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Top Wealth Is Distributed Weibull, Not Pareto

Author

Listed:
  • Teulings, Coen
  • Toussaint, Simon

Abstract

We study the shape of the global top wealth distribution, using the Forbes List of Billionaires. By constructing test statistics from ratios of log wealth moments, we assess whether the upper tail follows a Pareto distribution. We reject the Pareto null in all region-year combinations with sufficient observations.We then compare log-normal and Weibull alternatives; our moment ratio test results are compatible with both. Introducing a hazard rate–based test for log wealth distributions reveals pronounced right-tail differences: the log-normal distribution is rejected in favor ofWeibull. TheWeibull distribution accurately predicts regional averages of billionaire wealth, where Pareto performs poorly. Extending the analysis, we find that U.S. city size and firm size distributions are also Weibulldistributed.

Suggested Citation

  • Teulings, Coen & Toussaint, Simon, 2023. "Top Wealth Is Distributed Weibull, Not Pareto," CEPR Discussion Papers 18634, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:18634
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    File URL: https://cepr.org/publications/DP18634
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    More about this item

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • G5 - Financial Economics - - Household Finance

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