Equality of Outcome or Equality of Opportunity? A Simulation of Wealth Distribution Using Agent-based Modeling

Abstract

Against the backdrop of calls for a more just form of capitalism, this paper specifically focuses on the notion of equality within capitalist societies and utilizes findings from a computer simulation to explore which of one two fundamental principles, namely: (1) equality of opportunity; or (2) equality of outcome might better inform and guide reform efforts to create more uniform distribution of wealth among members of society. In this study, Agent Based Modeling (ABM), as a form of computer simulation was used to explore how the fundamental principles of equality of opportunity or equality of outcome might impact wealth distribution in a capitalist society. A total of 800 simulations were run, where 400 of them incorporated the principle of equal opportunity and 400 incorporated the principle of equal outcome. Each of the 800 simulations covered a period of 5 years. The most interesting insight gained from this study is likely the finding that wealth distribution inequality is significantly lower if the distribution of wealth is grounded in the principle of equal opportunity, instead of being grounded in the principle of equal outcome. The other interesting finding is that the mean wealth, maximum wealth, and total wealth are all significantly higher if the distribution of wealth is grounded in the principle of equal opportunity, instead of being grounded in the principle of equal outcome. Both of these insights may initially seem somewhat counterintuitive, as one might expect that wealth distribution inequality be lower if members in society all received equal share of the resources upon which they stumbled. However, the findings of this study imply that equality of opportunity in a capitalist society might create a more even distribution of wealth, as well as a greater degree of prosperity for its members.