An agent-based model of the observed distribution of wealth in the United States
Hunter A. Vallejos (),
James J. Nutaro () and
Kalyan S. Perumalla ()
Additional contact information
Hunter A. Vallejos: Georgia Institute of Technology
James J. Nutaro: Oak Ridge National Laboratory
Kalyan S. Perumalla: Oak Ridge National Laboratory
Journal of Economic Interaction and Coordination, 2018, vol. 13, issue 3, 641-656
Abstract Pareto cautiously asserted that the wealth and income distributions which bear his name are universal, basing his argument on observations of this distribution in many different types of economies. In this paper, we present an agent based model (and a scalable approximation of it) in a closely related spirit. The central feature of this model is that wealth enables an individual to secure more wealth. Specifically, the important and novel feature of this model is its ability to simultaneously produce both the Pareto distribution observed in empirical data for the top 10% of the population and the exponential distribution observed for the lower 90%. We show that the model produces these distributions of wealth when initialized with an equitable distribution. Then, using historical data, we initialize the model with US wealth shares in 1988 and show that the model tracks wealth share changes from 1988 to 2012. Simulations to 2088 project that the top 0.01% of the population will possess more than 70% of the total wealth in the economy.
Keywords: Pareto; Boltzmann–Gibbs; Wealth; Income; Inequality; Agent-based model (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s11403-017-0200-9 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:jeicoo:v:13:y:2018:i:3:d:10.1007_s11403-017-0200-9
Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11403/PS2
Access Statistics for this article
Journal of Economic Interaction and Coordination is currently edited by A. Namatame, Thomas Lux and Shu-Heng Chen
More articles in Journal of Economic Interaction and Coordination from Springer, Society for Economic Science with Heterogeneous Interacting Agents Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().