Italian economist and engineer Vilfredo Pareto (1848-1923) conjectured that for any population, income naturally follows a log-normal distribution. The normal, or Gaussian distribution ranges from negative to positive infinity with a central mean. Because logarithms are always positive, the log-normal distribution ranges from zero to positive infinity with a positive mean, consistent with there being no upper bound for the highest incomes. Pareto’s approximation describes the distribution of … [Read more...]