The Origins of Extreme Wealth Inequality in the Talent Versus Luck Model (original) (raw)

Advances in Complex Systems

Abstract

While wealth distribution in the world is highly skewed and heavy-tailed, human talent — as the majority of individual features — is normally distributed. In a recent computational study by Pluchino et al. [Talent vs luck: The role of randomness in success and failure, Adv. Complex Syst. 21(03–04) (2018) 1850014], it has been shown that the combined effects of both random external factors (lucky and unlucky events) and multiplicative dynamics in capital accumulation are able to clarify this apparent contradiction. We introduce here a simplified version (STvL) of the original Talent versus Luck (TvL) model, where only lucky events are present, and verify that its dynamical rules lead to the same very large wealth inequality. We also derive some analytical approximations aimed to capture the mechanism responsible for the creation of such wealth inequality from a Gaussian-distributed talent. Under these approximations, our analysis is able to reproduce quite well the results of the num...

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