Dynamics of Transformation from Segregation to Mixed Wealth Cities

We model the dynamics of a variation of the Schelling model for agents described simply by a continuously distributed variable—wealth. Agent movement is not dictated by agent choice as in the classic Schelling model, but by their wealth status. Agents move to neighborhoods where their wealth is not lesser than that of some proportion of their neighbors, the threshold level. As in the case of the classic Schelling model, we find here that wealth-based segregation occurs and persists. However, introducing uncertainty into the decision to move—that is, with some probability, if agents are allowed to move even though the threshold condition is contravened—we find that even for small proportions of such disallowed moves, the dynamics no longer yield segregation but instead sharply transition into a persistent mixed wealth distribution, consistent with empirical findings of Benenson, Hatna, and Or. We investigate the nature of this sharp transformation, and find that it is because of a non-linear relationship between allowed moves (moves where threshold condition is satisfied) and disallowed moves (moves where it is not). For small increases in disallowed moves, there is a rapid corresponding increase in allowed moves (before the rate of increase tapers off and tends to zero), and it is the effect of this non-linearity on the dynamics of the system that causes the rapid transition from a segregated to a mixed wealth state. The contravention of the tolerance condition, sanctioning disallowed moves, could be interpreted as public policy interventions to drive de-segregation. Our finding therefore suggests that it might require limited, but continually implemented, public intervention—just sufficient to enable a small, persistently sustained fraction of disallowed moves so as to trigger the dynamics that drive the transformation from a segregated to mixed equilibrium.