Peak Mobility

Late last year, The Economist published an article, "Meritocracy in America," which discussed social mobility in the United States. One metric used to measure social mobility was the percentage of sons who ended up in different income brackets than their fathers:

Some researchers claim that social mobility is actually declining. A classic social survey in 1978 found that 23% of adult men who had been born in the bottom fifth of the population (as ranked by social and economic status) had made it into the top fifth. Earl Wysong of Indiana University and two colleagues recently decided to update the study. They compared the incomes of 2,749 father-and-son pairs from 1979 to 1998 and found that few sons had moved up the class ladder. Nearly 70% of the sons in 1998 had remained either at the same level or were doing worse than their fathers in 1979. The biggest increase in mobility had been at the top of society, with affluent sons moving upwards more often than their fathers had. They found that only 10% of the adult men born in the bottom quarter had made it to the top quarter.

Now, there's a lot to criticize in this paragraph. The startling implication that children of the poor were overrepresented among the wealthy in the earlier study is presented without comment, and the fact that just a bit over 30% of sons in the second study ended up in a higher income quartile than their fathers isn't terribly disturbing when you consider that that figure would be only 37.5% even if the sons were randomly assigned to income quartiles.

But there's a more interesting fallacy at play here: the assumption that the metric used measures social mobility. It doesn't. More importantly, there's good reason to expect this metric to peak, decline, and finally level off, even in a perfectly meritocratic economy.

To understand why, we must draw a distinction between mobility and movement. To me, at least, the idea that social mobility might be declining is highly counterintuitive. Productivity continues its inexorable upward trend. College education is heavily subsidized, and student loans are readily available. We can debate the extent to which racial discrimination still impedes meritocracy, but that it's become dramatically less important in recent decades is well-nigh incontrovertible. In short, material barriers to escaping poverty are at an all-time low.

What this metric shows us is not mobility, but movement. That is, it does not measure the potential for the children of the poor to reach the upper income brackets, but rather the rate at which they actually do so. Counterintuitive though it may seem, we can construct a plausible model of a perfectly meritocratic economy in which such movement peaks and then declines.

Let's define a perfectly meritocratic economy as follows: Assume a natural ordering of all persons in terms of productivity. Since this is likely a product of both genetic and environmental factors, we'll assume that this ordering is established when they reach adulthood. A perfectly meritocratic economy is one in which incomes are directly proportional to productivity, so that the most productive citizen will have the highest income, and the least productive will have the lowest income. Obviously this isn't a perfect model of any real economy---the point is that it represents an economy with an ideal level of mobility.

The model has two further assumptions:

  1. A person's productivity is to some degree positively correlated with his parents'. This may be due to genetic factors (physical attributes, intelligence, etc.), to environmental and cultural factors, or to some combination of the two. I don't think that anyone will deny that this holds in the real world.
  2. Financial advantages or disadvantages related to a person's parents' income have no effect on his productivity. Obviously this doesn't hold in the real world, but my goal is to demonstrate that the phenomenon I'm describing occurs even in a perfectly meritocratic economy.

We begin the thought experiment with an economy governed by a rigid class system. Income is totally independent of productivity, so in the first generation there will be some very unproductive people at or near the top of the income distribution, and conversely some highly productive people at or near the bottom.

Just as the second generation reaches adulthood, we liberalize the economy (or progressivize it, or whatever it is you believe will create a perfectly meritocratic economy as defined above). Since we now have a perfectly meritocratic economy, there's a great deal of movement among income brackets in this generation, and each person's income is completely independent of his parents'.

In the third generation, we make no institutional changes. The economy is still perfectly meritocratic. But since the correlation between productivity and parents' income is now positive, the correlation between a person's income and his parents' is also positive. Social mobility has not decreased, but the economy has reached a sort of semi-equilibrium, and movement among income brackets has decreased. As long as a productive parents tend to have productive children, movement among income brackets will never again reach the level it reached in the second generation.

