Income and Expenditure Distribution. A Comparative Analysis

  • Kausik Gangopadhyay
  • Banasri Basu
Part of the New Economic Windows book series (NEW)


There are empirical evidences regrading the Pareto tail of the income distribution and the expenditure distribution. We formulate a simple economic framework to study the relation between them. We explain the Pareto tails in both the distributions with a Cobb-Douglas felicity function to describe the preferences of agents. Moreover, the Indian data suggest a thicker Pareto tail for the expenditure distribution in comparison to the income distribution. With a uniform distribution of taste parameters for various goods, we identify a process that can give rise to this empirical phenomenon. We also verify our observation with appropriate simulation results.


Utility Function Income Distribution Marginal Utility Pareto Distribution Cumulative Density Function 
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Copyright information

© Springer-Verlag Italia 2011

Authors and Affiliations

  • Kausik Gangopadhyay
    • 1
  • Banasri Basu
    • 2
  1. 1.Indian Institute of Management KozhikodeKeralaIndia
  2. 2.Physics and Applied Mathematics UnitIndian Statistical InstituteKolkataIndia

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