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Self-Fulfilling Prophecies, Quasi Nonergodicity, and Wealth Inequality: A Comment

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  • Alexis Akira Toda

Abstract

Bouchaud and Farmer (2023) argue that self-fulfilling beliefs generate a realistic wealth distribution. Their reported Gini coefficient, quantiles, and Pareto exponent are computed from dynasty-level wealth averaged over 250 dates, not from a cross section. Correcting the estimand strengthens their qualitative result: with $N=1{,}000{,}000$ dynasties, the terminal cross-sectional Gini is 0.883 rather than 0.7, and median wealth is 0.0052 rather than 0.39 of average wealth. The model therefore generates more inequality, but not the reported quantitative fit. Appendix F analyzes a different process and does not establish the claimed Pareto tail or exponent.

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  • Alexis Akira Toda, 2026. "Self-Fulfilling Prophecies, Quasi Nonergodicity, and Wealth Inequality: A Comment," Papers 2609.08198, arXiv.org.
    • Handle: RePEc:arx:papers:2609.08198
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    1. Dutta, Jayasri & Michel, Philippe, 1998. "The Distribution of Wealth with Imperfect Altruism," Journal of Economic Theory, Elsevier, vol. 82(2), pages 379-404, October.
    2. Elyès Jouini & Clotilde Napp, 2007. "Consensus Consumer and Intertemporal Asset Pricing with Heterogeneous Beliefs," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(4), pages 1149-1174.
    3. repec:dau:papers:123456789/78 is not listed on IDEAS
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