Wealth inequality is result of ‘pure randomness’: Study
Much like playing a game of Monopoly, a recent study from Tufts University finds that when people are more wealthy, it’s because they’re lucky — a result of just pure randomness.
The study’s findings, originally published in SIAM News, suggest even if everyone were equally talented and followed the same rules, a string of chance events determines the ultimate distribution of societal wealth, no differently than a coin toss or a game of Monopoly.
In fact, the study argues that government intervention is the only path to amend this outcome.
“It’s the only way that I know of, but I would not rule out that there are possible remodelings of the way that we conduct transactions that might fix it,” said Bruce Boghosian, professor of mathematics at Tufts University and lead researcher of the study.
Boghosian, who is currently serving as president at the American University of Armenia, added that a sufficiently progressive wealth tax could remedy the problem and eliminate oligarchy.
“Oligarchy is not just the tail on the distribution,” he said. “It’s not just very rich people. It is a very specific and mathematically precisely definable modification to a usual classical distribution of wealth.”
While a wealth tax sounds easier said than done, many advisors think it would also be hard to implement. Governments shouldn’t have to be the ones to deal with the “spreading the wealth” either.
Emmanuel Eliason, president and CEO of Eliason Wealth Management, says there are many other approaches, like education, that would help solve the wealth gap.
“Being able to be well informed and educated about financial concepts, how they work, how they impact income, generation assets, occupation, wealth creation, and long-term legacy and transfer
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