Top Wealth Is Distributed Weibull, Not Pareto

Coen Teulings and Simon Toussaint

No 18634, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the shape of the global top wealth distribution, using the Forbes List of Billionaires. By constructing test statistics from ratios of log wealth moments, we assess whether the upper tail follows a Pareto distribution. We reject the Pareto null in all region-year combinations with sufficient observations.We then compare log-normal and Weibull alternatives; our moment ratio test results are compatible with both. Introducing a hazard rate–based test for log wealth distributions reveals pronounced right-tail differences: the log-normal distribution is rejected in favor ofWeibull. TheWeibull distribution accurately predicts regional averages of billionaire wealth, where Pareto performs poorly. Extending the analysis, we find that U.S. city size and firm size distributions are also Weibulldistributed.

JEL-codes: D3 E2 G5 (search for similar items in EconPapers)
Date: 2023-11
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