Kinetic models of conservative economies with need-based transfers as welfare

Abstract

Kinetic exchange models of markets utilize Boltzmann-like kinetic equations to describe the macroscopic evolution of a community wealth distribution corresponding to microscopic binary interaction rules. We develop such models to study a form of welfare called need-based transfer (NBT). In contrast to conventional centrally organized wealth redistribution, NBTs feature a welfare threshold and binary donations in which above-threshold individuals give from their surplus wealth to directly meet the needs of below-threshold individuals. This structure is motivated by examples such as the gifting of cattle practiced by East African Maasai herders or food sharing among vampire bats, and has been studied using agent-based simulation. From the regressive to progressive kinetic NBT models developed here, moment evolution equations and simulation are used to describe the evolution of the community wealth distribution in terms of effciency, shape, and inequality.