Wednesday, January 12, 2011
The Half-Full Glass of Economic Mobility
When people look at data on economic mobility, they see different things.
For example, it is well known that if your father had high income, you are
more likely to have high income than if you father had low income.
According to this study [...], the elasticity of son's income with respect
to father's income is about 0.5 in the United States. How do you interpret
this fact? [...]
But what strikes me about that 0.5 number is not how large it is but how
small it is. [...] By contrast, the heritability of IQ is usually estimated
to be much larger than that. At least some of the heritability of income
must come not from inequality of opportunity but from the genetic
transmission of talent. [...]
The bottom line: In light of the heritability of talent, it would be
shocking if we did not find some significant heritability of income. And
that would be true even if equality of opportunity were perfect.
One further thought: The study cited above points out that economic mobility
is greater in some European countries. That fact does not surprise me, as
those are nations with less inequality. Moving up and down a short ladder
is a lot easier than moving up and down a tall one.
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