Are rich people smarter? |
| |
Authors: | Moshe Levy |
| |
Institution: | The Jerusalem School of Business Administration, The Hebrew University of Jerusalem, Jerusalem 91905, Israel |
| |
Abstract: | We formulate a general stochastic process of wealth accumulation by capital investment and analyze the conditions required to ensure convergence to the empirically observed Pareto wealth distribution. While homogeneous investment talent leads to the Pareto distribution under very general conditions, even a mild degree of differential investment talent results in a non-Pareto wealth distribution. This finding suggests that chance, rather than differential investment talent, is the dominant factor in the process of wealth accumulation by financial investment. Our findings conform with market efficiency and may have implications regarding the origins, the economic significance, and the social desirability of wealth inequality at the high-wealth range. |
| |
Keywords: | D31 O16 |
本文献已被 ScienceDirect 等数据库收录! |
|