# Fokker-Planck Description of Wealth Dynamics and the Origin of Pareto's Law

Source: [Fokker-Planck Description of Wealth Dynamics and the Origin of Pareto's Law](<https://www.sota2.com/research/paper/68fa2d7e1e209131ce85a078>)

Collection index: [llms.txt](<https://www.sota2.com/research/llms.txt>)

Data updated: 2025-10-24T16:19:13.895Z

Authors: Bruce M. Boghosian

Published: 2014-07-25T11:09:18.000Z

## Abstract

The so-called "Yard-Sale Model" of wealth distribution posits that wealth is transferred between economic agents as a result of transactions whose size is proportional to the wealth of the less wealthy agent. In recent work \[B.M. Boghosian, "Kinetics of Wealth and the Pareto Law," {\\it Phys. Rev. E} {\\bf 89} (2014) 042804\], it was shown that this results in a Fokker-Planck equation governing the distribution of wealth. With the addition of a mechanism for wealth redistribution, it was further shown that this model results in stationary wealth distributions that are very similar in form to Pareto's well known law. In this paper, a much simpler derivation of that Fokker-Planck equation is presented.

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## Original sources and implementation

[Original paper](<https://arxiv.org/abs/1407.6851>)

[PDF](<https://arxiv.org/pdf/1407.6851.pdf>)