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A study of UK household wealth through empirical analysis and a non-linear Kesten process

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 t...

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Published in:PloS one 2022-08, Vol.17 (8), p.e0272864-e0272864
Main Authors: Forbes, Samuel, Grosskinsky, Stefan
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description 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.
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source Publicly Available Content Database; PubMed Central; Coronavirus Research Database
subjects Analysis
Balance sheets
Computer and Information Sciences
COVID-19
Distribution (Economics)
Economic aspects
Empirical analysis
Equality
Growth models
Households
Inequality
Initial conditions
Modelling
Personal income
Physical Sciences
Research and Analysis Methods
Social Sciences
Theoretical analysis
Wealth
Wealth distribution
title A study of UK household wealth through empirical analysis and a non-linear Kesten process
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