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Why Money Trickles Up - Wealth & Income Distributions

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  • Geoff Willis

Abstract

This paper combines ideas from classical economics and modern finance with the general Lotka-Volterra models of Levy & Solomon to provide straightforward explanations of wealth and income distributions. Using a simple and realistic economic formulation, the distributions of both wealth and income are fully explained. Both the power tail and the log-normal like body are fully captured. It is of note that the full distribution, including the power law tail, is created via the use of absolutely identical agents. It is further demonstrated that a simple scheme of compulsory saving could eliminate poverty at little cost to the taxpayer.

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Paper provided by arXiv.org in its series Papers with number 1105.2122.

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Date of creation: May 2011
Date of revision: May 2011
Handle: RePEc:arx:papers:1105.2122

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