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

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  • 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.

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  • Michal Brzezinski, 2013. "Do wealth distributions follow power laws? Evidence from "rich lists"," Papers 1304.0212, arXiv.org.
  • Handle: RePEc:arx:papers:1304.0212
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    2. Frank A. Cowell & Philippe Kerm, 2015. "Wealth Inequality: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 671-710, September.
    3. Bawa, Siraj, 2017. "Corporate Taxation in the Open Economy without Pareto," MPRA Paper 80857, University Library of Munich, Germany, revised Aug 2017.
    4. Stefan Bach & Andreas Thiemann & Aline Zucco, 2015. "The Top Tail of the Wealth Distribution in Germany, France, Spain, and Greece," Discussion Papers of DIW Berlin 1502, DIW Berlin, German Institute for Economic Research.
    5. Fuyuo Nagayama, 2013. "Wealth inequality among the Forbes 400 and U.S. households overall," Research Rap Special Report, Federal Reserve Bank of Philadelphia, issue Jul.
    6. Stefan Bach & Andreas Thiemann & Aline Zucco, 2019. "Looking for the missing rich: tracing the top tail of the wealth distribution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(6), pages 1234-1258, December.
    7. Anand Sahasranaman & Henrik Jeldtoft Jensen, 2019. "Dynamics of reallocation within India's income distribution," Papers 1909.04452, arXiv.org, revised Oct 2020.
    8. Westermeier, Christian, 2016. "Estimating top wealth shares using survey data - An empiricist's guide," Discussion Papers 2016/21, Free University Berlin, School of Business & Economics.
    9. Bach, Stefan & Thiemann, Andreas & Zucco, Aline, 2019. "Looking for the missing rich: tracing the top tail of the wealth distribution," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 1234-1258.
    10. Junho Na & Jeong-dong Lee & Chulwoo Baek, 2017. "Is the service sector different in size heterogeneity?," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(1), pages 95-120, April.
    11. Li, Cong & Xu, Hedong & Fan, Suohai, 2020. "Synergistic effects of self-optimization and imitation rules on the evolution of cooperation in the investor sharing game," Applied Mathematics and Computation, Elsevier, vol. 370(C).

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