Talk:Pareto index

message: After reading the article and also the discussions here, I would like to point out that there is no mention of the correct choice of x_m, neither here nor in the Pareto Distribution article. Let's say I do a worldwide study and get x_m = $0.2 for some super-poor farmer and I assume 80-20 for the worldwide wealth distribution, so a=1.16. Then I would get a proportion of 3e-6 for having >$10k in wealth. Now that super-poor farmer dies and the next poorest person has $3 in wealth. Suddenly, my proportion for having >$10k jumps to 8e-5.
The point I am trying to make here is that the choice of x_m is crucially important, especially for wealth distributions. And this article should definitely mention that and possibly also provide useful instructions for determining x_m. Because contrary to what is written in the Pareto Distribution article, x_m is not the minimum of all observations, or at the very least that approach doesn't work for Pareto-based wealth estimates.  — Preceding unsigned comment added by Fxtentacle (talk • contribs) 10:32, 15 July 2019 (UTC)
thread_title:  definition of x_m unclear and highly important 

message: Since Vilfredo Pareto came up with the Pareto distribution while measuring economic inequality I would like to know which values have been empirically found to best fit reality (maybe for selected countries). I am also not clear what is meant by "embodies": Which index leads to the 80/20 rule? A table with the index and the corresponding percentages would be nice. Common Man 02:42, 19 October 2005 (UTC)
replies: text: The 80-20 rule holds if α = log4(5) (about 1.16). Michael Hardy 16:59, 6 July 2006 (UTC)
replies: text: Wataru Souma brings a selection of indices for different countries and centuries. roughly: historical data over the past centuries is about 1.13 to 1.89. Data about not-too-rich people in Japan during the past decade shows a range of 1.3-2.6, and older data about the US between the world wars ranges between 1.3 and 1.9.Ladypine (talk) 11:48, 7 August 2011 (UTC)
thread_title:  empirical values for wealth distribution 

message: I've seen respectable sources saying that what Pareto wrote about was the distribution, not of wealth, but of income.  Does anyone know?  (Maybe I'll go to the library and try to dig it out from his books.) Michael Hardy 17:03, 6 July 2006 (UTC)
replies: text: He did start writing about income (much more data is available on income than on wealth) but his distribution also empirically fits well to the repartition of wealth (especially for the rich).
The problem for wealth, it seems to me, is that even if you can identify it, which you often can't, it's very difficult to make comparisons.  Prices only have meaning for verified, public, detailed, and honest transactions.  There are few of these of any importance.  
The value added taxes, of which Canada's Goods and Services Tax is an interesting example, represent a new and major innovation in human history. They are the first mechanism that I know of to produce relatively sound information about the very important numbers, sales of goods, that result from the concatenation of many many unimportant events, individual retail sales. Yes, those clay tablets of Nineveh should be filed as fiction. 
This changes a great deal of both economics and governmental administration from here on out. Canada's application of the tax to a broad swath of services is the first accommodation, since the invention of public schooling, of government policy to the information-based economy.  
It is very little remarked, but I think it is also important, that consumption taxes are the only way you can tax Milovan Djillas's "New Class," roughly the 80th to 95th percentiles in gross incomes.  Before Canada's tax reforms of 1977 this slice of the population paid the lowest percentage of their income in total taxes of any of the population.  This should not surprise us.  They are the accountants, the lawyers, and the writers of tax regulations. Capitalism pari passu, that's what Djilas was talking about.  (Parenthetically, this punches a rather large hole in the economists' dogma that "sales taxes" are always regressive.  Taxing lawyers and accountants will be, whenever it occurs, a major step toward progressivity of taxation.)
Book values of capital assets do not even measure the value of capital assets, let alone the wealth that they represent to their owners.  "Assessed" "values" of real estate are a joke to everyone but the assessors, to whom they are merely one, albeit often a delicious one, indicator of the fees that might be available for making the assessment.  ("Two and two make what?"  "What do you want them to make?"  Accountancy students' humour.)
Even income is a pretty flaky concept.  The Canadian Income Tax Act has two sections, Section 1, which runs about two pages and creates an income tax, and Section 2, a thousand pages plus in my thirty year-old copy, which tried to define income.  Major accounting firms have entire rooms of documents making this effort, and Congressman Emanuel Celler once showed me his personal working copy of the US income tax act.  It ran to five 10-foot steel shelves.
 
So.  Wealth.  Income.  Two interesting notions.  Always interesting to read and think about.  Two great reminders of the value of the pinch of salt.
 
David Lloyd-Jones (talk) 15:45, 23 August 2015 (UTC)
thread_title: wealth or income?

message: :I submit that the above is far less challenging than many problems that secondary-school students are required to do, and it's shorter and simpler than most.  And it is reasonable to expect 16-year-olds to understand the question when it is phrased just as above---very nearly identical to what you see in this article.  (Not ALL 16-year-olds---not those who will major in French poetry, perhaps---but all who will go into any even slightly mathematical field.)
:"Cplot", do you have a problem with that assertion? Michael Hardy 23:51, 8 November 2006 (UTC)
thread_title:  (end of quiz question section)