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Center for Nonlinear Studies |
It is often said by economists and politicians that “A rising tide raises all boats” That is economic growth may not benefit all individuals equally but all elements of society will benefit from the growth.That does not appear to be consistent with the data for the last forty years. Despite a roughly three percent annual growth in the GDP many people have seen there net worth decline while others have enjoyed a large increase in their net worth.
Clearly the growth in the GDP is not distributed equally. The question we addressed is: How does the distribution of the growth in wealth affect the wealth of individuals? Using simple models we found an interesting connection between the distribution of the growth in wealth to both the increase and/or decline in the worth of individuals as well as the existence of economic mobility. We also found that as the distribution of the growth changed that there exists a phase transition between a region where all individuals saw an increase in their wealth to one where only the wealthiest saw their wealth grow.