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1 The Pareto Distribution - University of Montana

Estimating the Parameters of a Pareto DistributionIntroducing a Quantile Regression broad approach to using correlation coefficients for pa-rameter estimation and not merely as descriptive statistics has been devel-oped. [1,2,3,4] It was a goal of this project to extend these ideas specificallyto estimating the parameters of the Pareto Distribution . In this paper wewill recall the definition of the Pareto Distribution , some basic properties,and some previously developed methods of estimating the parameters of thePareto Distribution from which a random sample comes. We will introducea new parameter estimation scheme based on correlation coefficients.

Setting the derivative equal to zero, a little algebra and an omitted second derivative check to confirm we are maximizing L rather than minimizing L yields: αˆ = n/ Xn i=1 log x i ˆk 2.4 Correlation Coefficients Gideon[4] has shown using a correlation based interpretation of linear re-

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