IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2108.07888.html
   My bibliography  Save this paper

Wealth disparities and economic flow: Assessment using an asset exchange model with the surplus stock of the wealthy

Author

Listed:
  • Takeshi Kato
  • Yoshinori Hiroi

Abstract

How can we limit wealth disparities while stimulating economic flows in sustainable societies? To examine the link between these concepts, we propose an econophysics asset exchange model with the surplus stock of the wealthy. The wealthy are one of the two exchange agents and have more assets than the poor. Our simulation model converts the surplus contribution rate of the wealthy to a new variable parameter alongside the saving rate and introduces the total exchange (flow) and rank correlation coefficient (metabolism) as new evaluation indexes, adding to the Gini index (disparities), thereby assessing both wealth distribution and the relationships among the disparities, flow, and metabolism. We show that these result in a gamma-like wealth distribution, and our model reveals a trade-off between limiting disparities and vitalizing the market. To limit disparities and increase flow and metabolism, we also find the need to restrain savings and use the wealthy surplus stock. This relationship is explicitly expressed in the new equation introduced herein. The insights gained by uncovering the root of disparities may present a persuasive case for investments in social security measures or social businesses involving stock redistribution or sharing.

Suggested Citation

  • Takeshi Kato & Yoshinori Hiroi, 2021. "Wealth disparities and economic flow: Assessment using an asset exchange model with the surplus stock of the wealthy," Papers 2108.07888, arXiv.org, revised Nov 2021.
    • Handle: RePEc:arx:papers:2108.07888
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2108.07888
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Greg Kaplan & Giovanni L. Violante & Justin Weidner, 2014. "The Wealthy Hand-to-Mouth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(1 (Spring), pages 77-153.
    2. Chatterjee, Arnab & K. Chakrabarti, Bikas & Manna, S.S, 2004. "Pareto law in a kinetic model of market with random saving propensity," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 335(1), pages 155-163.
    3. repec:cup:buetqu:v:28:y:2018:i:04:p:v-vi_00 is not listed on IDEAS
    4. Takeshi Kato & Yasuyuki Kudo & Hiroyuki Mizuno & Yoshinori Hiroi, 2020. "Regional Inequality Simulations Based on Asset Exchange Models with Exchange Range and Local Support Bias," Papers 2002.09272, arXiv.org, revised Jul 2020.
    5. Arnab Chatterjee & Bikas K. Chakrabarti & S. S. Manna, 2003. "Pareto Law in a Kinetic Model of Market with Random Saving Propensity," Papers cond-mat/0301289, arXiv.org, revised Jan 2004.
    6. Greg Kaplan & Giovanni L. Violante & Justin Weidner, 2014. "The Wealthy Hand-to-Mouth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 77-153.
    7. Takeshi Kato & Yasuyuki Kudo & Hiroyuki Mizuno & Yoshinori Hiroi, 2020. "Regional Inequality Simulations Based on Asset Exchange Models with Exchange Range and Local Support Bias," Applied Economics and Finance, Redfame publishing, vol. 7(5), pages 10-23, September.
    8. A. Chatterjee & B. K. Chakrabarti, 2007. "Kinetic exchange models for income and wealth distributions," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 60(2), pages 135-149, November.
    9. Chakrabarti, Anindya S. & Chakrabarti, Bikas K., 2009. "Microeconomics of the ideal gas like market models," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 388(19), pages 4151-4158.
    10. Arnab Chatterjee & Bikas K. Chakrabarti, 2007. "Kinetic Exchange Models for Income and Wealth Distributions," Papers 0709.1543, arXiv.org, revised Nov 2007.
    11. repec:cup:buetqu:v:28:y:2018:i:01:p:v-v_00 is not listed on IDEAS
    12. Sebastian Guala, 2009. "Taxes in a Wealth Distribution Model by Inelastically Scattering of Particles," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 7(1), pages 1-7.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Takeshi Kato, 2022. "Islamic and capitalist economies: Comparison using econophysics models of wealth exchange and redistribution," Papers 2206.05443, arXiv.org, revised Sep 2022.
    2. Takeshi Kato, 2023. "WE economy: Potential of mutual aid distribution based on moral responsibility and risk vulnerability," Papers 2312.06927, arXiv.org.
