Complexity Theory and Economic Inequality

Steven Durlauf, David McMillon and Scott Page

No 34381, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze the potential for complexity theory to produce insights that elucidate the evolution of socioeconomic inequality and point toward effective policies. We position complexity theory as a complement to more traditional economic approaches. Economic models of inequality can fall into four broad categories: models based on individual attributes and technologies, social interaction models, intergenerational models of transfer, and models of institutional and social structure. Within each of these categories, complexity theory can enhance traditional theory. It is of particular value in helping to distinguish between bottom-up systemic and top-down structural causes of inequality. Complexity theory can further enrich our understanding of economic inequality by adopting a complex adaptive system of systems approach in which economic, social, political, and psychosocial systems interact with one another and with institutional and social structures to produce robust inequality, particularly on racial lines.

JEL-codes: D01 D3 D5 J7 (search for similar items in EconPapers)
Date: 2025-10
New Economics Papers: this item is included in nep-evo, nep-hme and nep-lma
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