Kinetic Exchange Income Distribution Models with Saving Propensities: Inequality Indices and Self-Organised Poverty Level

Abstract

We report the numerical results for the steady state income or wealth distribution $P(m)$ and the resulting inequality measures (Gini $g$ and Kolkata $k$ indices) in the kinetic exchange models of market dynamics. We study the variations of $P(m)$ and of the indices $g$ and $k$ with the saving propensity $\lambda$ of the agents, with two different kinds of trade (kinetic exchange) dynamics. In the first case, the exchange occurs between randomly chosen pairs of agents and in the next, one of the agents in the chosen pair is the poorest of all and the other agent is randomly picked up from the rest of the population (where, in the steady state, a self-organized poverty level or SOPL appears). These studies have also been made for two different kinds of saving behaviors. One, where each agent has the same value of $\lambda$ (constant over time) and the other where $\lambda$ for each agent can take two values (0 and 1), changing randomly over a fraction of time $\rho (<1)$ of choosing $\lambda =1$. We find that the inequality decreases with increasing savings ($\lambda$); inequality indices ($g$ and $k$) decrease and SOPL increases with increasing $\lambda$, indicating possible applications in economic policy making.

Invited paper for the Theme Issue on "Kinetic Exchange Models of Societies & Economies" to be published in Philisophical Transactions A (Guest Eds. S. Biswas, P. Sen & G. Toscani)

References in corpus (4)

• Kinetic Exchange Models for Income and Wealth Distributions
• Physics-inspired analysis of the two-class income distribution in the USA in 1983-2018
• Development of Econophysics: A biased account and perspective from Kolkata
• How simple regulations can greatly reduce inequality

Cited by in corpus (4)

• Variation of Gini and Kolkata Indices with Saving Propensity in the Kinetic Exchange Model of Wealth Distribution: An Analytical Study
• Success of Social Inequality Measures in Predicting Critical or Failure Points in Some Models of Physical Systems
• Kinetic Models of Wealth Distribution Having Extreme Inequality: Numerical Study of Their Stability Against Random Exchanges
• Kinetic modeling of economic markets with heterogeneous saving propensities