Berlin 2012 – scientific programme
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DY: Fachverband Dynamik und Statistische Physik
DY 13: Nonlinear Stochastic Processes
DY 13.4: Talk
Tuesday, March 27, 2012, 15:00–15:15, MA 004
When it pays off to pay tax: Insights from coupled multiplicative stochastic processes — Jan Lorenz1,2 and •Frank Schweitzer1 — 1Chair of Systems Design, ETH Zurich, Kreuzplatz 5, 8032 Zurich, Switzerland — 2Center for Social Science Methodolgy, Carl von Ossietzky University Oldenburg, Ammerlander Heerstr. 114 - 118, 26129 Oldenburg, Germany
We demonstrate by mathematical analysis and systematic computer simulations that taxation and redistribution of wealth can lead to sustainable growth of wealth in a society. The wealth dynamics of each agent is described by a stochastic multiplicative process which, in the long run, leads to the destruction of individual wealth and the extinction of the society. When this lossy process is combined with a taxation mechanism, where some proportion of wealth is collected by a government, which further reduces a fraction as costs for administration. The remaining public good is equally redistributed to all agents. We derived conditions for under which the destruction of wealth can be turned into sustainable growth, despite the losses from the random growth process and despite the administrative costs.