The Forbes 400 and the Pareto wealth distribution (original) (raw)
Related papers
The Forbes 400, the Pareto power-law and efficient markets
2007
Abstract. Statistical regularities at the top end of the wealth distribution in the United States are examined using the Forbes 400 lists of richest Americans, published between 1988 and 2003. It is found that the wealths are distributed according to a power-law (Pareto) distribution. This result is explained using a simple stochastic model of multiple investors that incorporates the efficient market hypothesis as well as the multiplicative nature of financial market fluctuations.
Distribution of the wealth of the richest persons in the world
Proceedings of the 22nd International Scientific Conference on Applications of Mathematics and Statistics in Economics (AMSE 2019), 2019
The aim of this paper is to examine the probability distribution of wealth of the richest persons in the world based on estimates from the CEOWORLD magazine’s rich list for March 2019. Since one can safely assume that there are a tiny number of people out of the whole world’s population in this list, we basically deal with the very right tail of the wealth distribution, which should according to the Pickands-Balkema-de Haan theorem follow a generalized Pareto distribution. We discuss in this paper not only different estimates of this distribution with an emphasis on the shape parameter per se but also their behavior throughout bootstrap samples. Among the main findings is the observation based on the maximum to sum plot and parametric estimates that there is high probability of infinite variance. This could have a serious impact on estimates of inequality measures. The whole distribution follows nearly a Pareto distribution, whereas the very right tail is closer to an exponential. T...
Top-End Wealth Accumulation: The Forbes Lists and Wealth Inequality
Worlds of Inequalities
The annual Forbes magazine’s lists of the wealthiest individuals in the world are a widely used source of data about the dynamics of wealth concentration. They complement the estimates of global and national wealth concentration published annually by Credit Suisse Bank and the World Inequality Database. Both sources enable analysis of the dynamics of wealth accumulation. This paper seeks to assess the degree to which political–institutional forces as opposed to market forces shape the process of wealth accumulation. The paper finds that the growth rate of the total wealth of the top 400 individuals between 2000 and 2020 was much higher than for their countries as a whole. Moreover, wealth at the very top has become significantly more concentrated. The processes generating accumulation of wealth nationally foster higher rates of wealth accumulation for the wealthiest. The paper proposes political and institutional explanations based on opportunities for rent-extraction by the wealthi...
Double power laws in income and wealth distributions
Physica A-statistical Mechanics and Its Applications, 2008
Close examination of wealth distributions reveal the existence of two distinct power law regimes. The Pareto exponents of the super-rich, identified, for example in rich lists such as provided by Forbes, are smaller than the Pareto exponents obtained for top earners in income data sets. Our extension of the Slanina model of wealth is able to reproduce these double power law features.
An analytic treatment of the Gibbs–Pareto behavior in wealth distribution
Physica A: Statistical Mechanics and its Applications, 2005
We develop a general framework, based on Boltzmann transport theory, to analyze the distribution of wealth in societies. Within this framework we derive the distribution function of wealth by using a two-party trading model for the poor people while for the rich people a new model is proposed where interaction with wealthy entities (huge reservoir) is relevant. At equilibrium, the interaction with wealthy entities gives a power-law (Pareto-like) behavior in the wealth distribution while the two-party interaction gives a Boltzmann-Gibbs distribution.
A generalized statistical model for the size distribution of wealth
Journal of Statistical Mechanics: Theory and Experiment, 2012
In a recent paper in this journal [J. Stat. Mech. (2009) P02037] we proposed a new, physically motivated, distribution function for modeling individual incomes having its roots in the framework of the κ-generalized statistical mechanics. The performance of the κ-generalized distribution was checked against real data on personal income for the United States in 2003. In this paper we extend our previous model so as to be able to account for the distribution of wealth. Probabilistic functions and inequality measures of this generalized model for wealth distribution are obtained in closed form. In order to check the validity of the proposed model, we analyze the U.S. household wealth distributions from 1984 to 2009 and conclude an excellent agreement with the data that is superior to any other model already known in the literature.
From Galileo to Modern Economics
Wealth Distribution This chapter begins with Michal Kalecki's witty epigram, quoted by Josef Steindl (1965, p. 18): "Economics consists of theoretical laws which nobody has verified and empirical laws which nobody can explain." Never more than in the case of the empirical Pareto law has Kalecki's witticism seemed so appropriate. Whether Pareto law is understandable or not, econophysicists consider the Pareto curve one of the forerunners of econophysics. The invariant distribution of income over time and space was clearly an economic phenomenon that economists were unable to account for or predict. Physicists were able to offer a different interpretation of the Pareto curve, based on appropriate methods and approaches, that contained it within the broader analysis of complex systems (see Richmond et al. 2013, p. 16 ff.). Pareto law is introduced here as a stage in the journey toward econophysics. Its empirical features generated different interpretations, and now that it is largely a matter for the econophysicists many issues remain concerning its stability and universality, the mobility among different classes of income, and so on. Pareto did not really try to explain his law from an economic perspective. As he confirmed in his Trattato di sociologia (1916) (The Mind and