The takeaway message isn't that the United States is a perfectly meritocratic society; it's that increases in social mobility throw an economy into disequilibrium, which may create an unsustainable level of movement among income brackets as the most economically fit take advantage of newly available opportunities. This movement may well have declined in recent years, but that in itself isn't sufficient reason to believe that social mobility isn't as high in the US as it's ever been.

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Brava! Excellent exposition

Brava! Excellent exposition of an economic fallacy. You really had me at "there's good reason to expect this metric to peak, decline, and finally level off, even in a perfectly meritocratic economy." That sentence was one of those eureka moments where I understood the whole thing immediately before I even read the rest of of the post. Unfortunately, the likely response from lefties is to abandon meritocracy as an ideal (fortunately I'm pretty sure this isn't a tenable position). There are people on both the left and right who don't like to have this pointed out because they like to believe in the myth of infinite potential; Murray & Herrnstein predicted this kind of meritocratic stratification in The Bell Curve, and look at the response they got.

Matt, Why would the most

Matt,

Why would the most reasonable response from lefties be to abandon meritocracy? Wouldn't it make more sense to argue, as most seem to, that perhaps instead we should focus on mitigating, to the extent possible, the positive correlation between parents' productivity and their children's productivity?

WRT Will Wilkinson's post to which you linked, all that the Rawlsian argument about desert really does is to show that desert ought not, indeed cannot, play any real role in determining economic distribution. Showing that desert is an empty concept does not by itself show that one ought to redistribute wealth, as Will seems to think. The argument for redistribution follows from principles that we would select in the original position. Undermining the concept of desert shows only that one potential counter-objection to the difference principle isn't going to cut it.

Overall, though, I agree with you and with Brandon. Indeed, the study in question seems to be flawed anyway, unless one is concerned only with _economic_ mobility. Higher pay doesn't always correlate with social class, though. Plenty of unionized auto workers, say, are very solidly members of the middle class despite holding jobs traditionally associated with the laboring class. A son of an autoworker who gets a job, say, as a university librarian has, in some sense, climbed the _social_ ladder, moving from a blue collar job to a decidedly white collar profession. Yet that same son may well earn little more, and perhaps even less, than his father.

Actually the response is,

Actually the response is, yes, not to abandon meritocracy--but some instead reanalyze what meritocracy means. For instance, to decouple it from productivity as anarchosyndicalist models like participatory economics do---which reassigns merit to effort and sacrifice rather than productivity.

And yes, mitigating the effects of parental productivity is the usual "liberal" solution.

Matt: Thanks,

Matt:
Thanks, but..."brava?"

Joe:
Isn't the librarian effect that you describe small enough that it can be safely ignored? Also, it seems to be that it should cut both ways. It masks upward mobility in some cases, but it also creates an illusion of downward mobility in others. Anyway, some quick Googling suggests that a research librarian's salary should put you in the second quintile.

I do agree that having a persistent underclass is a real problem, but most of the things we've been trying haven't worked very well, and have arguably aggravated the problem. How would you suggest that we mitigate this?

Joe, The desire and drive to

Joe,

The desire and drive to impart a similar or greater level of productivity to one's children is in large part (a) the American Dream and (b) the engine of economic growth, development, and progress. If such a link were severed, we really *would* become the parody of the atomistic selfish hedonist that socialists have painted 'capitalist' society as becoming.

Brandon, FWIW, I did a bit

Brandon,

FWIW, I did a bit of quick Googling after getting your message and confirmed what I thought was true. In 98, a research librarian made approx $49K at a private university. A UAW assembler (which is unskilled labor) earned about $22/hr straight time, which works out to about $46K. If the research librarian is second quartile, so is the assembler, unless the cutoff is really close.

You're right that the effect would work in both directions. How big it is, I don't really know, but it does strike me that unionized labor (which admittedly is a much smaller percentage of the country than it used to be) is typically pretty highly compensated, which is going to skew the data at least some. Whether it will entirely balance out is beyond my ability to guess. My only point really is that 'socio-economic' is something of a misnomer these days, as it's now far less likely than it used to be that the socio and the economic parts directly correlate.

