Divisive normalization is an efficient code for multivariate Pareto-distributed environments.

Divisive normalization is a canonical computation in the brain, observed across neural systems, that is often considered to be an implementation of the efficient coding principle. We provide a theoretical result that makes the conditions under which divisive normalization is an efficient code analytically precise: We show that, in a low-noise regime, encoding an -dimensional stimulus via divisive normalization is efficient if and only if its prevalence in the environment is described by a multivariate Pareto distribution. We generalize this multivariate analog of histogram equalization to allow for arbitrary metabolic costs of the representation, and show how different assumptions on costs are associated with different shapes of the distributions that divisive normalization efficiently encodes. Our result suggests that divisive normalization may have evolved to efficiently represent stimuli with Pareto distributions. We demonstrate that this efficiently encoded distribution is consistent with stylized features of naturalistic stimulus distributions such as their characteristic conditional variance dependence, and we provide empirical evidence suggesting that it may capture the statistics of filter responses to naturalistic images. Our theoretical finding also yields empirically testable predictions across sensory domains on how the divisive normalization parameters should be tuned to features of the input distribution.