Imagine a checkerboard, but instead of black and white squares, you've got red and blue pieces: they could be people or households, in a city. The goal is to see how these pieces distribute themselves across the board when they each have a preference for neighboring similar colors—a simple, seemingly harmless preference.

Thomas Schelling, a Nobel Prize-winning economist, introduced this model in the 1960s to explain how individual preferences can lead to collective patterns of segregation. Here's how it works: each piece is content as long as it isn’t a minority in its surrounding neighborhood. If a piece feels like it’s in the minority, it moves to another location where it feels more comfortable, meaning surrounded by more pieces of the same color.

Now, let's think about why these patterns emerge. Imagine someone happy only if at least half their neighbors are of the same color. At first glance, this might seem fair and not overly strict, but when many individuals follow this rule, the result is a striking pattern where large clumps, or patches, of similar colors emerge, leading to segregation.

What makes this phenomenon fascinating is how individual choices, which might each seem reasonable, accumulate to create a society that looks quite different from individual intentions. It's a bit like how each small gear in a clock comes together to make the entire mechanism move.

To visualize it, picture this: you have a grid of homes, and each home has a family, either represented by a blue or a red dot. When there's a high enough concentration of not-your-color homes nearby, the families decide to move to be closer to same-color groups, gradually leading to clusters forming over time. This is despite that no one moves with the explicit aim of creating segregation.

This model turns some of our intuitions about group behavior upside down. Even when no one has an explicit preference for segregation, the decision to seek a "comfort zone" as an individual builds a broader pattern of clustering. This can feel very much like how dominoes fall: one small nudge turns into a chain reaction affecting the entire board.

But why does this matter? Well, Schelling's model of segregation shows us that individual preferences and actions—when multiplied across an entire population—can lead to outcomes that are not only unintended but also sometimes undesirable. This is crucial because it helps urban planners, sociologists, and policymakers understand the invisible hand of human preferences shaping neighborhoods.

And it's not just about houses or city planning. This model can be applied to various scenarios, such as markets and social networks, where agents—companies, currencies, ideas—behave similarly, seeking environments like their own. For instance, you might see this reflected in school preferences or online communities where people tend to gravitate towards others they perceive as similar.

So, in essence, Thomas Schelling provided us with a powerful lens to view how tiny, individual actions—when looked at separately—can launch major structural changes in society. As simple as this model may seem, it uncovers incredible insights about patterns we observe in neighborhoods across the world.

What Schelling's work asks us to consider is a new appreciation for the forces of individual preference in shaping collective environments. As human beings, our desire for similarity might subtly steer us towards actions that have wider, unexpected effects on the communities we build.

That's all for today’s exploration into Schelling’s Model of Segregation! Hopefully, you've enjoyed this journey through one of the many unexpected ways in which simple, individual preferences carve out the world we live in. Keep pondering, stay curious, and we’ll see you in our next ELI5 episode.