Power-law Behaviour and Inequality in the Upper Tail of Wealth, Income and Consumption: Evidence from India

Abstract

This article analyses the upper tails of wealth, income and consumption in India over the period 2012–2018 using rich lists, wealth surveys, income tax returns and consumer expenditure surveys. We find the upper tail to obey a power-law in all three economic resources. Comparing our estimates in 2012—where we possess data on wealth, income and consumption simultaneously—we find that the upper tail of wealth is most concentrated, income slightly less, and consumption is much less concentrated. Unlike wealth and income, the Pareto coefficients for consumption are estimated to have a well-defined mean and variance. Our findings are suggestive of convex saving functions in the income distribution. JEL Codes: D31, O16, O53