5 ms·
Power law (Pareto distribution), not lognormal. But you're partly right. Simulate random exchanges at random prices and the wealth distribution will come out P
by crasshopper 14y ago
Power law (Pareto distribution), not lognormal.
But you're partly right. Simulate random exchanges at random prices and the wealth distribution will come out Pareto.
However, we cannot conclude that because [a] random exchanges lead to a power-law dist and [b] we observe a power-law in reality, that [c] the real wealth distribution is tantamount to random.
- Dn_Ab 14y agoAs far as I'm aware the debate of lognormal vs power law distribution on wealth is unsettled. EDIT: google search suggests power law tail - log normal bulk.
- crasshopper 14y agoYou are maybe thinking that it is difficult to identify powerlaws? (EDIT: s/identify/statistically verify/; s/powerlaws/TRUE powerlaws/) But look: http://globalrichlist.com/how.html http://globalrichlist.com/how.html The bulk is indeed powerlaw. Maybe you are thinking that a sufficiently winsorised US income distribution is lognormal.
- Dn_Ab 14y agoTo the contrary I think people are too eager to find scale free and power law phenomena. There are several papers discussing log-normal bulk and then power law tail. http://physicsworld.com/cws/article/news/2002/feb/26/the-physics-of-personal-income http://physicsworld.com/cws/article/news/2002/feb/26/the-phy... http://fmwww.bc.edu/ec-p/wp671.pdf http://fmwww.bc.edu/ec-p/wp671.pdf and more For what it's worth my initial statement was meant to hold beyond income and wealth and generalize to say achievement and productivity and so a lognormal assumption was fitting as the distribution to pick. It also chimed well with grandalf's statement on how advantages multiply.
- deleted 14y ago[deleted]