The Rich Really Do Get Richer!
Tue, 30 Apr 2002 07:35:05 -0700
> It's an old question still in search of an answer. Why does inequality in
> wealth distribution repeat itself so consistently from country to country?
> New research suggests that network effects may be more in play here than
> the backgrounds and talents of citizens.
Network effects may be fashionable, but
they're not needed to explain fat-tailed
Suppose there is a goddess, Fortuna, who
is in charge of allocating wealth between
the people in an economic system. Since
she has better things to do than to find
out which mortals "deserve" wealth, she
makes a list of all possible allocations,
and simply chooses one at random. *
Because wealth must sum to unity, there
are way more fat-tailed distributions on
that list than there are bell-shaped or
flat or whatever ones. (This also goes
to show that, when it rains, it pours)
(for the less anthropomorphized version,
think ergodic and e^-kt)
* unlike Santa Claus' algorithm