Evidence for Power-law tail of the Wealth Distribution in India

Sitabhra Sinha

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Abstract: The higher-end tail of the wealth distribution in India is studied using recently published lists of the wealth of richest Indians between the years 2002-4. The resulting rank distribution seems to imply a power-law tail for the wealth distribution, with a Pareto exponent between 0.81 and 0.92 (depending on the year under analysis). This provides a comparison with previous studies of wealth distribution, which have all been confined to Western advanced capitalist economies. We conclude with a discussion on the appropriateness of multiplicative stochastic process as a model for asset accumulation, the relation between the wealth and income distributions (we estimate the Pareto exponent for the latter to be around 1.5 for India), as well as possible sources of error in measuring the Pareto exponent for wealth.

Date: 2005-02
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Published in Physica A, Vol 359, pp 555-562 (2006)

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Journal Article: Evidence for power-law tail of the wealth distribution in India (2006)
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