Interplay of network structure and talent configuration on wealth dynamics

Abstract

The economic success of individuals is often determined by a combination of talent, luck, and assistance from others. We introduce a new agent-based model that simultaneously considers talent, luck, and social interaction. This model allows us to explore how network structure (how agents interact) and talent distribution among agents affect the dynamics of capital accumulation through analytical and numerical methods. We identify a phenomenon as ``talent configuration effect", which refers to the influence of how talent is allocated to individuals (nodes) in the network. We analyze this effect through two key properties: talent assortativity (TA) and talent-degree correlation (TD). In particular, we focus on three economic indicators: growth rate ($n_{\mathrm{rate}}$), Gini coefficient (inequality: $n_{\mathrm{Gini}}$), and meritocratic fairness ($n_{LT}$). This investigation helps us understand the interplay between talent configuration and network structure on capital dynamics. We find that, in the short term, positive correlations exist between TA and TD for all three economic indicators. Furthermore, the dominant factor influencing capital dynamics depends on the network topology. In scale-free networks, TD has a stronger influence on the economic indices than TA. Conversely, in lattice-like networks, TA plays a more significant role. Our findings address that high socioeconomic homophily can create a dilemma between growth and equality, and that hub monopolization by few highly talented agents makes economic growth strongly dependent on their performances.

arXiv comment20 pages = (12 pages, 6 figures, and 1 table in main text and Appendix A-D) + (8 pages, 8 figures and 1 table as Supplemental Material); Published version with extra typo correction

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Cited by in corpus (1)

• Anomaly, class division, and decoupling in income dynamics