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WORKING PAPERS / 12 June 2024

Top wealth is distributed Weibull, not Pareto

Coen Teulings, Simon Toussaint, 23 Nov 2023

CEPR Discussion Paper No. 18634

We study the shape of the global wealth distribution, using the Forbes List of Billionaires. We develop simple statistics based on ratios of log moments to test the default assumption of a Pareto distribution, which is strongly rejected. Hazard rates show that the log-transformed data instead follow a Gompertz distribution, which means that the data in levels follow a truncated-Weibull distribution. We further apply our model to the U.S. city size distribution and the U.S. firm size distribution. These distributions also show a rejection of Pareto in favor of (truncated-)Weibull. We discuss some theoretical and practical implications of our results.