HackerPapers

arXiv:1304.0212q-fin.ST

Do wealth distributions follow power laws? Evidence from "rich lists"

Michal Brzezinski

Abstract

We use data on wealth of the richest persons taken from the "rich lists" provided by business magazines like Forbes to verify if upper tails of wealth distributions follow, as often claimed, a power-law behaviour. The data sets used cover the world's richest persons over 1996-2012, the richest Americans over 1988-2012, the richest Chinese over 2006-2012 and the richest Russians over 2004-2011. Using a recently introduced comprehensive empirical methodology for detecting power laws, which allows for testing goodness of fit as well as for comparing the power-law model with rival distributions, we find that a power-law model is consistent with data only in 35% of the analysed data sets. Moreover, even if wealth data are consistent with the power-law model, usually they are also consistent with some rivals like the log-normal or stretched exponential distributions.

arXiv comments
17 pages, 6 figures, 1 table, 1 appendix
Journal reference
DOI
doi:10.1016/j.physa.2014.03.052
Subjects
q-fin.STStatistical Finance physics.soc-phPhysics and Society stat.APApplications (Statistics)

On Hacker News

Linked by 2 identifiable commenters in 3 comments across 3 threads, from Mar 2018 to Jan 2019.

Comments linking this paper, per year.

Discussed in comments3 threads

  1. World's Top 26 Billionaires Now Own as Much as the Poorest 3.8B 1 comment

    • What I'd like to see more in these articles is an acknowledgement of how power laws work (or perhaps log-normal distributions or stretched exponential distributions https://arxiv.org/abs/1304.0212).

      defertoreptarView on HNParent context

  2. Show HN: Talent vs. Luck – A recreation of the paper's model 1 comment

    • A key purpose of the original paper is to inform policy to improve public funding of research [1]. Thus, to a first-order approximation, it should reflect realities. However, ... The number of lucky and unlucky events in the paper (figure 5, page 8) are each around 5-7 events…

      nopinsightView on HNParent context

  3. Talent vs. Luck: the role of randomness in success and failure 1 comment

    • Correction for above: Each factor needs not be normally distributed, just independent. Evidence that suggests Log-Normal is at least as plausible as Power Law as a model for wealth distribution: "Using recently developed empirical methodology for detecting power-law behaviour…

      nopinsightView on HNParent context

Submitted to Hacker News

Connected through shared HN threads, not inferred similarity or a recommendation.