The Edgeworth Cube: An Economic Model for Social Peace

Oliver Kunze and Florian Schlatterer
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Oliver Kunze: University of Applied Sciences Neu-Ulm, Neu-Ulm, Germany
Florian Schlatterer: University of Applied Sciences Neu-Ulm, Neu-Ulm, Germany

International Journal of Applied Behavioral Economics (IJABE), 2018, vol. 7, issue 2, 30-46

Abstract: Social peace is an asset to every society. Its absence endangers the well-being and the safety of the population and the stability of states. In order to better understand the interdependencies of poverty, social peace and migration pressure the authors introduce the model of the “Edgeworth-Cube” which is an extension of the classical Edgeworth Box model by one dimension. This new dimension can either be interpreted as “aggression” (which reduces “social peace” for others) or as “migration pressure” (which results from a worldwide heterogeneous distribution of wealth), and this new dimension is modelled as a non-budget-constrained unilateral immaterial good. The “Edgeworth-Cube” also differentiates vital (essential) goods from normal (non-essential) goods. By focusing on extremely imbalanced endowments and by formal mathematical modeling the authors show in their approach that applying behavioral pressure (i.e. aggression or migration pressure) has an existential economic value for the poor on the one hand. On the other hand, the authors show that transfer payments have a systemically limited potential to keep aggression and migration pressure at bay.

Date: 2018
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