How wealth inequality naturally spreads in an unconstrained market
The affine wealth model originally proposed by Bruce M. Boghosian in 2016 is an agent-based stochastic model to analyze #wealth distribution under different wealth tax regimes that has always fascinated me since I first read about it in an old issue of Scientific American.
I like it because it takes political opinions and fluffy back-of-the-envelope economic models out of the equation and it replaces them with a quantitative model that analyzes how a market is likely to behave and how that ends up impacting the wealth owned by each agent in the simulation.
In this notebook I’ve tried to provide a visual representation on top of the thick math of how these agent-based simulations run - where each pair of agents at turns transacts a fraction of their wealth with each other, a simple simultation of a free market.
It’s appalling how quickly you see wealth concentrate when no wealth tax or other rebalancing acts are at play. The first graph is literally the most striking falsification of the “wealth naturally trickles down in a free market” hypothesis.
And it’s also appalling how even a basic wealth tax can bring back fairness. And how easy it is to fine-tune it to nudge wealth distribution towards your goal.
https://notebooks.manganiello.tech/fabio/wealth-inequality.ipynb




