This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Are Rich People Smarter?

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Shiki (Moshe) Levy (Anderson School of Management)
Abstract

We investigate general models of wealth accumulation induced by financial investment. These models assume only that returns are stochastic and that a minimal level of wealth is required in order to participate in financial investments. When homogenous investment talents are assumed by the generated distribution of wealth converges to the Pareto (power-law) distribution of wealth which is empirically observed at the high-wealth range. However, when a small degree of diversity of investment capabilities is introduced, the resulting distribution of wealth becomes inconsistent with the empirical distribution. We conclude that the empirical Pareto wealth distribution suggests that chance, rather than talent, is the dominant factor in the process of wealth accumulation by financial investment. Our findings conform with market efficiency and may have implications regarding the origins, the economic significance, and the desirability of social inequality.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1132&context=anderson/fin
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Anderson Graduate School of Management, UCLA in its series University of California at Los Angeles, Anderson Graduate School of Management with number 1132.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: 07 Oct 1997
Date of revision:
Handle: RePEc:cdl:anderf:1132

Note: oai:cdlib1:anderson/fin-1132
Contact details of provider:
Postal: 110 Westwood Plaza, Los Angeles, CA. 90095
Web page: http://repositories.cdlib.org/anderson/fin/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Fama, Eugene F & French, Kenneth R, 1992. " The Cross-Section of Expected Stock Returns," Journal of Finance, American Finance Association, vol. 47(2), pages 427-65, June. [Downloadable!] (restricted)
  2. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May. [Downloadable!] (restricted)
  3. Harry M. Markowitz, . "Investment for the Long Run," Rodney L. White Center for Financial Research Working Papers 20-72, Wharton School Rodney L. White Center for Financial Research.
Full references

Statistics
Access and download statistics

Did you know? Use the JEL tree to browse through the database by subfields.

This page was last updated on 2009-11-19.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.