
Economics Economics Forum  Financial Mathematics, Econometrics, Operations Research, Mathematical Finance, Computational Finance 
 LinkBack  Thread Tools  Display Modes 
September 14th, 2016, 02:41 PM  #1 
Newbie Joined: Sep 2016 From: UK Posts: 1 Thanks: 0  SuperRich Wealth Distribution
Hi, I am looking for a mathematical model which can accurately forecast what percentile (1p) of a population a member with wealth w would be in, based on Gini coefficient (G). I am planning to apply it mainly only to the top end of wealth. I have tried to use the Pareto distribution so far. What I am unsure of there, however, is what to do with the parameter x[sub]min[/sub] as described in Wikipedia's article (https://en.wikipedia.org/wiki/Pareto_distribution): p = (x[sub]min[/sub]/w)^P where P, the Pareto parameter, can be expressed in terms of G by a known equation. Wikipedia describes x[sub]min[/sub] as the (necessarily positive) minimum possible value of X. How does one apply this to a realworld population? I can't imagine setting the value to $1 or less would allow for accurate predictions of topend wealth. The other problem is, this x[sub]min[/sub] seems to me to behave like an average rather than a minimum value. For example, in a maximally unequal society, P=1 so p = x[sub]min[/sub]/w. This predicts that 10% of the population have wealth ten times x[sub]min[/sub], 1% have wealth a hundred times x[sub]min[/sub], and so forth. But while this is a pretty unequal society by realworld standards, it is definitely not the most unequal possible  imagine a system where 10% had a wealth a hundred times the "minimum" (or, say, the average of the remaining 90%), 1% had a wealth 100^2 times the minimum, and so forth. The most unequal system would really be everyone having "minimum" wealth except one individual. But the inequality here seems to be capped much before that. Can anyone help with my model? 

Tags 
distribution, superrich, wealth 
Thread Tools  
Display Modes  

Similar Threads  
Thread  Thread Starter  Forum  Replies  Last Post 
Gradients in work and proporationate divisions in wealth  trapezodial  Economics  5  February 15th, 2012 02:26 PM 