8/11/13

When are you gonna become rich?

Overall, the portion of American population having incomes distributed by the Pareto law (~1% to 5%) has not been significantly changing since 1947.  This portion is a working definition of being rich. When a person gets income above the Pareto threshold - s/he is able to reach any other level with a probability falling as a power of income.  
However, the age when a person  can get into the Pareto has been increasing. (see the paper with our model for explanation) For younger, it is getting harder and harder to get rich.  Figure 1 compares several probability density functions (PDF) describing the  age dependence (as expressed by working experience) of the portion of rich people. In 2011, the peak age is approximately 57 years. In 1990, it was 46 years of age.
Another sad news - old people drop out of the rich population exponentially. Much faster than get into it.    


Figure 1. PDF for several years.
 

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