Bak is at the Neils Bohr Institute in Copenhagen, Denmark. He proposed that large, dynamic systems will behave according to some variation of a power law. At a top level, it seems obvious. Major earthquakes happen rarely. Moderate earthquakes come more often.
Undetectable tremblers go on daily.
Even a reader unfamiliar with economics with realize that the stock market has a major crash rarely, a modest adjustment more often, and small ups and downs weekly or daily. What seems obvious, though, requires analysis and a strong mathematical footing to be accepted as a working theory. Kan did that in 1991. The solid lines denote the interval used in the fit and the dashed lines are the extrapolations of the model. Links to 560x480-pixel, 74KB JPG .