Graduate Student Seminar: Stochastic and Kinetic Models of Wealth Distribution, Speaker: Daniel Cooney

Title:  Stochastic and Kinetic Models of Wealth Distribution

Abstract:  Empirical studies have shown that the distribution of wealth in a population often feature power-law tails, displaying the so-called Pareto law. Recently, Boghosian and coauthors have proposed the "Yard-Sale" kinetic model for binary exchange of wealth between economic agents and applied it to explore the long-time behavior of wealth distribution in a large population. We will introduce the Lorenz curve and Gini coefficient, indicators of wealth inequality, and then show how the Gini coefficient is shown to be a Lyapunov functional for the Yard-Sale model. We will also explore how a combination of binary exchange and taxation can produce steady-state wealth distributions following the Pareto law.