    3. Maslina Mansor & Mohamad Fazli Sabri & Mustazar Mansur & Muslimah Ithnin & Amirah Shazana Magli & Abd Rahim Husniyah & Nurul Shahnaz Mahdzan & Mohd Amim Othman & Roza Hazli Zakaria & Nurulhuda Mohd Sa, 2022. "Analysing the Predictors of Financial Stress and Financial Well-Being among the Bottom 40 Percent (B40) Households in Malaysia," IJERPH, MDPI, vol. 19(19), pages 1-23, September.
    4. Takeshi Kato, 2022. "Wealth Redistribution and Mutual Aid: Comparison using Equivalent/Nonequivalent Exchange Models of Econophysics," Papers 2301.00091, arXiv.org.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Takeshi Kato, 2022. "Islamic and capitalist economies: Comparison using econophysics models of wealth exchange and redistribution," Papers 2206.05443, arXiv.org, revised Sep 2022.
    2. Takeshi Kato & Yoshinori Hiroi, 2021. "Wealth disparities and economic flow: Assessment using an asset exchange model with the surplus stock of the wealthy," PLOS ONE, Public Library of Science, vol. 16(11), pages 1-16, November.
    3. Chakrabarti, Anindya S. & Chakrabarti, Bikas K., 2010. "Statistical theories of income and wealth distribution," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-31.
    4. Takeshi Kato, 2022. "Wealth Redistribution and Mutual Aid: Comparison using Equivalent/Nonequivalent Exchange Models of Econophysics," Papers 2301.00091, arXiv.org.
    5. Anindya S. Chakrabarti, 2017. "Scale-free distribution as an economic invariant: a theoretical approach," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(1), pages 1-26, April.
    6. Aydiner, Ekrem & Cherstvy, Andrey G. & Metzler, Ralf, 2018. "Wealth distribution, Pareto law, and stretched exponential decay of money: Computer simulations analysis of agent-based models," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 490(C), pages 278-288.
    7. Costas Efthimiou & Adam Wearne, 2016. "Household Income Distribution in the USA," Papers 1602.06234, arXiv.org.
    8. Chakrabarti, Anindya S., 2011. "An almost linear stochastic map related to the particle system models of social sciences," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 390(23), pages 4370-4378.
    9. Takeshi Kato & Yasuyuki Kudo & Hiroyuki Mizuno & Yoshinori Hiroi, 2020. "Regional Inequality Simulations Based on Asset Exchange Models with Exchange Range and Local Support Bias," Papers 2002.09272, arXiv.org, revised Jul 2020.
    10. Ghosh, Asim & Chatterjee, Arnab & Inoue, Jun-ichi & Chakrabarti, Bikas K., 2016. "Inequality measures in kinetic exchange models of wealth distributions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 451(C), pages 465-474.
    11. Düring, Bertram & Matthes, Daniel & Toscani, Giuseppe, 2008. "A Boltzmann-type approach to the formation of wealth distribution curves," CoFE Discussion Papers 08/05, University of Konstanz, Center of Finance and Econometrics (CoFE).
    12. G. Toscani & C. Brugna & S. Demichelis, 2012. "Kinetic models for the trading of goods," Papers 1208.6305, arXiv.org.
    13. Chakrabarti, Anindya S. & Chakrabarti, Bikas K., 2009. "Microeconomics of the ideal gas like market models," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 388(19), pages 4151-4158.
    14. Gualandi, Stefano & Toscani, Giuseppe, 2019. "Size distribution of cities: A kinetic explanation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 524(C), pages 221-234.
    15. Anindya S. Chakrabarti, 2011. "An almost linear stochastic map related to the particle system models of social sciences," Papers 1101.3617, arXiv.org, revised Mar 2011.
    16. Victor M. Yakovenko & J. Barkley Rosser, 2009. "Colloquium: Statistical mechanics of money, wealth, and income," Papers 0905.1518, arXiv.org, revised Dec 2009.
    17. Boghosian, Bruce M. & Devitt-Lee, Adrian & Johnson, Merek & Li, Jie & Marcq, Jeremy A. & Wang, Hongyan, 2017. "Oligarchy as a phase transition: The effect of wealth-attained advantage in a Fokker–Planck description of asset exchange," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 476(C), pages 15-37.
    18. Lorenzo Pareschi & Giuseppe Toscani, 2014. "Wealth distribution and collective knowledge. A Boltzmann approach," Papers 1401.4550, arXiv.org.
    19. Brugna, Carlo & Toscani, Giuseppe, 2018. "Kinetic models for goods exchange in a multi-agent market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 499(C), pages 362-375.
    20. Juan Pablo Pinasco & Mauro Rodríguez Cartabia & Nicolas Saintier, 2018. "A Game Theoretic Model of Wealth Distribution," Dynamic Games and Applications, Springer, vol. 8(4), pages 874-890, December.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2108.07888. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.