Information Economy May Shrink the Rich-Poor Gap

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By Barbara Kiviat

Could the information economy help narrow the gap between the rich and the poor? That's the implication of a sweeping new study appearing in the journal Science. The research corrals data from 21 populations — from the pre-Industrial merchants of East Anglia to the Ache foragers of present-day Paraguay — in order to look at how wealth gets trapped within certain families.

One conclusion: as wealth shifts from material goods like farms and factories to intangibles like social networks and the ability to innovate, there's more of an opportunity for a person who was born poor to work his way up to being rich — and for someone who was born rich to lose his place in the economic food chain.

Most studies of economic inequality look at modern, developed societies, but this research attempts to get at underlying mechanisms by comparing different sorts of less developed ones. Examples span four continents and six centuries and pull from the work of more than two dozen social scientists. Wealth is measured in a variety of ways, from housing quality to hunting returns to social connections provided by in-laws.

A key finding is that societies of hunter-gatherers tend to be more economically egalitarian than those of farmers and herders because of how parents do — or don't — transfer wealth to their children. Among hunter-gatherers, a child born into the top 10% of richest families is three times more likely to wind up rich than a child born into the poorest 10% of families. Among farmers, that rich-born child is 11 times more likely to be rich, and among herders, 20 times more likely.

That's not because hunter-gatherers don't pass on wealth to their children. They do. Parents who know where to dig for the most nutritious tubers or how best to hunt elk will pass along that knowledge-based wealth to their kids. The difference is, that advantage is harder to monopolize than, say, a tract of land that comes with a deed.

"When you pass along that wealth, you reveal it, and you can't exclude others from using it," says Samuel Bowles, an economist at the Sante Fe Institute, who led the study with anthropologist Monique Borgerhoff Mulder of the University of California, Davis, and economist Tom Hertz of the International University College of Turin and U.S. Department of Agriculture. "An economy based on brains and connections has more opportunities for equality that one based on grain and steel."

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http://www.time.com/time/business/article/...1933243,00.html