Wealth condensation in pareto macroeconomies

Z. Burda, D.A. Johnston, J. Jurkiewicz, Marek M. Kamiński, Maciej A. Nowak, Gábor Papp, Ismaïl Zahed

Abstract

We discuss a Pareto macro-economy (a) in a closed system with fixed total wealth and (b) in an open system with average mean wealth and compare our results to a similar analysis in a super-open system (c) with unbounded wealth. Wealth condensation takes place in the social phase for closed and open economies, while it occurs in the liberal phase for super-open economies. In the first two cases, the condensation is related to a mechanism known from the balls-in-boxes model, while in the last case to the non-integrable tails of the Pareto distribution. For a closed macro-economy in the social phase, we point to the emergence of a ``corruption'' phenomenon: a sizeable fraction of the total wealth is always amassed by a single individual.

Locations

• Physical review. E, Statistical physics, plasmas, fluids, and related interdisciplinary topics - View
• arXiv (Cornell University) - View - PDF
• PubMed - View
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