Richer or Poorer
Multidimensional intergenerational mobility
Jason Fletcher & Katie Jajtner
Social Science & Medicine, July 2023
Abstract:
In this paper, we present novel evidence of the extent to which intergenerational mobility is generalized or specific across domains of human and health capital. That is, do children who experience greater mobility in one domain (e.g., income) also experience mobility in other domains (education, health status, health behaviors, crime). Using rich data in Add Health, we find evidence against generalized mobility -- families that are more mobile in one domain are not more mobile in others. We then ask a place-based version of this question, motivated by Chetty et al. (2014)'s work showing high levels of geographically-based income mobility in the US. The school-based sampling combined with parent-child links across many outcome domains of the Add Health allows us to use a common dataset between the two analyses. Like our individual-based results, we find limited evidence of generalized mobility by place -- indeed, most estimates suggest close-to-zero correlations between many of the ten domains we explore.
Was It Demography All Along? Population Dynamics and Economic Inequality
Jacob Vigdor
University of Washington Working Paper, May 2023
Abstract:
Broad movements in American earnings inequality since the mid-20th century show a correlation with the working-age share of the population, evoking concerns dating to the 18th century that as more individuals in a population seek work the returns to labor diminish. The possibility that demographic trends, including the baby boom and post-1965 immigration, contributed to the rise in inequality was referenced in literature before the early 1990s but largely discarded thereafter. This paper reconsiders the impact of supply-side dynamics on inequality, in the context of a literature that has favored demand-side explanations for at least 30 years, and a recent movement toward equality that coincides with the retirement of the baby boom generation, reduced immigration, and a long trend toward reduced fertility. Evidence suggests an important role for the population age distribution in economic inequality, and coupled with demographic projections of an aging population and continued low fertility portends a broad trend toward greater equality over at least the next two decades.
People's Preferences for Inequality Respond Instantly to Changes in Status: A Simulated Society Experiment of Conflict Between the Rich and the Poor
Heidi Vuletich, Kurt Gray & Keith Payne
Cognitive Science, June 2023
Abstract:
Most people in the United States agree they want some income inequality but debate exactly how much is fair. High-status people generally prefer more inequality than low-status individuals. Here we examine how much preferences for inequality are (or are not) driven by self-interest. Past work has generally investigated this idea in two ways: The first is by stratifying preferences by income, and the second is by randomly assigning financial status within lab-constructed scenarios. In this paper, we develop a method that combines both experimental control and the social experience of inequality -- a simulated society experiment. Across two experiments (N = 138, observations = 690), participants voted on the distribution of rewards -- first behind a veil of ignorance, and then when they were randomly assigned a status within a game of chance. Status varied repeatedly across five rounds, allowing us to measure dynamic preferences. Under the veil of ignorance, people preferred inequality favoring the top status. When the veil of ignorance disappeared, self-interest immediately influenced inequality preferences. Those who randomly landed in top positions were satisfied with the status quo established under the veil of ignorance, whereas those who randomly landed in bottom positions wanted more equality. Yet these preferences were not stable; decisions about the optimal level of inequality changed according to changes in social status. Our results also showed that, when inequality grows in a society, preferences regarding inequality become polarized by social status. Individuals in low-status positions, particularly, tend to demand more equality.
Long-term relatedness and income distribution: Understanding the deep roots of inequality
Trung Vu
Oxford Economic Papers, July 2023, Pages 704-728
Abstract:
This article explores the role of long-term relatedness between countries, captured by an index of genetic distance, in driving worldwide differences in income inequality. The main hypothesis is that genetic distance gives rise to barriers to the international diffusion of redistributive policies and measures, and institutions, leading to greater income disparities. Using cross-country data, I consistently find that countries that are genetically distant to Denmark -- the world frontier of egalitarian income distribution -- tend to suffer from higher inequality, ceteris paribus. I also demonstrate that genetic distance is associated with greater bilateral differences in income inequality between countries. Employing data from the European Social Survey, I document that second-generation Europeans descending from countries with greater genetic distance to Denmark are less likely to exhibit positive attitudes towards equality. Further evidence suggests that effective fiscal redistribution is a key mechanism through which genetic distance to Denmark transmits to greater income inequality.
The inheritance of social status: England, 1600 to 2022
Gregory Clark
Proceedings of the National Academy of Sciences, 4 July 2023
Abstract:
A lineage of 422,374 English people (1600 to 2022) contains correlations in social outcomes among relatives as distant as 4th cousins. These correlations show striking patterns. The first is the strong persistence of social status across family trees. Correlations decline by a factor of only 0.79 across each generation. Even fourth cousins, with a common ancestor only five generations earlier, show significant status correlations. The second remarkable feature is that the decline in correlation with genetic distance in the lineage is unchanged from 1600 to 2022. Vast social changes in England between 1600 and 2022 would have been expected to increase social mobility. Yet people in 2022 remain correlated in outcomes with their lineage relatives in exactly the same way as in preindustrial England. The third surprising feature is that the correlations parallel those of a simple model of additive genetic determination of status, with a genetic correlation in marriage of 0.57.
Testosterone administration modulates inequality aversion in healthy males: Evidence from computational modeling
Jiajun Liao et al.
