(A silly theory about) Wealth Distribution

Had there been any newspapers left, their headlines would read «Apocalypse Strikes! Only twenty survivors found on planet.» But there are no newspapers: whatever you need the nineteen others to know, you can actually go and tell them face-to-face.

So, you start creating a society from scratch. You need food, clothes, shelter, sex (let’s not deny it), and an internet connection to check my blog regularly. Trust me, I have a T1 connection in my backyard bunker. Anyway. Intially, everyone is entitled a fair share of resources, but over time people work to provide themselves and others with the basic necessities and trade.

Every day, you go out and spend a little part of your wealth. If you’re rich, you might spend only 4%, but there’s always minimum amount you need to spend to survive, even if you’re dirt poor. Oh, and you only have time to trade with four other people, because otherwise there’s no time for you to actually work on surviving the apocalypse.

This is what the situation looks like:

Every line in the histogram represents the wealth amassed by a given person, and below every line is the number of people that trade with that person. Play with it a little bit: the customer graph is randomly generated every time you click the button.

Done? Good. There are several lessons here:

If nobody gives you money, you go bankrupt

This one is pretty obvious. Every time there’s someone with no «customers» they end up running out of money.

You can go along with only a few customers

This one is a little bit more surprising. If you give money to four people, and only two people give you money, how can you survive?

Actually, it’s pretty obvious: if you’re a wage slave right now, you have only one person giving you money, but you spend money on groceries, several utilities, taxes… all that matters is that whatever amount you get from other people is larger than what you spend.

In the simulation, most two-income survivors end up bankrupt because their two customers are poor and therefore don’t spend enough. But sometimes, they manage to latch onto high-spending survivors and earn a decent living as a consequence.

More customers does not imply more wealth

Again, in the simulation, it’s not uncommon to see five-customer survivors become more wealthy than six-customer survivors. In fact, some very lucky three-customer surviors can earn as much as unlucky six-customer survivors. I’ve seen a 5-customer beat an 8-customer once.

This is quite logical: I would rather have one rich customer who pays me €1000 every day, than ten poor customers who only pay me €10 a day.

I guess the main lesson here is, when the Apocalypse comes, make sure you buy my stuff.

Anyway, the above model is extremely simple, and does not take into account charity, families, debt, growth or the fact that there’s a minimum price to buy certain products. Do you think any of these would change the results significantly? I’m really interested in the answer, so please drop by the comments section below.

Nicollet.Net