University Maths Notes: Probability and Statistics – The Pareto Distribution
The probability density function of a Pareto distribution is
This is shown below for
and
various values of
The cumulative distribution function is then found by
integration:
for
and
0 otherwise.
for
and
for
respectively.Example: The Pareto distribution may be used to model the distribution of wealth and income with x_m the minimum wage or state benefit level, the sizes of human settlements, oil fields etc.