Scaling in local to global condensation of wealth on sparse networks.

Abstract

The prevalence of wealth inequality propels us to characterize its origin and progression via empirical and theoretical studies. The yard-sale (YS) model, in which a portion of the smaller wealth is transferred between two individuals, culminates in the concentration of almost all wealth to a single individual, while distributing the rest of the wealth with a power law of exponent one. By incorporating redistribution to the model, in which the transferred wealth is proportional to the sender's wealth, we show that such extreme inequality is suppressed if the frequency ratio of redistribution to the YS-type exchange exceeds the inverse of the population size. Studying our model on a sparsely-connected population, we find that the wealth inequality ceases to grow for a period, when local rich nodes can no longer acquire wealth from their broke nearest neighbors. Subsequently, inequality resumes growth due to the redistribution effect by allowing locally amassed wealth to move and coalesce. Analyzing the Langevin equationsand the coalescing random walk on complex networks, we elucidate the scaling behaviors of wealth inequality in those multiple phases. These findings reveal the influence of network structure on wealth distribution, offering a novel perspective on wealth inequality.