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Is there any evidence that wealth distribution follows the power law outside passing the 80/20 rule? The charts of wealth distribution in the US when there aren

Is there any evidence that wealth distribution follows the power law outside passing the 80/20 rule? The charts of wealth distribution in the US when there aren't huge bins doesn't really look like a power law.

shawndumas 13y ago
it's an understood economic principal: "At the end of the 19th century, economist Vilfredo Pareto discovered that wealth among a population is not normally distributed. Rather, it seemed to have the form of a power law P(k) ∼ k−γ. Figure 2a shows the distribution of wealth in 2011 among the richest people in the US in a log–log plot. The distribution is quite skewed and somewhat resembles a power law. It also illustrates that the richest man in the US, Bill Gates (rightmost data point), is about 30 times richer than the average of the next 400 fabulously rich Americans. It's natural to view such a skewed distribution of wealth as both unethical and unjust. The difference between the normal distribution of length and the power-law distribution of wealth is precisely the skewness: If Bill Gates were a length, he would measure more than 300 miles from head to toe. How can the occurrence of that extraordinarily broad distribution be explained? In the case of wealth, one can seek an explanation in terms of human economic actions and greed. That approach seems fine at first. But the same broad distribution was discovered early in the 20th century to represent town populations in a country (figure 2b). In the case of towns, population growth, commerce, and migration are among the factors likely to shape the distribution. Power-law distributions appear in other diverse settings and, as is the case with wealth and town size, have seemingly disparate causes. Species among genera (figure 2c), which should have something to do with biological evolution. Word frequency in a novel (figure 2d), which should have something to do with how you write a book or how the human language arose and developed. Surnames in a country (figure 2e), which should have something to do with the country's society and history." http://www.physicstoday.org/daily_edition/points_of_view/just_and_unjust_distributions http://www.physicstoday.org/daily_edition/points_of_view/jus... http://www.guardian.co.uk/commentisfree/2011/nov/11/occupy-movement-wealth-power-law-distribution http://www.guardian.co.uk/commentisfree/2011/nov/11/occupy-m... http://en.wikipedia.org/wiki/Pareto_index http://en.wikipedia.org/wiki/Pareto_index

shawndumas 13y ago

it's an understood economic principal: "At the end of the 19th century, economist Vilfredo Pareto discovered that wealth among a population is not normally distributed. Rather, it seemed to have the form of a power law P(k) ∼ k−γ. Figure 2a shows the distribution of wealth in 2011 among the richest people in the US in a log–log plot. The distribution is quite skewed and somewhat resembles a power law. It also illustrates that the richest man in the US, Bill Gates (rightmost data point), is about 30 times richer than the average of the next 400 fabulously rich Americans. It's natural to view such a skewed distribution of wealth as both unethical and unjust. The difference between the normal distribution of length and the power-law distribution of wealth is precisely the skewness: If Bill Gates were a length, he would measure more than 300 miles from head to toe. How can the occurrence of that extraordinarily broad distribution be explained? In the case of wealth, one can seek an explanation in terms of human economic actions and greed. That approach seems fine at first. But the same broad distribution was discovered early in the 20th century to represent town populations in a country (figure 2b). In the case of towns, population growth, commerce, and migration are among the factors likely to shape the distribution. Power-law distributions appear in other diverse settings and, as is the case with wealth and town size, have seemingly disparate causes. Species among genera (figure 2c), which should have something to do with biological evolution. Word frequency in a novel (figure 2d), which should have something to do with how you write a book or how the human language arose and developed. Surnames in a country (figure 2e), which should have something to do with the country's society and history." http://www.physicstoday.org/daily_edition/points_of_view/just_and_unjust_distributions http://www.physicstoday.org/daily_edition/points_of_view/jus... http://www.guardian.co.uk/commentisfree/2011/nov/11/occupy-movement-wealth-power-law-distribution http://www.guardian.co.uk/commentisfree/2011/nov/11/occupy-m... http://en.wikipedia.org/wiki/Pareto_index http://en.wikipedia.org/wiki/Pareto_index