Thursday, August 21, 2014

Extremely Positive News on Economic Mobility

Richard Reeves from the Brookings Institution has released this video about income mobility (HT: EV).

I suspect that the statistics he cites will be a very positive surprise to most people.

For all people born in the bottom income quintile, only 1/3 will remain there.  For a statistically average poor family with three children, one child will grow up to remain in the bottom quintile.  One child will move out of the bottom, but will have income below the median, and one child will have an income in the top half.

For black Americans, in particular, the outcomes are not this good.  But, even for black children born in the lowest quintile, half will move into a higher quintile.

For white Americans born in the lowest quintile, amazingly, the distribution of incomes is roughly flat across quintiles, with the odds of ending up in any quintile falling between 16% and 23% - near to what Reeves calls an "opportunity utopia".  That almost seems unbelievable.  That utopia would be a worthy goal, but I would never have guessed a society could come this close.  With perpetually poor places like Appalachia, or with areas characterized by vastly different standards of living, from West Virginia to Connecticut, how could this be possible?  But, apparently, it is.

Then, he shows the results for children born to parents who are never married versus those born to married parents, with no adjustment for race.  Remarkably, the results are very similar.

For poor children of never-married parents, about half will move to a higher quintile.

For poor children of married parents, again, they are in an "opportunity utopia".  In fact, for a child born into the lowest quintile to married parents who stay married, the lowest quintile is the quintile they are least likely to end up in.  I repeat, for a child born into the lowest quintile to married parents who stay married, the lowest quintile is the quintile they are least likely to end up in.  For children of parents who are married, this is better than a utopia.  Do we even have a word for that?  Is America dreaming?  I wouldn't know how to dream of something better than utopia. But for people who are married when they have children and stay married, we are living in it.

A child born into the bottom quintile to married parents who stay married has an 83% likelihood of moving up to higher income quintiles!

The result is the same regarding education.  If you are born poor and you drop out of high school, you have about a 46% chance of moving up.  If you are born poor and you graduate from college, you are living in the uber-utopia.

Here are a couple of graphs from the report:

This is the distribution of adult incomes of children born into families with married parents.  That is amazing.  And, in the report, the charts are interactive, so you can click on "Never Married" and then click on "Continuously Married", and watch the probabilities change.  And, despite the tone of the accompanying narrative, it is amazingly clear that the marital status of the parents and the education level of the children are much more important than the quintile the children are born into.  College graduates who were born into the first quintile have much better outcomes than high school drop outs who were born into the fifth quintile, for instance.

I haven't seen the raw data, so I don't know how much of the difference in the racial outcomes is due to family structure and education.

Next is a graph showing the amount of time parents spend with their kids, based on the parents' education.  The report points out that a gap has developed between the more educated and the less educated parents.  But, I can't help but noticing that parents with a high school education or less spend nearly 3 times more time with their children than the average parents did 30 years ago, regardless of education!  That is incredible!  As a nation we should be very proud of this development!

On the other hand, some people look at this graph and bemoan that educated parents spend almost 40 minutes more with their children than than less educated people.  This can only be described as a pathological reaction.  It would be interesting if someone set up a study where they presented made up social economic statistics with a helpfully negative tone.  How positive would the reported outcomes have to be before the subjects reached a consensus that inequality wasn't a high priority problem.  The issue has such value because there may be no threshold high enough for it to cease to be a purported issue.  In the report, this graph is shown in order to visualize the "gap".  Nothing positive is said about the trend.  It's as if the reader is expected not to see anything positive going on.  The extreme rise in parental attention among both groups is like the ape on the basketball court.

Is there any way to square the image of poor families ever more desperate to hang on to their disintegrating share of hope with this finding that the most vulnerable parents spend nearly 3 times more time with their kids than educated parents from 30 years ago did?  If spending time with kids is important, then why are outcomes for poor children worsening even while their family time skyrockets?  Are poor kids worse off because children of educated parents have more parent time?  Is there a fixed-pie of parental attention, such that, when educated parents spend time with their children, children of less-educated parents are harmed?  Can someone pencil that out for me?  How did I even end up with a functional life when my own parents barely even noticed me, by today's standards?

The video ends with, "We have a big problem, and we need big solutions."


  1. I'll tell you why this is not really good news about economic mobility: it's because quintiles don't matter.

    The distinction is between being one of the unwashed masses (the 99%) and being one of the elite (the 1%). OK, yeah, the top 10% is also a decent place to be. And of course, the real power elite is the 0.1%.

    The difference between being in the first, second, third, and fourth quintiles is not significant, compared to the difference between being in any of those and being in the 1%.

    You have to analyze the data that way -- look at the "backwards L curve" of wealth distribution -- to see that we have a big problem with lack of social mobility. And we do: the problem is an inherited aristocratic elite.

    The Brookings Institution guy is really not thinking clearly, because you don't use quintile data to see what's going on in this society; that just isn't where the class lines break down. It's like saying "Look, there's lots of social mobility among these different ghettos!" Who cares?

  2. By the way, you can start to spot this from the data on the top quintile (isn't it interesting that it shows more "persistence" than the other four?). The other four are really the same social class, so mobility among them means little.

    1. Nathanael, if that is true, that is extremely good news. Thank you for your input.