Full text: The Personal Distribution of Income

of wealth and income. This could be used then to 
understand and interpret the empirical joint distributions 
of income and wealth. For this purpose one would no doubt 
require data which are more conveniently arranged than the 
published material used above, and for this reason alone 
it would go beyond the modest scope of this paper. 
1 The difficulties arising from the discrete 
representation of a continuous income variable 
(Cramer,1969,p.62)in the matrix need not concern us 
here.They do not exist since we relate the classes of the 
matrix to rank in a hierarchy. 
2 Champernowne apparently did not know Yule's paper. It 
was Simon's merit to have brought it to the attention of 
economists.Unfortunately he used it in a form which 
obscured its essence which is the interplay of two 
exponential,or geometrical,distributions resulting from 
two stochastic processes. 
3 Champernowne was, of course, aware of these facts,as his 
thesis of 1937 shows (Champernowne 1973).His formalised 
model of 1953 is,however,not well suited to reflect all 
the economic factors so well stated in 1937. 
4 As far as the other factors,in other words,the 
explanations of earned income, are concerned, I can only 
vaguely indicate the direction in which I think a theory 
might be developped. The high earned incomes concern e- / 
managers,professional people artists and sportsmen. In 
most cases these people can be ranked in a hierarchy which 
in the case of managers depends on the scope of their 
activity,i.e. on the size of the firm,while in the case of 
the artists and sportsmen what matters is the size of the 
audience which they serve. The modern media have created 
ever larger audiences and accordingly greater incomes. A 
relevant theory of the high earned incomes (and the Pareto 
distribution is relevant only for them) will have to start 
from this concept of hierarchies pertaining to scope which 
gives another interpretation of Champernowne's matrix 
which,in his own presentation, is more adapted to income 
formation in a burocratic hierarchy. 
V /c- 

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