Top Heavy, Always
One of the issues that many people who concern themselves with the happenings of the world are aware of the fact that, especially in America, the top 1% owns an overwhelming portion of the overall wealth. There seems to be a cycle whereby the wealthy portion of America, through better access to health, better education and other rich people, they are able to maintain and often grow their wealth. Apart from this being a worrying and at times scary phenomenon, it is very interesting to understand it in terms of networks and whether this is the only avenue in which this happens.
In fact this does not seem to be the case at all. This effect, which is coined as the Matthew Effect, has applications in a very wide variety of fields. In the context of networks, one of the interesting applications that we looked at was the ‘credibility’ that some websites have and how this is fed by the credibility that other sites which are connected to them also have and thus is a never ending and very complex feedback loop.
Another field which is still relatively new but also experiencing this effect is the venture capital world. There is data that points to the fact that despite the incredibly dynamic and innovative nature of the venture capital world, about 3% of the venture capital companies generate about 95% of the revenue. This is really interesting to look at for multiple reasons. The first is that one big premise of the venture capital world is that companies grow fast and big. With a model like this one would expect a somewhat more even distribution of revenues but even here there is something to be said about the way that these economically successful firms are able to rise to the top due to the resources and networks that they have.
These applications are interesting to look into because although we are often quick to criticize the top for having such strong controlling power and for not sharing, it seems more that it is about the way that relationships and opportunities grow amongst themselves. It seems that there is a trend in the way that we deal with one another both on a business level and on a human level and the Matthew effect seems like a perfect way to understand all of these interactions and power plays.
http://www.cnn.com/2015/01/19/world/wealth-inequality/
http://25iq.com/2012/10/06/the-matthew-effect-and-vc-performance/