Death, Taxes, and Inequality. Can a Minimal Model Explain Real Economic Inequality?

ArXiv ID: 2406.13789 “View on arXiv”

Authors: Unknown

Abstract

Income inequality and redistribution policies are modeled with a minimal, endogenous model of a simple foraging economy. Significant income inequalities emerge from the model for populations of equally capable individuals presented with equal opportunities. Stochastic income distributions from the model are compared to empirical data from actual economies. The impacts of redistribution policies on total wealth, income distributions, and inequality are shown to be similar for the empirical data and the model. These comparisons enable detailed determinations of population welfare beyond what is possible with total wealth and inequality metrics. I

Keywords: Income Inequality, Redistribution Policies, Endogenous Model, Stochastic Income Distributions, Welfare Analysis, Macro/Policy

Complexity vs Empirical Score

• Math Complexity: 3.5/10
• Empirical Rigor: 4.5/10
• Quadrant: Philosophers
• Why: The paper uses a relatively simple agent-based model (Sugarscape) and basic statistical fits (lognormal/Pareto), showing moderate empirical validation against real data but no complex mathematical derivations or backtesting code, placing it in the Philosophers quadrant.

  flowchart TD
    A["Research Goal:<br/>Can a minimal endogenous model<br/>explain real economic inequality?"]
    
    B["Methodology:<br/>Develop stochastic model of<br/>simple foraging economy"]
    
    C["Data/Input:<br/>Empirical income data<br/>from real economies"]
    
    D["Computational Process:<br/>Simulate income distributions<br/>under equal opportunities"]
    
    E["Key Finding 1:<br/>Significant inequalities emerge<br/>even with equal individuals"]
    
    F["Key Finding 2:<br/>Redistribution policies impact<br/>total wealth & inequality similarly<br/>in model and reality"]
    
    G["Welfare Analysis:<br/>Detailed determinations of<br/>population welfare beyond<br/>total wealth & inequality metrics"]
    
    A --> B
    B --> C
    C --> D
    D --> E
    D --> F
    E --> G
    F --> G