Full text: The Personal Distribution of Income

Footnotes to p.4 
1) Although Champernowne's theory is more complicated than the 
simple model which takes its place in the above reasoning, 
we can easily extend the conclusions: With dhampernowne, the 
promotion i3 stochastic, with probabilities of non-promotion 
and demotion. In this more general case p in the above solution 
has to be replaced by b which is the root of the characteristic 
equation of the matrix ^ . 
The Pareto coefficient in the simple case is - ~-R , the ratio 
of the parameters of the two exponential distributions; in the 
more general case of Champernowne the Pareto coefficient is 
*| ^ 
" —j-— . b could be regarded as the parameter of ajaf age dis 
tribution, if the classes (states of the system) are regarded 
as age classes 
2) Champernowne apparently did not know Yule's paper: It was 
H.Simon's merit to have brought it to the attention of 
economists; unfortunately he reproduced it in a form which 
obscured its essence, which is the interplay of the two ex 
ponential distributions, i.e. of two stochastic processes.
	        

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