Wealth distribution on a dynamic complex network

TL;DR

This paper introduces an agent-based model linking wealth exchange and network dynamics, revealing how social protection influences wealth distribution and network topology, leading to wealth condensation or egalitarian structures.

Contribution

It presents a novel dynamic network model where wealth exchange and network rewiring co-evolve, showing how social protection factors shape economic inequality and network structure.

Findings

Wealth condenses among few agents when no social protection is applied.

Higher social protection fosters egalitarian networks with more evenly distributed wealth.

Network topology shifts from hubs to more egalitarian structures as social protection increases.

Abstract

We present an agent-based model of microscopic wealth exchange in a dynamic network to study the topological features associated with economic inequality. The model evolves through two alternating processes, the conservative exchange of wealth between connected agents and the rewiring of connections, which depends on the wealth of the agents. The two dynamics are interrelated; from the dynamics of wealth a complex network emerges and the network in turn dictates who interacts with whom. We study the time evolution and the economic and topological asymptotic characteristics of the model for different values of a social protection factor $f$, which favors the poorest agent in each wealth transaction. In the case of $f=0$, our results show condensation of wealth and connections in a few agents, in accordance with the mean field models with respect to wealth. Low values of $f$ favor agents from the middle and upper classes, leading to the formation of hubs in the network. As $f$ increases, the network restriction on exchanges gives rise to an egalitarian society different from the results outside the midfield network.