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America is no less socially mobile than it was a generation ago

economist.com

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Re: America is no less socially mobile than it was a generation ago

#11

Post by scarmig »

jandrewrogers wrote: post #6

One thing to be aware of is that the range of incomes in many countries is much more compact than the US. If you define social mobility by the ability to move from the bottom segment to the top, it requires a much smaller change in income in most industrialized countries than in the US. For example, for the average person in Denmark to go from the bottom 10% to the top 10% of income requires earning a mere $40k more…

True and to the point, as far as it goes. But I think you discount the importance of relative change a bit too much.

Imagine a country with a fiery economy: within a generation, real incomes will triple or quadruple, and at an equal factor across all income groups. Let's say also this country also has an incredibly rigid caste system, where you can predict that a person falls will fall within the same single percentile as their parents with 100% accuracy.

Your absolute measure fails to capture a situation that I think you'd agree shows very little income mobility, while the one you're criticizing succeeds at it. What I think you're getting at is that people can be much better off despite lack of intergenerational income mobility. Sure.

But people are looking for a measure that will capture the fact that some societies have parental income that's much more predictive of children income than other societies. It's an interesting reality that many people find problematic, and it has a real impact on other social systems--race, class, geographic mobility, educational outcomes, and elite networks--that are very interesting to analyze and potentially useful to understand.

Re: America is no less socially mobile than it was a generation ago

#13

Post by jandrewrogers »

DerpDerpDerp wrote: post #9
jandrewrogers wrote: post #6

One thing to be aware of is that the range of incomes in many countries is much more compact than the US. If you define social mobility by the ability to move from the bottom segment to the top, it requires a much smaller change in income in most industrialized countries than in the US. For example, for the average person in Denmark to go from the bottom 10% to the top 10% of income requires earning a mere $40k more…

> in absolute terms they are far better off with $60k of income regardless of the definition of social mobility. I'm not sure this is true, if the cost of living (or luxuries) is different between the two countries.

Actually, the studies adjust the incomes for purchasing power parity, so it is not just nominal income. Costs of living and similar are built into the relative income quintiles and deciles when comparing between countries.

The US also has a wider income range because of the enormous differences in cost of living within the country itself, in large part due to its size, which skews the result. The top quintile in one region of the US may be the middle quintile in another.

Re: America is no less socially mobile than it was a generation ago

#14

Post by rayiner »

jandrewrogers wrote: post #6

One thing to be aware of is that the range of incomes in many countries is much more compact than the US. If you define social mobility by the ability to move from the bottom segment to the top, it requires a much smaller change in income in most industrialized countries than in the US. For example, for the average person in Denmark to go from the bottom 10% to the top 10% of income requires earning a mere $40k more…

> In short, there are many countries where moving from $20k to $40k is considered "socially mobile" but also others where moving from $20k to $60k income is not because the top bracket is $80k. Most people would probably prefer to live in the latter country.

I don't think that's actually true. Having the rich be a lot richer has a lot of sociological impacts, particularly within a democracy.

Re: America is no less socially mobile than it was a generation ago

#15

Post by 001sky »

jandrewrogers wrote: post #13
DerpDerpDerp wrote: post #9

Earlier quoted context omitted.

> in absolute terms they are far better off with $60k of income regardless of the definition of social mobility. I'm not sure this is true, if the cost of living (or luxuries) is different between the two countries.

Actually, the studies adjust the incomes for purchasing power parity, so it is not just nominal income. Costs of living and similar are built into the relative income quintiles and deciles when comparing between countries. The US also has a wider income range because of the enormous differences in cost of living within the country itself, in large part due to its size, which skews the result. The top quintile in one…

Costs of living and similar are built into the relative income quintiles

One way to break a correlation that uses an inflation index is to look at or carve out asset inflation. Once you correct for asset inflation (which is NPV'd income), only then will you have properly adjusted income measures.

Re: America is no less socially mobile than it was a generation ago

#16

Post by lostcolony »

kudos200 wrote: post #10
kudos200 wrote: post #8

Earlier quoted context omitted.

What proportion of the richest 1% (or 0.1%, or the top 1000 richest people) do you think came from families that were already in the top 1%? How do you define "out of reach"?

Well, I got curious and found an answer: "In 1982, 60 percent of the people on the Forbes 400 list of wealthiest Americans came from wealthy families, compared with 32 percent in 2011." http://www.gsb.stanford.edu/news/research/joshua-rauh-what-f...

Which speaks nothing of policy changes today, and what effect it will have on the future. Nor what disruption will come about to ensure that that trend continues (we are given no data points in that post other than those two, and we had both the PC revolution and the internet in between 1982 and 2011 to massively shake up entire industries).

More to the point, it speaks nothing on how conditions for those not among the elite have changed in that time, and how they will change over time.

Re: America is no less socially mobile than it was a generation ago

#17

Post by WalterBright »

kudos200 wrote: post #8
lostcolony wrote: post #5

"Most likely...The correlation between vast wealth accruing to a tiny elite and the ability of people to move between the rest of the rungs of the income ladder may be small—at least for now." And there's the crux of the matter. Even if that correlation remains small, the top rung of that ladder is so far out of reach of everyone else, -and- incorporates an insanely disproportionate amount of money, power, and influe…

What proportion of the richest 1% (or 0.1%, or the top 1000 richest people) do you think came from families that were already in the top 1%? How do you define "out of reach"?

85% of American millionaires are self-made. Source: "The Millionaire Next Door"

Re: America is no less socially mobile than it was a generation ago

#18

Post by Tarrosion »

jandrewrogers wrote: post #13
DerpDerpDerp wrote: post #9

Earlier quoted context omitted.

> in absolute terms they are far better off with $60k of income regardless of the definition of social mobility. I'm not sure this is true, if the cost of living (or luxuries) is different between the two countries.

Actually, the studies adjust the incomes for purchasing power parity, so it is not just nominal income. Costs of living and similar are built into the relative income quintiles and deciles when comparing between countries. The US also has a wider income range because of the enormous differences in cost of living within the country itself, in large part due to its size, which skews the result. The top quintile in one…

Yes, after reading the article I'm not sure how they correct for the stark differences between places. Are the quintiles done locally or nationally? If they're done locally, then people who migrate are a problem for the statistics: it's very easy to move from bottom quintile to top quintile, just move from Palo Alto to rural Oklahoma. Or by excluding people who migrate, perhaps there are skewed effects.

But if the quintiles are national quintiles, not local quintiles, variation due to location still throws things off. The group of people in the 3rd national quintile living in Silicon Valley probably have quite different statistics than the group of folks in the 3rd national quintile living in a mid-size town.

Re: America is no less socially mobile than it was a generation ago

#20

Post by testrun »

kudos200 wrote: post #10
kudos200 wrote: post #8

Earlier quoted context omitted.

What proportion of the richest 1% (or 0.1%, or the top 1000 richest people) do you think came from families that were already in the top 1%? How do you define "out of reach"?

Well, I got curious and found an answer: "In 1982, 60 percent of the people on the Forbes 400 list of wealthiest Americans came from wealthy families, compared with 32 percent in 2011." http://www.gsb.stanford.edu/news/research/joshua-rauh-what-f...

Which means that mobility increased.
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