# Full text: The Personal Distribution of Income

```17
Larger wealth presupposes larger income ( if it had to he saved
out of it) } t erefore the mean income has t> be higher for
lar er wealth. Prom thid point of view it is not surprising
that the increase of income with wealth is less than proportionate,
because wealth in an integral f income taken ver time ^
if saving can be assumed t be a cinstant proportion of inc me.
The interpretation is only weakened to the extent to which it
could be argued that the creation of new wealth from earned
Inc me will affect mostly the lower wealth classes ( only
earned inc me i3 really relevant in this context where income
is supposed to play an active role vis-a-vis wealth ).
The other; regression - wealth on income - should
on the face of it represent the effect of the propensity to
save, the ereation of new wealth from earned income
( continuing primary accumulation ). The curvilinear shape
might be compatible with this interpretation, since for the
lower incomes the saving will play no role and wealth will
only start emerging when income has reached a certain level,
and then it will rise st eply ( because it is an integral,
see above ). Here again, an alternative interpretation is
possible* If income is large, it probably has been derived
from large wealth, therefore to larger income will
on the average correspond larger wealth ( rate f return relation ).
n f[
Thus the #tw> relatione or theories >r laws
behind the j->int distribution of wealth and inc me seem
to be both relevant for each of the two regression lines
although possibly not to the same extent ( each f the
regressi n lines may be be more strongly influenced by
one relation than by the other ).
The preceding arguments implied that.to^ s me exeat,
each regression line is an inverse t the other regression line.
In order to make this clear let me choose an example fr m
another field/ where there is only one "law" or at least we
can pretend there is only one. 'fake the size distribution of
manufacturing plants according to output and cost. The law
consists in the effects of scale on cost in relation to output.
The regression of cost ( or employment) on output will show
a coefficient less than one, decreasing cost to scale.
We expect the other regression to be the inverse of the first
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