Abstract
A study of the distribution of the income of workers, companies and countries was presented, a little more than a century ago, by Italian economist Vilfredo Pareto. He investigated data of personal income for different European countries and found a power law distribution that seems not to be dependent on the different economic conditions of the countries. In his book Cours d’Economie Politique [1] he asserted that in all countries and times the distribution of income and wealth follows a power law behaviour where the cumulative probability P(w) of people whose income is at least w is given by P(w) ∝ w −α, where the exponent α is named today Pareto index, while the power law is known as Pareto law. The exponent α for several countries was 1.2 ≤ α ≤ 1.9. However, recent data indicates that, even though Pareto’s distribution provides a good fit to the distribution of high range of income, it does not agree with observed data over the middle and low range of income. For instance, data from Japan [2, 3], Italy [4], India [5], Brazil [6], the United States of America and the United Kingdom [7, 8, 9] are fitted by a lognormal or Gibbs distribution with a maximum in middle range plus a power law for high income one.
Access provided by Autonomous University of Puebla. Download to read the full chapter text
Chapter PDF
Keywords
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
References
Pareto V (1897), Cours d’Economie Politique, Vol. 2, F. Pichou, Lausanne
Aoyama H, Souma W and Fujiwara Y (2003), Growth and fluctuations of personal and company’s income, Physica A: Statistical Mechanics and its Applications 324:352–358
Nirei M and Souma W (2004) Two factor model of income distribution dynamics, Santa Fe Institute (USA) report sfi0410029
Clementi F and Gallegati M (2005) Power law tails in the Italian personal income distribution, Physica A: Statistical and Theoretical Physics 350:427–438
Sinha S (2005) Evidence for Power-law tail of the Wealth Distribution in India, to appear in Physica A and condmat/0502166vl
Brasil (2004) http://www.ibge.gov.br/home/estatistica/populacao /trabalho-erendimento/pnad99/sintese/grafico.shtm
Dragulescu A and Yakovenko VM (2000) Statistical Mechanics of Money, The European J. of Physics B 17:723–729
Dragulescu A and Yakovenko VM (2001) Evidence for the exponential distribution of income in the USA, The European J. of Physics B 20:585–589
Dragulescu A and Yakovenko VM (2001) Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States, Physica A: Statistical and Theoretical Physics 299:213–221
Pianegonda S, Iglesias JR, Abramson G and Vega JL (2003) Wealth redistribution with conservative exchanges Physica A: Statistical and Theoretical Physics 322:667–675
Pianegonda S and Iglesias JR (2004) Inequalities of wealth distribution in a conservative economy, Physica A: Statistical and Theoretical Physics 42:193–199
Sinha S (2003) Stochastic Maps, Wealth Distribution in Random Asset Ex change Models and the Marginal Utility of Relative Wealth, Physica Scripta T106:59–64
Chatterjee A, Chakrabarti BK and Manna SS (2004), Pareto Law in a Kinetic Model of Market with Random Saving Propensity, Physica A: Statistical and Theoretical Physics 335:155–163
Chakrabarti BK and Chatterjee A (2004), Ideal Gas-Like Distributions in Economics: Effects of Saving Propensity, in “Applications of Econophysics”, Ed. H. Takayasu, Conference proceedings of Second Nikkei Symposium on Econophysics, Tokyo, Japan, 2002, by Springer-Verlag, Tokyo. Pages 280–285. Preprint available: cond-mat/0302147.
Chakraborti A and Charkrabarti BK (2000) Statistical mechanics of money: how saving propensity affects its distribution, The European J. of Physics B 17:167–170
Patriarca M, Chakraborti A and Kaski K (2004) Statistical model with a standard Gamma distribution, Phys. Rev. E 70:016104
Iglesias JR, Gonçalves S, Pianegonda S, Vega JL and Abramson G (2003) Wealth redistribution in our small world, Physica A 327:12–17
Iglesias JR, Gonçalves S, Abramson G and Vega JL (2004) Correlation between risk aversion and wealth distribution, Physica A 342:186–192
Scafetta N, Picozzi S and West BJ (2002) Pareto’s law: a model of human sharing and creativity cond-mat/0209373vl
Scafetta N, West BJ and Picozzi S (2003) cond-mat/0209373vl(2002) and A Trade-Investment Model for Distribution of Wealth cond-mat/0306579v2.
Das A and Yarlagadda S (2005) An analytic treatment of the Gibbs-Pareto behavior in wealth distribution cond-mat 0409329vl and to be published in Physica A.
Slanina F (2004) Inelastically scattering particles and wealth distribution in an open economy, Phys. Rev. E 69:046102
Inaoka H, Takayasu H, Shimizu T, Ninomiya T, Taniguchi K (2004) Physica A 339:621
Laguna MF, Risau Gusman S and Iglesias JR (2005) Economic exchanges in a stratified society: End of the middle class?, to appear in Physica A
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2005 Springer-Verlag Italia
About this chapter
Cite this chapter
Gusman, S.R., Laguna, M.F., Iglesias, J.R. (2005). Wealth Distribution in a Network with Correlations Between Links and Success. In: Chatterjee, A., Yarlagadda, S., Chakrabarti, B.K. (eds) Econophysics of Wealth Distributions. New Economic Windows. Springer, Milano. https://doi.org/10.1007/88-470-0389-X_15
Download citation
DOI: https://doi.org/10.1007/88-470-0389-X_15
Publisher Name: Springer, Milano
Print ISBN: 978-88-470-0329-3
Online ISBN: 978-88-470-0389-7
eBook Packages: Business and EconomicsEconomics and Finance (R0)