Sunday, September 23, 2012

Is Romney wrong about economic mobility in the United States?

In a Washington Post editorial, Ruth Marcus writes that Mitt Romney is presenting a "Fantasyland version of the American Dream." According to Marcus, Romney claims that

all it takes to succeed in this country is determination and hard work. Government merely needs to get out of the way, roust the Entitlement Society slackers and let the Opportunity Society strivers go for it.

“Frankly, I was born with a silver spoon, which is the greatest gift you could have, which is to get born in America,” Romney told donors at the now-famous Florida fundraiser. “I’ll tell you ... 95 percent of life is set up for you if you’re born in this country.”

Describing his own path, Romney noted that he gave away the money his father left him. “I have inherited nothing,” he said. “Everything I earned I earned the old-fashioned way.”

There’s only one thing wrong with this cozy, self-satisfied worldview: It omits the enormous advantages accruing to those born on third base. It ignores the grim reality that those born to less-privileged families are far less likely than the Bushes or Romneys of the world to secure their place in the middle class or above.

It imagines an America where economic mobility is far more fluid than it is in reality. Being born in America is an advantage, to be sure, but some spoons are a lot more sterling than others.

A new study from the Brookings Institution’s Center on Children and Families underscores Romney’s misperception. “The reality is that economic success in America is not purely meritocratic,” write authors Isabel V. Sawhill, Scott Winship and Kerry Searle Grannis. Rather, they say, “It helps if you have the right parents. Those born into rich or poor families have a high probability of remaining rich or poor as adults.”
This seems to be flawed reasoning. The statement in that last paragraph assumes that merit is randomly distributed throughout the population. But that's not the only plausible theory. How about this alternate theory? Parents earn their money through their actions. They took those actions because of some combination of their genes and their environment (including how they were raised by their parents). The parents obviously pass on their genes to their children, and they can also pass on some of their upbringing by raising their kids to share their values and so on. The children will tend to act in similar ways to their parents. In short, parents can pass on their "merit" to their children. If that's correct, then in a meritocracy, you'd expect a person's level of economic success to be fairly similar — although far from identical — to their parents.

And that's what the study shows:
People do move up and down the ladder, both over their careers and between generations, but it helps if you have the right parents. Children born into middle-income families have a roughly equal chance of moving up or down once they become adults, but those born into rich or poor families have a high probability of remaining rich or poor as adults. The chance that a child born into a family in the top income quintile will end up in one of the top three quintiles by the time they are in their forties is 82 percent, while the chance for a child born into a family in the bottom quintile is only 30 percent. In short, a rich child in the U.S. is more than twice as likely as a poor child to end up in the middle class or above.
As Tyler Cowen wrote in a blog post called "Why Economic Mobility Measures are Overrated" (which I've blogged twice before):
How much of immobility is due to “inherited talent plus diminishing role for random circumstance”? Is not this cause of immobility very different — both practically and morally — from such factors as discrimination, bad schools, occupational licensing, etc.? What are you supposed to get when you combine genetics with meritocracy? I do not know how much of current American (or other) immobility is due to this factor, but I find it discomforting that complaints about mobility are so infrequently accompanied by an analysis of this topic.


Anonymous said...

Nah - I don't buy the genetics stuff. Too close to "natural master class" Aryan race bullshit. Genetics count, but only to the point of getting a standard issue human brain with out mental, genetic or health defects.

There is nothing "special" about kids who pull As when that kid attends a great school. Lots of kids with the "basic" brain do very well in good schools. And if kids need more prep, parents pay for tutors or send kids to SAT prep classes.

Take Exeter - it's hard to go to Exeter and fail. You don't have to be anything more then an average kid with the opportunity to get a world class education. Of course, that same kid will have attended great schools from very early on.

But kids don't need more then an average, healthy brain to pull As at Exeter and Wharton. The level of thinking required isn't too advanced for the average human brain. The most that might come up at Wharton is a tiny bit of theoretical statistics.

John0 Juanderlust said...

These studies seem to be skewed toward a conclusion from the outset.
They appear to ignore the role personal philosophy plays in things.
If you divide people into classes, then, over and over, tell one group that they don't have a chance and anything that doesn't work for them is not their fault, they will not do well.
Somehow the definitions of the words "opportunity" and "rights" have been so perverted that these people don't get what it means when you place the word "equal" in front of them.
Some people and their parents are proudly stupid and ignorant. That sort of thing is encouraged. To benefit from successful parents is considered bad. That is sick.