Full text: Konvolut Wealth and Income Distribution 2

An Attempted Generalisation 
In dealing with income of property owners we have chosen as a 
state variable wealth which evolves slowly in a stochastic process; 
income can be derived from it by means of another random 
variable, the rate of return. Can we generalise this two-step expla 
nation to include also earned income? 
In a somewhat formal way we could speak of the rank which an 
individual occupies in one or several hierarchises. Examples 
of such hierarchies are wealth, education, status, grade (level) 
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of an official or manager, rank of officers, ^obility, degreSe of 
specialisation, grading by popularity of stars etc. Each of these 
would represent a dimension in what might be called hierarchical 
spe'ce. An individual would occupy a certain point in that space, 
corresponding to its r0nk in the various hierarchies, and it 
would h&ar€; certain probabilities of transition with ip a certain 
time to another point in that space. In other words, an indi 
viduals' hierarchical position in society (a vector) would be the 
state variable of a stochastic process. 
To each point in the hierchical space corresponds a certain probability 
distribution of income; the basic rule that the higher rank means 
expectation of a higher income. 

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