Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following table provides selected points on the Lorenz curve for the 2018 US wealth distribution, downloaded from the World Inequality Database: T L(z) 0

image text in transcribed
image text in transcribed
The following table provides selected points on the Lorenz curve for the 2018 US wealth distribution, downloaded from the World Inequality Database: T L(z) 0 0 0.9 0.2932 0.99 0.6510 0.999 0.8207 0.9999 0.9055 0.99999 0.9531 1 1 1. Compute the fraction of wealth controlled by the top 10% of (a) The entire population (b) The top 10% (c) The top 1% (d) The top 0.1% (e) The top 0.01% 2. Based on your answers to (1), is the wealth distribution in the United States well-approximated by a Pareto distribution? If so, which part of the distribution is approximately Pareto? 3. Assuming that the US wealth distribution is indeed Pareto, at least for the top 0.01%, use your answer from 1.e to estimate the PLE. 4. Recall that the best source of wealth data in the U.S. is the Survey of Consumer Finances (SCF). A shortcoming of the SCF is that (for privacy reasons) it does not include people on the Forbes 400 list of wealthiest people. Using the PLE from (3), estimate the fraction of wealth controlled by the 400 wealthiest families in 2018. In 2018, there were approximately 127.9 million households in the US

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Macroeconomics

Authors: Andrew B. Abel, Ben S. Bernanke, Dean Croushore, Ronald D. Kneebone

8th Canadian Edition

134646355, 9780134842615 , 978-0134646350

More Books

Students also viewed these Economics questions

Question

Explain what is meant by the reasonable person test?

Answered: 1 week ago