Entrepreneurs and Wealth Concentration
Author Information
Author(s): Joseph E. Fargione, Clarence Lehman, Stephen Polasky
Primary Institution: University of Minnesota
Hypothesis
Can chance and determinism explain the concentration of wealth among entrepreneurs?
Conclusion
The study shows that chance alone can lead to unlimited concentration of wealth among a few entrepreneurs.
Supporting Evidence
- The model predicts a log-normal distribution of wealth.
- Wealth concentration occurs even in growing, stagnant, or shrinking economies.
- An inherited fortune tax can effectively moderate wealth concentration.
Takeaway
Some people get really lucky with their investments, and over time, they can end up owning almost all the money, while others have very little.
Methodology
The study uses a simplified individual-based model to analyze wealth generation among entrepreneurs.
Limitations
The model simplifies many real-world factors that could affect wealth distribution.
Participant Demographics
The model assumes all entrepreneurs start with equal capital and talent.
Digital Object Identifier (DOI)
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