Pareto index

In economics the Pareto index, named after the Italian economist and sociologist Vilfredo Pareto, is a measure of the breadth of income or wealth distribution.

One of the simplest characterizations of the Pareto distribution, when used to model the distribution of incomes, says that the proportion of the population whose income exceeds any positive number x > xm is where xm is a positive number, the minimum of the support of this probability distribution (the subscript m stands for minimum).

The larger the Pareto index, the smaller the proportion of very high-income people.

Mathematically, the formula above entails that all incomes are at least the lower bound xm, which is positive.

Up to this income the probability density keeps decreasing, and then suddenly jumps down to zero, which is clearly unrealistic.