Self-Fulfilling Prophecies, Quasi Nonergodicity, and Wealth Inequality: A Comment

Alexis Akira Toda

Papers from arXiv.org

Abstract: Bouchaud and Farmer (2023) argue that self-fulfilling beliefs generate a realistic wealth distribution. Their reported Gini coefficient, quantiles, and Pareto exponent are computed from dynasty-level wealth averaged over 250 dates, not from a cross section. Correcting the estimand strengthens their qualitative result: with $N=1{,}000{,}000$ dynasties, the terminal cross-sectional Gini is 0.883 rather than 0.7, and median wealth is 0.0052 rather than 0.39 of average wealth. The model therefore generates more inequality, but not the reported quantitative fit. Appendix F analyzes a different process and does not establish the claimed Pareto tail or exponent.

Date: 2026-09
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