Wealth Distribution

The Problem

The top 10% of wealthy individuals in the US owns approximately 75% of the countries wealth. This leaves only 22.8% of the wealth for the remaining 90% of Americans. This can result in more opportunities for the children of rich people to remain rich while children of middle and lower class families do not have access to these same opportunities. I believe we should raise the Estate Tax to limit the amount of money people can receive in inheritance so that children from any backgrounds will have an equal chance to succeed.

Model Description

This projects seeks to model the wealth distribution in the US. Two versions of the project were created. The first is a systems model in the form of a Vensim model. The second is an agent model in the form of an AgentCubes model

The Story

  1. People will be differentiated by their wealth. The three groups will be the bottom 33% (lower-class), the next 33% (middle-class), and the next 33% (upper-class). This model will not include the top 1% because no amount of reasonable taxes can limit their wealth.
  2. Upper-class, middle-class, lower-class people move randomly on the world
  3. If an upper-class person touches another upper-class person they create a middle-class person with a 5 percent chance
  4. If a middle-class person touches another middle-class person they create a lower-class person with a 5 percent chance
  5. If a lower-class person touches another lower-class person they create a lower-class person with a 5 percent chance
  6. 4.2% of lower-class individuals will become upper-class and 13.5% of middle-class individuals will become upper-class (Picchi)
  7. 19% of middle-class individuals will become lower-class (Cooper)
  8. 37% of lower-class individuals will become middle-class (Cooper)
  9. 8% of upper-class individuals will become middle-class (Aisch)
  10. 1% of upper-class individuals will become lower-class (Dorfman)
  11. Upper, middle, and lower-class individuals all have a 5 percent chance of dying
  12. A counter will count and graph the number of Upper, middle, and lower class people

Conclusion

After analyzing both types of models it is safe to conclude that having a high estate tax will result in an even distribution of wealth in the real world. The AgentCubes model shows a very even distribution of wealth on a large and realistic scale. The Vensim model also supports this conclusion.However on small scales, the high estate tax may backfire and result in a large number of lower-class people.

Resources

Aisch, Gregor. “Some Colleges Have More Students From the Top 1 Percent Than the Bottom 60. ” The New York Times, The New York Times, 18 Jan. 2017. link

Cooper, Preston. “College Enrollment Surges Among Low-Income Students.” Forbes, Forbes Magazine, 26 Feb. 2018. link

Dorfman, Jeffrey. “Dispelling The Myth Of Underemployed College Graduates.” Forbes, Forbes Magazine, 23 Jan. 2017. link

Egan, Matt. “Record Inequality” CNNMoney, Cable News Network, 27 Sept. 2017. link

Picchi, Aimee. “Your Odds of Becoming a Millionaire? ” CBS News, CBS Interactive, 25 Jan. 2016. link


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