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A study of UK household wealth through empirical analysis and a non-linear Kesten process
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Forbes, Samuel and Grosskinsky, Stefan (2022) A study of UK household wealth through empirical analysis and a non-linear Kesten process. PLoS One, 17 (8). e0272864. doi:10.1371/journal.pone.0272864 ISSN 1932-6203.
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Official URL: https://doi.org/10.1371/journal.pone.0272864
Abstract
We study the wealth distribution of UK households through a detailed analysis of data from wealth surveys and rich lists, and propose a non-linear Kesten process to model the dynamics of household wealth. The main features of our model are that we focus on wealth growth and disregard exchange, and that the rate of return on wealth is increasing with wealth. The linear case with wealth-independent return rate has been well studied, leading to a log-normal wealth distribution in the long time limit which is essentially independent of initial conditions. We find through theoretical analysis and simulations that the non-linearity in our model leads to more realistic power-law tails, and can explain an apparent two-tailed structure in the empirical wealth distribution of the UK and other countries. Other realistic features of our model include an increase in inequality over time, and a stronger dependence on initial conditions compared to linear models.
Item Type: | Journal Article | ||||||
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Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions |
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Divisions: | Faculty of Science, Engineering and Medicine > Science > Mathematics | ||||||
SWORD Depositor: | Library Publications Router | ||||||
Library of Congress Subject Headings (LCSH): | Income distribution -- Mathematical models, Wealth -- Mathematical models | ||||||
Journal or Publication Title: | PLoS One | ||||||
Publisher: | Public Library of Science | ||||||
ISSN: | 1932-6203 | ||||||
Official Date: | 24 August 2022 | ||||||
Dates: |
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Volume: | 17 | ||||||
Number: | 8 | ||||||
Article Number: | e0272864 | ||||||
DOI: | 10.1371/journal.pone.0272864 | ||||||
Status: | Peer Reviewed | ||||||
Publication Status: | Published | ||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||
Date of first compliant deposit: | 18 October 2022 | ||||||
Date of first compliant Open Access: | 19 October 2022 | ||||||
RIOXX Funder/Project Grant: |
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