Reply To: Historical data on wealth distribution


To put it in different terms, Pareto’s Law is not a praxeological law but an empirical regularity or, we might say, an historical fact. Both facts and theory are important elements in debates. But Pareto’s Law refers to just one aspect of the social process for which there seems to be no praxeological explanation. For this reason, Austrian economists have not emphasized Pareto’s Law.

My guess is that the reason mainstream economists do not appeal to Pareto’s Law is that it has not been subject to rigorous econometric testing. Other mainstream economists have tried to formulate “power laws.”

Schumpeter thought this a fruitful line of inquiry for economists. But the project has made little headway.