Born Poor? Santa Fe economist Samuel Bowles says you better get used to it • Hacker News Board

Re: Born Poor? Santa Fe economist Samuel Bowles says you better get used to it

#31

Post by jbooth » Fri, Feb 05, 2010, 12:11 AM UTC

yummyfajitas wrote: post #28

isleyaardvark wrote: post #6

The article makes some interesting points but there seems to be a flawed use of statistics. Particularly the part about "the percentage likelihood that a bottom 10 percenter will ever make it to the top 10 percent. For 99 out of 100 people, rags never lead to riches." Well, what would you expect? There's going to be a pure mathematical limit to that sort of movement, nevermind issues of income mobility. To take an ab…

Additionally, he is making the implicit assumption that low parental income causes low adult income, and therefore hard work doesn't matter. But that's nonsense. It's also equally possible that some heritable (not necessarily genetic) trait causes both low parental and low child income. One plausible alternative explanation: lazy parents tend to have lazy children and lazy people tend to be poor. This causes a correl…

I'm sure your plausible alternative explanation feels great to say to yourself, but that's just not how it works. If you're born in a poor family you have 10 million things going against you from day 1: quality of educational opportunity, access to credit or a buffer if you have a bad run of luck, spare capacity to actually try and get better at things because you're not trying to put dinner on the table constantly, neighborhood cultural factors, etc etc etc.

Hard work matters -- but your baseline is probably more important.

Re: Born Poor? Santa Fe economist Samuel Bowles says you better get used to it

#32

Post by yummyfajitas » Fri, Feb 05, 2010, 12:40 AM UTC

jbooth wrote: post #31

yummyfajitas wrote: post #28

Earlier quoted context omitted.

Additionally, he is making the implicit assumption that low parental income causes low adult income, and therefore hard work doesn't matter. But that's nonsense. It's also equally possible that some heritable (not necessarily genetic) trait causes both low parental and low child income. One plausible alternative explanation: lazy parents tend to have lazy children and lazy people tend to be poor. This causes a correl…

I'm sure your plausible alternative explanation feels great to say to yourself, but that's just not how it works. If you're born in a poor family you have 10 million things going against you from day 1: quality of educational opportunity, access to credit or a buffer if you have a bad run of luck, spare capacity to actually try and get better at things because you're not trying to put dinner on the table constantly,…

Do you have evidence that my plausible alternative hypothesis is not how it works, or are you just guessing?

In any case, I don't believe my alternate hypothesis is a complete explanation. All I'm doing is showing why Bowles' statistics don't prove his case at all. All they do is prove that whatever factor causes low income (which may well be hard work) is hereditary.

Incidentally, one of your hypothesis is demonstrably false. 90% of the poor do have "spare capacity to actually try and get better at things because [they are] not trying to put dinner on the table constantly...". 80% of the poor (people below the poverty line) don't work at all (and are not looking for work) and 90% don't work full time (at least 27 weeks/year). So at least 90% of the poor do have spare capacity to improve their lot.

http://www.bls.gov/cps/cpswp2007.pdf

Re: Born Poor? Santa Fe economist Samuel Bowles says you better get used to it

#33

Post by eru » Fri, Feb 05, 2010, 1:18 AM UTC

nazgulnarsil wrote: post #29

gjm11 wrote: post #25

Earlier quoted context omitted.

Who mentioned national lines? (1) The original article, which was talking about, e.g., the chances of moving out of the top or bottom 10% by wealth of US society . (2) The person you were replying to (you can tell he was talking about the US by, e.g., comparing his figures for the $250k proposal to the US population, though I think he misunderstood the proposal). (3) The two people who replied to you. Or, in other wo…

I stand by my statement. the world, on net, has more income mobility now than at any time in the past. everyday is pretty much the best day the world has ever seen from a net welfare standpoint.

For the whole world you may be right today. That why I put the question mark in my comment. (Lots of people here are from the US and assume everyone is.)