Psychoneuroendocrinology, forthcoming
Abstract:
Fairness concerns play a prominent role in promoting cooperation in human societies. Social preferences involving fairness concern have been associated with individual testosterone levels. However, the causal effects of testosterone administration on fairness-related decision making remain to be elucidated. Here, we used a randomized, double-blind, between-participant design and administered testosterone or placebo gel to 120 healthy young men. Three hours after administration, participants performed a modified Dictator Game from behavioral economics, in which they were asked to choose one of two monetary allocations between themselves and anonymous partners. Participants were either in a position of advantageous inequality (i.e., endowed with more than others) or disadvantageous inequality (i.e., endowed with less than others). Computational modeling showed that inequality-related preferences explained behavior better than competing models. Importantly, compared with the placebo group, the testosterone group showed significantly reduced aversion to advantageous inequality but enhanced aversion to disadvantageous inequality. These findings suggest that testosterone facilitates decisions that prioritize selfish economic motives over fairness concerns, which in turn may boost status-enhancing behaviors.
A Longitudinal Analysis of Gene x Environment Interaction on Verbal Intelligence Across Adolescence and Early Adulthood
LiChen Dong et al.
Behavior Genetics, July 2023, Pages 311-330
Abstract:
The Scarr-Rowe hypothesis proposes that the heritability of intelligence is higher in more advantaged socioeconomic contexts. An early demonstration of this hypothesis was Rowe and colleagues (Rowe et al., Child Dev 70:1151-1162, 1999), where an interaction between the heritability of verbal intelligence and parental education was identified in adolescent siblings in Wave I of the National Longitudinal Study of Adolescent to Adult Health. The present study repeated their original analysis at Wave I using contemporary methods, replicated the finding during young adulthood at Wave III, and analyzed the interaction longitudinally utilizing multiple measurements. We examined parental education, family income, and peer academic environment as potential moderators. Results indicated increased heritability and decreased shared environmental variance of verbal intelligence at higher levels of parental education and peer academic environment in adolescence. Moreover, moderation by peer academic environment persisted into adulthood with its effect partially attributable to novel gene-environment interactions that arose in the process of cognitive development.
Do Robots Increase Wealth Dispersion?
Francisco Gomes, Thomas Jansson & Yigitcan Karabulut
Review of Financial Studies, forthcoming
Abstract:
We document significant negative effects of exposure to increased automation at work on household wealth accumulation. Beyond the income and savings channels, we uncover a novel mechanism contributing to the negative wealth effects of automation that arises through the endogenous optimal portfolio decisions of households. We show that households rebalance their financial wealth away from the stock market in response to increased human capital risk induced by pervasive automation, thereby attaining lower wealth levels and relative positions in the wealth distribution. Our evidence suggests that the portfolio channel amplifies the inequality-enhancing effects of increased automation.
Tying the value of goals to social class
Sara Wingrove et al.
Journal of Personality and Social Psychology, forthcoming
Abstract:
Although everyone strives toward valued goals, we suggest that not everyone will be perceived as doing so equally. In this research, we examine the tendency to use social class as a cue to understand the importance of others' goals. Six studies find evidence of a goal-value bias: Observers perceive goals across a variety of domains as more valuable to higher class than to lower class individuals (Studies 1-6). These perceptions do not appear to reflect reality (pilot study), and those who are strongly motivated to justify inequality show the bias to a greater extent (Studies 5 and 6), suggesting a motivated pathway. We also explore implications of the bias, finding that Americans tend to offer better opportunities to, and prefer to collaborate with, higher class than lower class others, revealing discriminatory outcomes that are partially driven by perceived goal value (Studies 2, 3, 4, 6). Results suggest that Americans expect higher class individuals to value achieving goals more than their lower class counterparts, fueling increased support for those who are already ahead.
Socioeconomic Status and Meta-Perceptions: How Markers of Culture and Rank Predict Beliefs About How Others See Us
Holly Engstrom et al.
Personality and Social Psychology Bulletin, forthcoming
Abstract:
How does a person's socioeconomic status (SES) relate to how she thinks others see her? Seventeen studies (eight pre-registered; three reported in-text and 14 replications in supplemental online material [SOM], total N = 6,124) found that people with low SES believe others see them as colder and less competent than those with high SES. The SES difference in meta-perceptions was explained by people's self-regard and self-presentation expectations. Moreover, lower SES people's more negative meta-perceptions were not warranted: Those with lower SES were not seen more negatively, and were less accurate in guessing how others saw them. They also had important consequences: People with lower SES blamed themselves more for negative feedback about their warmth and competence. Internal meta-analyses suggested this effect was larger and more consistent for current socioeconomic rank than cultural background.
The Spillover Effects of Top Income Inequality
Joshua Gottlieb et al.
NBER Working Paper, June 2023
Abstract:
Top income inequality in the United States has increased considerably within occupations. This phenomenon has led to a search for a common explanation. We instead develop a theory where increases in income inequality originating within a few occupations can "spill over" through consumption into others. We show theoretically that such spillovers occur when an occupation provides non-divisible services to consumers, with physicians our prime example. Examining local income inequality across U.S. regions, the data suggest that such spillovers exist for physicians, dentists, and real estate agents. Estimated spillovers for other occupations are consistent with the predictions of our theory.
Rising inequality and declining mobility in the Forbes 400
Ricardo Fernholz & Kara Hagler
Economics Letters, forthcoming
Abstract:
We examine the joint evolution of inequality and mobility from 1985-2020 using a novel data set of intergenerational family wealth dynamics constructed from the Forbes 400 list of wealthiest Americans. In recent decades, the concentration of wealth at the very top of the distribution has risen in the U.S. Over this same period, we show that mobility among the wealthiest American family dynasties has declined, with mobility measured either as family wealth-rank correlations over one-year and five-year periods or as the number of new entrants at the top of the distribution.