Saturday, June 25, 2016

Pareto and inequality

Are you familiar with the Pareto's principle?

In a nut shell, Vilfredo Pareto, an Italian scientist that lived in the nineteen century, made the observation that in Nature and in many human activities there is this bizarre aspect: roughly 80% of the effects come from 20% of the causes

For example, in 1896 he discovered that 20% of the people had 80% of the land.

Now, they say that the world has never been as unequal as it is today: rich are becoming richer, poor are becoming poorer.

Is it true? well, according to recent news and wealth indicators it seems it is. It is bad news, indeed.

There are many reasons for this, but let's move on with Pareto's principle, ie 80% is in the hand of 20%'s only.

What happens if we apply again Pareto to the 20% of the richest population?

Well, it turns out that 4% of the population has control over two third of the wealth.

Let's apply Pareto again.

We discover that 1% of the population has control over 50% of the wealth. 

Like in 1896 in the agrarian Italy!

Are we all condemned to this empirical principle that looks like more as a prophecy?

I think that we can all agree on one point: progress is not only the capability of using your smarthone to whatsup a guy living on the other side of the world. Progress is the possibility of living in a world where there are no huge differences in how wealth is distributed, unless you want to live in a district with armed walls, barble wire, CCTV, police everywhere because you are scared to leave your house and to be kidnapped or killed.

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