Retrospectives: Pareto's Law
Vilfredo Pareto, using data for England, a number of Italian cities, several German states, Paris, and Peru, plotted cumulative distributions of income for these countries on double logarithmic paper. He claimed that in each case the result was a straight line with about the same slope. Thus, he asserted a law of income distribution. I discuss Pareto's discovery of this relationship; his theory of income distribution; Pareto's Law and Pareto optimality; the attack on Pareto's Law; the counterattack; and the more recent literature. For all the excesses of the Paretian camp followers, there remains the significant insight that the history of all hitherto existing society is a history of social hierarchies. There is the feel of structure behind income distributions. Something is going on here.
Volume (Year): 6 (1992)
Issue (Month): 2 (Spring)
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References listed on IDEAS
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- Chipman, John S., 1974. "The welfare ranking of Pareto distributions," Journal of Economic Theory, Elsevier, vol. 9(3), pages 275-282, November.
- Warren M. Persons, 1909. "The Variability in the Distribution of Wealth and Income," The Quarterly Journal of Economics, Oxford University Press, vol. 23(3), pages 416-449.