Intergenerational wealth transmission and the dynamics of inequality in small-scale societies

Abstract

Small-scale human societies range from foraging bands with a strong egalitarian ethos to more economically stratified agrarian and pastoral societies. We explain this variation in inequality using a dynamic model in which a population's long-run steady-state level of inequality depends on the extent to which its most important forms of wealth are transmitted within families across generations. We estimate the degree of intergenerational transmission of three different types of wealth (material, embodied, and relational), as well as the extent of wealth inequality in 21 historical and contemporary populations. We show that intergenerational transmission of wealth and wealth inequality are substantial among pastoral and small-scale agricultural societies (on a par with or even exceeding the most unequal modern industrial economies) but are limited among horticultural and foraging peoples (equivalent to the most egalitarian of modern industrial populations). Differences in the technology by which a people derive their livelihood and in the institutions and norms making up the economic system jointly contribute to this pattern.

Figure 1. Populations studied

Note: Circle indicates hunter-gatherers, star horticulturalists; square pastoralists, and triangle agriculturalists.

Figure 2. Steady-state wealth distribution

The dashed line is the steady-state condition requiring wealth inequality to be unchanging from one period to the next. The solid line (equation 2) is the combined effect of this period’s variance of shocks (the constant) augmented by the inequalities in wealth transmitted from the previous period (the slope).