I do agree that measured by income the world has entered a golden age. But I do not know whether mobility in income quantiles is at its peak: You can have a lot of mobility at a very low level of income, too. And in the stone age people were probably more alike in income, so that quantiles were closer together and more easily shuffled just by random changes. (Not that this is a good or bad thing per se.)

Re: Born Poor? Santa Fe economist Samuel Bowles says you better get used to it

#34

Post by nandemo » Fri, Feb 05, 2010, 1:32 AM UTC

What’s troubling about this research is that poverty tends to persist through generations, no matter how individuals try to improve their circumstances.

"Poor" young Americans are much wealthier than their grandfathers. The claim that "the poor stay poor" is largely an artifact of defining "poor" as "bottom 10% income".

Re: Born Poor? Santa Fe economist Samuel Bowles says you better get used to it

#35

Post by Perceval » Fri, Feb 05, 2010, 2:40 AM UTC

guelo wrote: post #18

eru wrote: post #14

Earlier quoted context omitted.

While our situation is quite good (and in absolute term probably the best ever), I doubt that we (=US 2010?) have "insane mobility" --- measured in actual turnover between quantiles of wealth from one generation to the next. Does anybody have some sources? (I'd guess it would be interesting to look at societies in great turmoil (e.g. England after 1066, French Revolution, Communist revolution in China) or societies w…

You are right, mobility in the US is not what conservatives think it is. Sources: http://www.americanprogress.org/issues/2006/04/b1579981.html "By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland…

>Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark.

As far as I can tell, that study measured mobility by quintile. If the United States has a wider variance in income, the quintiles will be much wider, hence more difficult to move from one quintile to another.

It seems reasonable to assume that the social welfare states of Western Europe and Canada have less variance in income distribution, and therefore it's easier to move from one quintile to another because the quintiles are smaller. Saying that there's greater mobility between quintile in Western Europe really only reflects the smaller variance in incomes in Western Europe.

To set up an accurate cross-national comparison, one would have to construct a unified set of incomes for all people across all the studies countries. Then measure mobility of individuals between quintiles of the unified data set. Only that type of design would control for the different variance found in different national-economic contexts.

Re: Born Poor? Santa Fe economist Samuel Bowles says you better get used to it

#36

Post by gjm11 » Fri, Feb 05, 2010, 2:42 AM UTC

nazgulnarsil wrote: post #29

gjm11 wrote: post #25

Earlier quoted context omitted.

Who mentioned national lines? (1) The original article, which was talking about, e.g., the chances of moving out of the top or bottom 10% by wealth of US society . (2) The person you were replying to (you can tell he was talking about the US by, e.g., comparing his figures for the $250k proposal to the US population, though I think he misunderstood the proposal). (3) The two people who replied to you. Or, in other wo…

I stand by my statement. the world, on net, has more income mobility now than at any time in the past. everyday is pretty much the best day the world has ever seen from a net welfare standpoint.

Would you care to present your evidence that the world has more income mobility now than at any time in the past?

(And, FWIW, I am still having grave difficulty believing that you really meant "the world" when you said "we".)

Re: Born Poor? Santa Fe economist Samuel Bowles says you better get used to it

#37

Post by Perceval » Fri, Feb 05, 2010, 2:43 AM UTC

chipsy wrote: post #11

"Basic income" has been pilot-studied in Africa to great success. The reasoning is very simple: If you are living hand-to-mouth with unreliable income - so unreliable that you can essentially expect "the end of the world" to come at any time - then you cannot make any future plans around earning and saving; consuming as much as possible immediately holds more value. But if you have a government-guaranteed income, you…

We have a rough approximation of that in the United States with the Earned Income Tax Credit. If you have a job but make less than a certain amount, the government sends you a tax return to supplement your income up to that level.

http://en.wikipedia.org/wiki/Earned_Income_Tax_Credit

Re: Born Poor? Santa Fe economist Samuel Bowles says you better get used to it

#38

Post by Perceval » Fri, Feb 05, 2010, 2:53 AM UTC

This article is pretty embarrassing in its use of numbers/statistics.

