Clientelism, income inequality, and social preferences: an evolutionary approach to poverty traps

Political clientelism is a dyadic relation in which a politician (the patron) gives material goods and services to a citizen (the client), in exchange for political support. We argue that there is a two-way relation between clientelism and income inequality and poverty. In a poor society in which income inequality is high, clientelism will be a natural outcome. Once clientelism is established, it is harder for democracy to redistribute income and it is easier for the society to be caught in a poverty trap. We develop a two-part game-theoretic model. In the first part, clientelism emerges in a poor and unequal society as a consequence of social preferences, in particular, strong reciprocity. In the second part, using evolutionary and stochastic game theory, we show that clientelism causes income inequality and poverty. July of 2007 was the month in which the Colombian government reported that in the past weeks, in 16 states of the country, the Sisben, the system used for allocating welfare state expenses, was manipulated by politicians for electoral purposes. This system classifies people according to their income and socio-economic status, and offers benefits, subsidies, and services according to this classification. It can be inferred from this report that the system is an important instrument used by politicians for the establishment of clientelistic links: citizens, who give political support and votes to certain candidates that may influence the assignment of subsidies, may benefit from the system. The problem is that some medium-income people are classified as belonging to the first tier of the system, which implies the biggest flow of benefits. In contrast, some low-income citizens are erroneously classified as those not deserving subsidies.Once clientelism is established, it is harder for democracy to redistribute income and it is easier for the society to be caught in a poverty trap. We develop a two-part game-theoretic model. In the first part, clientelism emerges in a poor and unequal society as a consequence of social preferences, in particular, strong reciprocity. In the second part, using evolutionary and stochastic game theory, we show that clientelism causes income inequality and poverty. July of 2007 was the month in which the Colombian government reported that in the past weeks, in 16 states of the country, the Sisben, the system used for allocating welfare state expenses, was manipulated by politicians for electoral purposes. This system classifies people according to their income and socio-economic status, and offers benefits, subsidies, and services according to this classification. It can be inferred from this report that the system is an important instrument used by politicians for the establishment of clientelistic links: citizens, who give political support and votes to certain candidates that may influence the assignment of subsidies, may benefit from the system. The problem is that some medium-income people are classified as belonging to the first tier of the system, which implies the biggest flow of benefits. In contrast, some low-income citizens are erroneously classified as those not deserving subsidies.July of 2007 was the month in which the Colombian government reported that in the past weeks, in 16 states of the country, the Sisben, the system used for allocating welfare state expenses, was manipulated by politicians for electoral purposes. This system classifies people according to their income and socio-economic status, and offers benefits, subsidies, and services according to this classification. It can be inferred from this report that the system is an important instrument used by politicians for the establishment of clientelistic links: citizens, who give political support and votes to certain candidates that may influence the assignment of subsidies, may benefit from the system. The problem is that some medium-income people are classified as belonging to the first tier of the system, which implies the biggest flow of benefits. In contrast, some low-income citizens are erroneously classified as those not deserving subsidies.It can be inferred from this report that the system is an important instrument used by politicians for the establishment of clientelistic links: citizens, who give political support and votes to certain candidates that may influence the assignment of subsidies, may benefit from the system. The problem is that some medium-income people are classified as belonging to the first tier of the system, which implies the biggest flow of benefits. In contrast, some low-income citizens are erroneously classified as those not deserving subsidies.