A simple and efficient kinetic model for wealth distribution with saving propensity effect: based on lattice gas automaton

TL;DR

This paper introduces a simple, efficient 1D lattice gas automaton model to simulate wealth distribution, incorporating saving propensity effects, and demonstrates its effectiveness in reducing wealth inequality.

Contribution

The paper develops a novel 1D lattice gas automaton model for wealth distribution that is computationally more efficient than existing models and captures the impact of saving propensity.

Findings

Higher saving fractions reduce wealth inequality measures.

The model accurately reproduces wealth distribution benchmarks.

Saving propensity significantly alters wealth distribution patterns.

Abstract

The dynamics of wealth distribution plays a critical role in the economic market, hence an understanding of its nonequilibrium statistical mechanics is of great importance to human society. For this aim, a simple and efficient one-dimensional (1D) lattice gas automaton (LGA) is presented for wealth distribution of agents with or without saving propensity. The LGA comprises two stages, i.e., random propagation and economic transaction. During the former phase, an agent either remains motionless or travels to one of its neighboring empty sites with a certain probability. In the subsequent procedure, an economic transaction takes place between a pair of neighboring agents randomly. It requires at least 4 neighbors to present correct simulation results. The LGA reduces to the simplest model with only random economic transaction if all agents are neighbors and no empty sites exist. The 1D-LGA has a higher computational efficiency than the 2D-LGA and the famous Chakraborti-Chakrabarti economic model. Finally, the LGA is validated with two benchmarks, i.e., the wealth distributions of individual agents and dual-earner families. With the increasing saving fraction, both the Gini coefficient and Kolkata index (for individual agents or two-earner families) reduce, while the deviation degree (defined to measure the difference between the probability distributions with and without saving propensities) increases. It is demonstrated that the wealth distribution is changed significantly by the saving propensity which alleviates wealth inequality.