MERITOCRATIC AND MONOPOLY INEQUALITY - A COMPUTER-SIMULATION OF INCOME-DISTRIBUTION

This paper explores the properties of a model of the distribution of i ncome in which individual income is proportional to a multiplicative f unction of previous income, ability, chance, a ceiling factor determin ed by competition among members of an income class for resources held by members of other classes, and an additive factor summarizing effect s of altruism and minimal subsistence. The behavior of the model is in vestigated by computer simulation for combinations of values of three model parameters representing the tendency of income to grow exponenti ally (the Monopoly effect), the weight of the ability factor (the meri tocracy effect), and the weight of the ceiling factor resulting from c ompetitive interactions. Steady state income distributions generated b y the model are characterized by measures of income inequality, exchan ge mobility, elite stability, and meritocracy. Results suggest that fo r constant Monopoly effect, the effect of the meritocracy parameter on various aggregate outcomes is nonlinear, with a range over which grea ter returns to ability produce lower inequality, lower exchange mobili ty, greater elite stability and meritocracy; for constant returns to a bility, a greater Monopoly effect generally produces greater inequalit y, more exchange mobility, less stability of the elite, and lower meri tocracy. Results also reveal a nonlinear relationship between exchange mobility and inequality, with mobility decreasing to a minimum and th en increasing again as inequality increases; a nonlinear but monotonic negative relationship between elite stability and inequality, with gr eater inequality associated with less stability; and a nonlinear relat ionship between meritocracy and inequality, with meritocracy increasin g at first with inequality al low inequality levels, reaching a maximu m and then decreasing as inequality increases further. These findings are interpreted in relation to major stratification trends in the cour se of sociocultural evolution.