Power Law

In statistics, a power law is a functional relationship between two quantities, where a relative change in one quantity results in a proportional relative change in the other quantity, independent of the initial size of those quantities: one quantity varies as a power of another.

A power law distribution has the form Y = k Xα, where:

  • X and Y are variables of interest,
  • α is the law’s exponent,
  • k is a constant.

The power law can be used to describe a phenomenon where a small number of items is clustered at the top of a distribution (or at the bottom), taking up 95% of the resources. In other words, it implies a small amount of occurrences is common, while larger occurrences are rare. For example, where the distribution of income is concerned, there are very few billionaires; the bulk of the population holds very modest nest eggs.

  • This is neat:

    If you plot two quantities against each other with logarithmic axes and they show a linear relationship, this indicates that the two quantities have a power law distribution.

References

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