I'm less pessimistic than you that the things that we've been trying have always made the situation worse. While I'm not a cheerleader for the current state of public education, I would suggest that the U.S.'s long history of public education has made social mobility in this country far more likely than it is/has been in Europe, say. Indeed, you mention several other factors, many of which you seem to find generally positive: Pell Grants for college, say. And end to Jim Crow laws. Integration of schools. Head Start.

Again, this is not to say that these sorts of things couldn't be better. I'm not opposed to making public schools compete with one another, provided that we make fair comparisons between them (e.g., your school may get 80% of its students to pass their end-of-grade tests while mine gets only 40% of its students to pass. But if none of my school's students could have passed that test at the beginning of the year while 40% of your students would have passed it the previous year, is your school really doing a better job than mine?)

Of course, my big thing is the one that's going to get rocks thrown at me. One big way of evening the playing field is to prevent parents from giving their kids huge sums of money when the parents die. No, it doesn't eliminate all inequalities. That's impossible to do without abolishing families entirely, and that strikes me as a pretty crummy idea. Still, the fact that we can't entirely level the playing field isn't a good argument for leaving the giant hill in the middle. I'm going to go duck for cover now.

In response to the

In response to the comparison between the US and Europe.

http://www.economist.com/world/na/displayStory.cfm?story_id=3518560
http://www.post-gazette.com/pg/05133/504149.stm

Brian, I'm not suggesting

Brian,

I'm not suggesting that we somehow teach parents not to encourage their kids to be productive. I don't wanna put all the kids in a creche. I acknowledge that it's impossible, short of a really radical restructuring of our society, to completely eliminate the correlation between a child's productivity and his/her parent's productivity. Thus the suggestion for mitigating _to the extent possible_ that correlation. Eliminate it? That would be the atomist parody. But then, I'm not a socialist; I've criticisms of capitalism, but the 'atomistic selfish hedonist' part has never been one of those criticisms. I'm rather fond of atomistic selfish hedonism myself. I just think that a rational atomistic selfish hedonist should be a utilitarian. :wink:

Joe, The fact that someone

Joe,

The fact that someone from Connecticut born to a wealthy broker/trader/executive, as a result gets a huge trust fund, an ivy league education, and annual interest on the trust fund that is equivalent to 10 of those UAW workers' salaries doesn't impact on me in the slightest. That Paris Hilton runs about being just a bit more than a waste of space (and money) doesn't affect my station in life at all.

This by way of saying making a fetish out of "equality" doesn't do anything to help people who might actually need or do well from it. So long as the poor and working class are having continual real increases in standard of living, that would seem to be the proper metric and area of concern, not "how many multiples person A has over B due to their family".

The level playing field always has people with different levels of ability. Do I get to strap weights and hindrances on professional football players so that we have "an equal chance to compete" in a full contact football game?

Why would the most

Why would the most reasonable response from lefties be to abandon meritocracy? Wouldn’t it make more sense to argue, as most seem to, that perhaps instead we should focus on mitigating, to the extent possible, the positive correlation between parents’ productivity and their children’s productivity?

We already have public education to (partially) mitigate the causation that goes "successful parents can afford good schools to make their children successful". If the remainder of the correlation is due to genetic reasons, then it is a fundamental fact of the world, not an artifact of society. Until we have genetic engineering which will make the children of the dumb smart, I'm not quite sure how you would mitigate it.

1) It's worth reading

1) It's worth reading Michael Young's old satire "The Rise of the Meritocracy" about how unforgiving a complete meritocracy would be.
2) The Economist says "America is increasingly looking like imperial Britain, with dynastic ties proliferating...". Imperial Britain was loud with English complaints that the Empire was disproportionately run by Scots, who had cheated by developing a better education system. But it was a proper education system, aimed at - well, education, rather than self-regard and cuddles. How odd that in your federal system no State has tried the same strategy.

