Matthew Effect – inequality

Daniel Rigney   The Matthew Effect

“The old saying does often seem to hold true: the rich get richer while the poor get poorer, creating a widening gap between those who have more and those who have less. The sociologist Robert K. Merton called this phenomenon the Matthew effect, named after a passage in the gospel of Matthew. Yet the more closely we examine the sociological effects of this principle, the more complicated the idea becomes. Initial advantage doesn’t always lead to further advantage, and disadvantage doesn’t necessarily translate into failure. Does this theory need to be revisited?

Merton’s arguments have significant implications for our conceptions of equality and justice, and they challenge our beliefs about culture, education, and public policy. His hypothesis has been examined across a variety of social arenas, including science, technology, politics, and schooling, to see if, in fact, advantage begets further advantage. Daniel Rigney is the first to evaluate Merton’s theory of cumulative advantage extensively, considering both the conditions that uphold the Matthew effect and the circumstances that cause it to fail. He explores whether growing inequality is beyond human control or disparity is socially constructed and subject to change. Reexamining our core assumptions about society, Rigney causes us to rethink the sources of inequity.”       source amazon Daniel Rigney

relevant articles etc 1/2022

Economyths/GMPDF 2017 The Unfair Economy- How the rich get richer – David Orrell    PDF   24/10/2021   Redistributing Income Through Hierarchy  by Blair Fix 

Abstract :   Although the determinants of income are complex, the results are surprisingly uniform. To a first approximation, top incomes follow a power-law distribution, and the redistribution of income corresponds to a change in the power-law exponent. Given the messiness of the struggle for resources, why is the outcome so simple?  This paper explores the idea that the (re)distribution of top incomes is uniform because it is shaped by a ubiquitous feature of social life, namely hierarchy. Using a model first developed by Herbert Simon and Harold Lydall, I show that hierarchy can explain the power-law distribution of top incomes, including how income gets redistributed as the rich get richer.  …

Conclusions :  Despite the complexities of human life, the distribution of top incomes follows a remarkably uniform pattern. To a first approximation, top incomes are distributed according to a power law. And when income gets redistributed, this power law changes. In short, it seems that we can model the rich getting richer with a single parameter — the power-law exponent \alpha . Such simplicity deserves an explanation.  The reason top incomes follow a uniform pattern, I have argued, is not because income has an ultimately simple cause. Instead, it is because the complex forces that shape income pass through a ubiquitous feature of human organization: hierarchy. Thus, I propose that hierarchy is a proximate cause of both the distribution of top incomes, and the uniformity with these incomes get redistributed when the rich get richer.

We have known since Lydall’s work in the 1950s that hierarchy can produce a power-law distribution of top incomes. The more complex model used here confirms Lydall’s result. I also find that by varying the rate that income increases with hierarchical rank, we vary the distribution of top incomes in much the same way as we observe in the real world. This result suggests that growing inequality is caused by a redistribution of income within hierarchies. Importantly, evidence from CEOs points at the same trend — namely, that growing inequality is associated with hierarchies becoming more ‘despotic’.

Appealing to hierarchy, I have admitted, does not explain the root cause of inequality. To do that, we would need to explain why income within hierarchies scales the way it does (something that I do not attempt here). So in a sense, the hierarchy model of income merely kicks the causal can: it explains one parameter (the power-law exponent of top incomes) in terms of another parameter (the degree of despotism within hierarchies).  Still, I consider that progress. It suggests that we can better understand the causes of inequality by studying the command structure of firms.

gm caw: Impressively excellent article! “Appealing to hierarchy, I have admitted, does not explain the root cause of inequality. To do that, we would need to explain why income within hierarchies scales the way it does…” So what is wrong with stratified positioning (“power”) being the root cause scaling ala the “Matthew Effect”? Have economists ever tried to model this “Effect” not just as sociological reproduction but as inscribed into the (interest bearing) money system?    Soziale Ungleichheit – Wer hat, der kriegt – In nur wenigen EU-Ländern sind die Vermögensunterschiede so groß wie in Deutschland. Es gibt mehrere Gründe, warum die Schere zwischen Arm und Reich künftig noch weiter aufgehen dürfte.arm-reich-vermoegen – Video von Laura Terberl, Olivia von Pilgrim, Sonja Salzburger

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