The Pareto Distribution: A Power Law Distribution
https://www.theguardian.com/commentisfree/2011/nov/11/occupy-movement-wealth-power-law-distribution
The article details the realities behind the forces which were being opposed by the Occupy Wall Street movement. During the Occupy Wall Street protest movement in 2011, protestors were upset with the inequitable distribution of wealth, honing in on the extreme differences between the “1%” and the “99%”. Protestors were not only concerned with the abundant resources of the rich, but the immense power it conferred. However, in the 19th century, the Italian economist Vilfredo Pareto had already identified the natural tendency for wealth and power to accumulate in the hands of few–especially in an 80/20 distribution. Today, this is known as the Pareto distribution, and it is an example of a power law distribution which occurs commonly in the real world. The article is optimistic in noting that the protestors were “right” to target the 1%, since it would produce the greatest yield in offsetting the income inequality; however, it is hard to come to terms with the seemingly inevitability of the Pareto distribution in America’s complex capitalist economic system.
The Pareto distribution discussed through the article is pertinent to chapter 18’s discussion on the power law, and its effect in networks. The Pareto distribution is especially relevant to the rich-get-richer model which could be used to model a power law distribution. It makes intuitive sense that those with more resources would be able to snowball their advantage into gaining more and more, and both the Pareto distribution and the Rich-get-richer model support this idea. However, in contrast to ideas discussed in chapter 18 about the long-tail, the article cites many statistics supporting the fact that wealth does not follow the idea of the long-tail as most of the wealth is centered in those at the top, while the bottom, despite having more individuals, does not have as much.