Do capitalistic institutions breed billionaires?

Abstract

There is a new wave of interest in the inequality of income and wealth in the social sciences as well as in physics. On the top of the list are persons who own assets of US dollar 1 billion and more. Not much is known quantitatively of the distribution of these persons among countries. In this paper, it is analyzed empirically whether more capitalistic countries, as measured by index variables of economic freedom, exhibit a systematically larger number of billionaires in the year 2012 than less capitalistic countries. The main result is that the typical economic freedom indicators do not play a statistically significant role with respect to the number and wealth of billionaires, except the protection of property rights. In addition to that, according to further empirical results of the paper, billionaires may not be economically harmful for the respective countries as their existence, number and wealth is positively correlated with the GDP per head.

Rankings as coordination games: the Dutch Top 2000 pop song ranking

“…The reason for this similarity might be purely accidental; however, the distribution of income and wealth, as well as the success of popular music (and other forms of artwork), is the result of a combination of talent, performance, and luck. To become very rich, as well as to get to the top of the charts, involves many successful steps in-between, each of them very unstable (see Prinz 2015). Such a process implies that ''success breeds success'', as success in the next step is proportional to success of the previous step.…”

Technology factor as society’s information stock: An elegant proof

“…For market-economy countries, it has been empirically observed that the income structure of top income class (less than 5% of populations) obeys a Pareto distribution (Mandelbrot, 1960;Nirei and Souma, 2007;Atkinson et al, 2011;Aoki and Nirei, 2017;Tao et al, 2019), while the low-and middle-income class (about 95% of populations) obeys an exponential distribution (Nirei and Souma, 2007;Newby et al, 2011;Clementi et al, 2012;Prinz, 2016;Irwin and Irwin, 2017;Rosser, 2019;Tao et al, 2019;Ma and Ruzic, 2020). Theoretically, it has been known that the generalized Pareto distribution is a fairly general family that includes the Pareto distribution and the exponential distribution as two special cases (Balkema and Haan, 1974;Pickands, 1975;Singh and Maddala, 1976;Cowell, 2000).…”

“…In this regard, Murrell (1992) has pointed out that a society's stock of personal knowledge is acquired through a long historical process and is shaped by the institutions and organizations of that particular society that has the given factor endowment. Clementi et al, 2012;Prinz, 2016;Irwin and Irwin, 2017;Rosser, 2019;Tao et al, 2019;Ma and Ruzic, 2020) and the top income class (less than 5% of populations) follows a Pareto distribution (Mandelbrot, 1960;Nirei and Souma, 2007;Atkinson et al, 2011;Aoki and Nirei, 2017;Tao et al, 2019). In this regard, Blanchet et al (2017Blanchet et al ( , 2018 have used the generalized Pareto distribution to describe the income structure of the total population.…”

Exponential or Pareto: towards an evolution of equal opportunity

“…Because slaves had no property right of personal income, this evidence implies that slave-based societies might undergo a Pareto distribution of the total population. As the time came to the end of the 20th century, it had been found that the income structures of market-economy countries around the world uniformly exhibited a two-class pattern [19][20][23][24][25][26][27][28][29][30][31][32][33] : the majority of populations obeyed an exponential distribution and only the remaining (richest) part followed a Pareto distribution.…”