Do wealth distributions follow power laws? Evidence from ‘rich lists’

We use data on the wealth of the richest persons taken from the ‘rich lists’ provided by business magazines like Forbes to verify if the upper tails of wealth distributions follow, as often claimed, a power-law behaviour. The data sets used cover the world’s richest persons over 1996–2012, the richest Americans over 1988–2012, the richest Chinese over 2006–2012, and the richest Russians over 2004–2011. Using a recently introduced comprehensive empirical methodology for detecting power laws, which allows for testing the goodness of fit as well as for comparing the power-law model with rival distributions, we find that a power-law model is consistent with data only in 35% of the analysed data sets. Moreover, even if wealth data are consistent with the power-law model, they are usually also consistent with some rivals like the log-normal or stretched exponential distributions.