1

Background
Price's law says this:
In an company, half of all value is created by the square root of the people.

I'm sure Dr. Price looked at more than the median, but I suspect this was how the technically-illiterate average person could ingest the rule.

Benford's law (reduced) says this: For many sets of real world numbers the first digit is 1 about 30% of the time.

According to wikipedia Benford's law applies to: "...electricity bills, street addresses, stock prices, house prices, population numbers, death rates, lengths of rivers, and physical and mathematical constants"

This prevalence is related to power-laws underlying a wide variety of natural phenomena.

Question:
So can Prices value-creation law be derived from a Benford-like premise?

Or, restated, does the power-law behind Benford's law speak to the mechanisms driving Price's law?

chl
  • 53,725
EngrStudent
  • 9,375
  • 3
    Benford's Law is not necessarily related to power laws: it applies to almost any distribution whose support covers orders of magnitude. It is difficult to see how such a general phenomenon could be used to deduce such a specialized statement as Price's Law. – whuber Oct 29 '20 at 17:27

0 Answers0