The second number is how many jobs the state Economic Development Department claims to have created in Santa Fe last year.

As if the state's economic development department were the main driver of job creation!

Bowles argues that inequality is holding the United States back, but it's not clear that that's the case. You can see the chart of states arranged by gini coefficient, where rich dynamic centers of business like New York and California score highly. In contrast, Utah is the most equal state in the U.S., but is anyone flocking there? Does anyone want to reproduce Utah's social model throughout the rest of the country?

Then the statistics for the top and bottom 10%--both groups have an approximately 30% chance that their offspring will stay in the same percentile of income distribution. But this means that 70% of rich kids are going to fall from grace, whereas 70% of poor kids are going to grow up to do better. And that's bad?

Re: Born Poor? Santa Fe economist Samuel Bowles says you better get used to it

#39

Post by brc » Fri, Feb 05, 2010, 3:20 AM UTC

yummyfajitas wrote: post #28

isleyaardvark wrote: post #6

The article makes some interesting points but there seems to be a flawed use of statistics. Particularly the part about "the percentage likelihood that a bottom 10 percenter will ever make it to the top 10 percent. For 99 out of 100 people, rags never lead to riches." Well, what would you expect? There's going to be a pure mathematical limit to that sort of movement, nevermind issues of income mobility. To take an ab…

Additionally, he is making the implicit assumption that low parental income causes low adult income, and therefore hard work doesn't matter. But that's nonsense. It's also equally possible that some heritable (not necessarily genetic) trait causes both low parental and low child income. One plausible alternative explanation: lazy parents tend to have lazy children and lazy people tend to be poor. This causes a correl…

If you agree that much wealth is created by attitude, ideas and effort - and I think most of us will agree on that - then the outcomes of children will most certainly be similar to their parents. Parents teach us our attitude, behaviour pattern and even tend to install our 'social class' into us. This would not be a negligible factor. If parents are absent (more common in poorer people) then these factors are learnt from peers, who are probably in the same income group.

If you want to escape being poor, you have to think differently to other poor people.

There are many examples of where children from poor families group up to be rich, and do so because they do not want to be like their parents. In these cases the parents low wealth is a catalyst for building great wealth in the child.

If low wealth was a cause, then how does one explain the high number of immigrants that go on to create great wealth? Newly arrived immigrants are some of the poorest people around.

You don't need a lot of money to get rich. You just need the right knowledge, the right attitude and the right drive to succeed. Most people achieve the wealth level they set out to acheive. For the majority, it's that they only set out to acheive a modest level of wealth - they may think they want to be rich, but they aren't actually doing anything towards it.

Re: Born Poor? Santa Fe economist Samuel Bowles says you better get used to it

#40

Post by isleyaardvark » Fri, Feb 05, 2010, 3:51 AM UTC

gjm11 wrote: post #23

isleyaardvark wrote: post #6

The article makes some interesting points but there seems to be a flawed use of statistics. Particularly the part about "the percentage likelihood that a bottom 10 percenter will ever make it to the top 10 percent. For 99 out of 100 people, rags never lead to riches." Well, what would you expect? There's going to be a pure mathematical limit to that sort of movement, nevermind issues of income mobility. To take an ab…

I think your comment on the $250k proposal is wrong. The US has a population of, let's say, 300M. In any year, let's say 1/60 of that many -- 5M -- are just turning 18, which is when Bowles proposes handing out the money. (He's not proposing to give that much to everyone all at once.) So the annual cost is $250k times 5M, or about $1T. There's no $56T up-front cost. Now, $1T/year is an awful lot: it's about 1/4 of wh…

Fair enough, I assumed that initially everyone over 18 would get $250k. Now you could say that's an unrealistic assumption, but... so is the program. 19 year-olds can vote, how enthusiastic would they be for a program where they get the shaft? And the under-18s can't vote. People will expect to get something. (Consider Social Security, when that started people received benefits before they had paid a dime into the system.) Costs would inevitably balloon out of control. And that's not even considering other practical concerns. What about fraud? What about both legal and illegal immigration?