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Measuring inequality in society-oriented Lotka--Volterra-type kinetic equations

Published: May 21, 2025 | arXiv ID: 2505.15526v1

By: Marco Menale, Giuseppe Toscani

Potential Business Impact:

Shows how to measure fairness in groups.

We present a possible approach to measuring inequality in a system of coupled Fokker-Planck-type equations that describe the evolution of distribution densities for two populations interacting pairwise due to social and/or economic factors. The macroscopic dynamics of their mean values follow a Lotka-Volterra system of ordinary differential equations. Unlike classical models of wealth and opinion formation, which tend to converge toward a steady-state profile, the oscillatory behavior of these densities only leads to the formation of local equilibria within the Fokker-Planck system. This makes tracking the evolution of most inequality measures challenging. However, an insightful perspective on the problem is obtained by using the coefficient of variation, a simple inequality measure closely linked to the Gini index. Numerical experiments confirm that, despite the system's oscillatory nature, inequality initially tends to decrease.

Page Count
19 pages

Category
Quantitative Finance:
General Finance