The big problem for me is

The big problem for me is that the entire argument is simply about social mobility, how easy it is to move from one class to another, especially to rise in class. This is a completely pointless argument, for many of the reasons cited above, but also for the base reason that, while a high degree of social mobility may at least make us feel better that those born poor are not necessarily trapped poor, what we really need is a shrinking underclass, a non-victimized lower class, a gigantic middle class , and a nearly nonexistent upper class. The numbers of people born in one and changing does not directly change the actual populations of those classes.

Yeah Brandon, you heard me.

Yeah Brandon, you heard me. It's like "you go, girl!"

This by way of saying making

This by way of saying making a fetish out of “equality” doesn’t do anything to help people who might actually need or do well from it. So long as the poor and working class are having continual real increases in standard of living, that would seem to be the proper metric and area of concern, not “how many multiples person A has over B due to their family".

I'm sorry, wealth is relative. If you care that country X lacks access to, say, proper medical care or even widespread access to video games, you're only arguing in a framework where there are people who do (leaving aside arguments as to how people get such access). If one group is only advancing incrementally while another is advancing exponentially (or by a large multiple), I suggest there's something wrong.

"Real increases" in standard of living should be tending towards equality.

Anyway, why *is* the world like a full-contact football game? If so, Something Must Be Done. :behead:

As for Patri:

We already have public education to (partially) mitigate the causation that goes “successful parents can afford good schools to make their children successful". If the remainder of the correlation is due to genetic reasons, then it is a fundamental fact of the world, not an artifact of society. Until we have genetic engineering which will make the children of the dumb smart, I’m not quite sure how you would mitigate it.

*yawn* First of all, there's a massive and convenient "if" there. Secondly, public education in the US is rife with class effects, more than other countries that use similar schemes of education funding.

And finally,

The numbers of people born in one and changing does not directly change the actual populations of those classes.

Yes but mobility is not an end in itself: it's being used as an indicator of whether we even have the groundwork set to change class structure.

Mandos, In no way is wealth

Mandos,

In no way is wealth relative. Perception of wealth, perhaps, but actual stocks of goods (consumer and producer) do in fact exist in real world economies, and that stock is what is considered wealth.

Alright, the IMPORTANT

Alright, the IMPORTANT aspects of wealth are relative. Otherwise it is just so much matter.

Mandos- I don't see how it

Mandos-

I don't see how it follows that if the (a) absolute material standing of the least off is increasing and (b) that standing is above absolute minimums for healthy existence (and in the US case, many orders of magnitude greater), that an increasing difference between top and bottom is any indication of something wrong with the system or wrong in and of itself. People are heterogeneous and one should expect heterogeneous outcomes.

Rawlsian justice, as I understand it, would share my befuddlement as it is concerned solely with the welfare of the worst off, and not on disparity qua disparity. The latter concern is unhealthy, illiberal, and in my opinion ultimately unjust.

As far as sports analogies go, they are all inherently disanalagous to life as we experience it, in that all sports are necessarily zero-sum, while liberal society & economics are not. But in the realm of better or worse non-analogies, if you're going to invoke a "level playing field" one must also acknowledge "disparity in ability (physical and mental" or else the point falls into complete incoherency.

"I don’t see how it

"I don’t see how it follows that if the (a) absolute material standing of the least off is increasing and (b) that standing is above absolute minimums for healthy existence (and in the US case, many orders of magnitude greater), that an increasing difference between top and bottom is any indication of something wrong with the system or wrong in and of itself. People are heterogeneous and one should expect heterogeneous outcomes."

So here's (part of) the problem: an underclass, even if it is in absolute terms a rising underclass, is in a state of weakness so that violence can be visited upon it in ways that can't normally apply to the rising overclass, from the soft violence of the unrectified externality to the overt violence of gangs, etc, etc. The poor today, for instance, are often materially much better off than the poor yesterday (and even the rich day before yesterday) ...yet most of the things we would normally call "squalor" still apply.

And heterogeneous wrt what? Yes people are heterogeneous---but what measure are we using to determine tp what form of heterogeneity should accrue greater or lesser award? If its merely productivity, then I'm not entirely happy with it.

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