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math.ST updates on arXiv.org

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Proportionate vs disproportionate distribution of wealth ...
G. Oshanin, Yu. Holovatch, G. Schehr · 2011-06-23 · via math.ST updates on arXiv.org

We study the distribution P(ω) of the random variable ω= x_1/(x_1 + x_2), where x_1 and x_2 are the wealths of two individuals selected at random from the same tempered Paretian ensemble characterized by the distribution Ψ(x) \sim φ(x)/x^{1 + α}, where α> 0 is the Pareto index and $φ(x)$ is the cut-off function. We consider two forms of φ(x): a bounded function φ(x) = 1 for L \leq x \leq H, and zero otherwise, and a smooth exponential function φ(x) = \exp(-L/x - x/H). In both cases Ψ(x) has moments of arbitrary order. We show that, for α> 1, P(ω) always has a unimodal form and is peaked at ω= 1/2, so that most probably x_1 \approx x_2. For 0 < α< 1 we observe a more complicated behavior which depends on the value of δ= L/H. In particular, for δ< δ_c - a certain threshold value - P(ω) has a three-modal (for a bounded φ(x)) and a bimodal M-shape (for an exponential φ(x)) form which signifies that in such ensembles the wealths x_1 and x_2 are disproportionately different.