Santa Fe Institute

How social network structures give rise to inequality

April 4, 2013 9:21 a.m.

In the game of Monopoly® each player starts with equal assets. As the game progresses, time and chance – and a relatively simple set of static rules – determine each player’s eventual stature. In real human societies, the game of determining “haves” and “have-nots” is a lot more complicated, and it has been playing out for thousands of years under changing rules that are not well understood. 

SFI Professor Sam Bowles, an economist, and SFI Omidyar Fellow Paul Hooper, an anthropologist, have pulled together a team of more than two dozen researchers to unravel those hidden rules. Their approach is to build mathematical models, using ethnographic data from traditional societies all over the world, in order to discover what social network structures give rise to inequalities in wealth and political power. 

Some of the basics of their social network analysis look very much like a sort of game and, in fact, use game theory. As Bowles explained during an NSF-funded workshop on “Network Structure and Wealth Inequality” at SFI in February, social network models take into account the costs and benefits of connections, as well as the possibility of bargaining between players, in order to make predictions about how network structure and the distribution of wealth change over time. 

SFI External Professors and economists Rajiv Sethi and Matthew Jackson presented crash courses in the mathematics of networks for the ethnographers participating in the meeting.

Hooper, who is collecting ethnographic data from the Tsimane, a group of Amazonian hunters and horticulturalists, models the structure of their social networks. Then he compares the results with real world data on the distribution of wealth in those societies. So far the data are consistent with the models, but there is still work to be done to improve the theory so it better represents observed reality, says Hooper.

Watch Hooper's SFI video interview (3 minutes)

“The more you can get your models informed by the data, the more you can leverage the models to ask what's going on,” says Hooper. “There's a back-and-forth that's really productive.”

The workshop was part of SFI’s Dynamics of Wealth Inequality project led by Bowles and UC Davis anthropologist Monique Borgerhoff Mulder. 

More about the workshop

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