NetLogo User Community Models
# Multiplicative Growth and Inequality.nlogo
Author: Rupert Nagler, Jan 2020, email@example.com
## WHAT IS IT?
Simulation of multiplicative vs additive growth and the impact on equality of wealth.
Our turtles assume they have all the same chance to get wealthy doing business. They are represented in their blue 2d-world as yellow circles. Their vertical position reflects their actual wealth while their horizontal position reflects their unique "who" number.
You will experience the difference between additive growth (as generated by labour income vs. consumption) and multiplicative growth (as generated by investments, interests, shares). Multiplicative growth will automaticly lead to an uneven distribution of wealth, while a **wrong ergodic hypothesis** will make you think - like most traditional economists - that everybody has equal chances in multiplicative economic growth.
You can explore the intrinsic effects why **"the rich get richer"** and the benefits of **cooperation** induced by a form of wealth tax. Lorenz Curve, Gini Coefficient and a histogram show the current distribution of the current wealth of each turtle.
## HOW IT WORKS
All turtles play by the same rules; nobody cheats or has more influence or better connections. In each round a percentage "leverage" of the current wealth of each turtle is multiplied by a normally distributed random variable with mean "mult-mean" and standard deviation "mult-sdev". Added to the wealth is another normally distributed random variable with mean "add-mean" and standard deviation "addd-sdev".
After the wealth of all turtles has been adopted, some redistribution in the form of a wealth tax may be applied: If "tax-factor" is > 0 and current wealth is > "tax-limit" a wealth tax (wealth * tax-factor) is subtracted. Then the collected wealth tax is redistributed evenly to all turtles or to the poor turtles below tax-limit, depending on the switch "redist-all?".
## HOW TO USE IT
* Use the sliders to control the number of turtles "num-turtles" and the initial wealth "init-wealth".
## THINGS TO NOTICE
* You see all turtles sitting on the blue world area. Each turtle will go up or down vertically dependent of its current wealth after each tick.
## THINGS TO TRY
* Try different values for multiplicative growth "mult-mean", "mult-sdev" and additive growth "add-mean", "add-sdev",
## EXTENDING THE MODEL
* better visualization ideas?
## NETLOGO FEATURES
* plotting on a log scale,
## RELATED MODELS
## CREDITS & REFERENCES
Credit: computation of Lorenz Curve and Gini index copied from:
Wikipedia: Distribution of wealth, retrieved 12/2019
Wikipedia: Lorenz Curve, retrieved 12/2019
Wikipedia: Gini Coefficient, retrieved 12/2019
Wikipedia: Ergodic process, retrieved 12/2019
Ergodicity Economics, Ole Peters and Alexander Adamou, 2018
Entrepreneurs, Chance, and the Deterministic Concentration of Wealth, Joseph E. Fargione u.a., 2011
An evolutionary advantage of cooperation, Ole Peters and Alexander Adamou, 2018
Capital and Ideology, Thomas Piketty, 2019
Farmers Fable: Simulation benefits of cooperation, retrieved 12/2019
Gier, Marc Elsberg, novel, blanvalet 2019
Copyright 2020 Rupert Nagler. All rights reserved.
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