C. Makropoulos, A. Langousis, S. Baki, A. Efstratiadis, A. Christofides, G. Karavokiros, and N. Mamassis, Climate, hydrology, energy, water: recognizing uncertainty and seeking sustainability, Hydrology and Earth System Sciences, 13, 247–257, doi:10.5194/hess-13-247-2009, 2009.
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7. D. Koutsoyiannis, The political origin of the climate change agenda, Self-organized lecture, doi:10.13140/RG.2.2.10223.05283, School of Civil Engineering – National Technical University of Athens, Athens, 14 April 2020.
8. G.-F. Sargentis, T. Iliopoulou, S. Sigourou, P. Dimitriadis, and D. Koutsoyiannis, Evolution of clustering quantified by a stochastic method — Case studies on natural and human social structures, Sustainability, 12 (19), 7972, doi:10.3390/su12197972, 2020.
9. D. Koutsoyiannis, and N. Mamassis, From mythology to science: the development of scientific hydrological concepts in the Greek antiquity and its relevance to modern hydrology, Hydrology and Earth System Sciences, 25, 2419–2444, doi:10.5194/hess-25-2419-2021, 2021.
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11. D. Koutsoyiannis, Stochastics of Hydroclimatic Extremes - A Cool Look at Risk, Edition 3, ISBN: 978-618-85370-0-2, 391 pages, doi:10.57713/kallipos-1, Kallipos Open Academic Editions, Athens, 2023.

Our works that reference this work:

1. G.-F. Sargentis, and D. Koutsoyiannis, The function of money in water–energy–food and land nexus, Land, 12 (3), 669, doi:10.3390/land12030669, 2023.
2. G.-F. Sargentis, N. Mamassis, O. Kitsou, and D. Koutsoyiannis, The role of technology in the water–energy–food nexus. A case study: Kerinthos, North Euboea, Greece, Frontiers in Water, 6, 1343344, doi:10.3389/frwa.2024.1343344, 2024.

Tagged under: Course bibliography: Stochastic methods, Entropy