Introducing Economic Disparity and Housing Immobility to Schelling's Dynamic Model of Segregation

Abstract

Drawing on Thomas Schelling’s 1971 dynamic model of racial segregation, this paper re-examines the model by introducing economic constraints that reflect modern limitations on wealth-driven sorting. Although Schelling’s model effectively introduces segregation patterns influenced by social preference, it fails to account for real-world housing market patterns driven by financial mobility. To address this limitation, the standard model was modified to mimic a city’s housing market where property values decrease as one moves further from the city centre. Two simulated groups (referred to as agents, representing individual households) were assigned varying degrees of income disparity, introducing a new agent state termed ‘trapped’, in which the agent’s desire to relocate based on social preference is inhibited by a lack of purchasing power. After running 2000 simulations across a control group and three economic disparity levels (low, medium and high) with varying social preference thresholds, the results reveal three key findings: (1) Income disparity drove spatial economic sorting, (2) interestingly, increased income disparity reduced overall social segregation by inhibiting feedback loops based on social preference, and (3) high-income disparity led to housing market friction, which made 12 per cent of agents ‘trapped’. Ultimately, these findings suggest that economic disparity successfully influences segregation patterns and, crucially, incorporates financial constraints into urban sociological models.