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Today's rich families in Florence were rich 700 years ago
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- SmellTheGlove 10y agoI'm not entirely surprised. In Florence, and probably in lots of other places too, wealth was amassed in land holdings and gold (florins being the currency). Land holdings over a 700 year horizon seems like a far better stability bet than equities, since the land itself has intrinsic value even if the occasional war or natural disaster gets rid of whatever is happening on it. Back in the 1400's, the merchant class absolutely made a great living - upper class even. But the old blue bloods (many families of which even went broke, in terms of liquidity) and nobility had land. They used that land to build business and bring in rents, and build business relationships with other upper class families, but even as the businesses faded the land remained. I mentioned some of the old Florentine nobility going broke - many of them preferred hardship to selling their land holdings. Some of them would eventually marry off a daughter to a family that desired the blue blood relationship and some land would go as dowry, thus restoring the fortune in that family (through the wealth of the inlaws). One good example is Lisa Gherardini's marriage into the del Giocondo family - she was of an old nobility fallen on harder times, while the Giocondo family were new money merchants. Some land and a few florins went with her, the Gherardini family were restored a bit and the Giocondo family remained wealthy for a long time. I'm not a historian, but I've taken a bit of an interest in Florentine history as an adult, so take this for what it's worth. A real historian would probably know better.
- throwaway_xx9 10y agoBali is a similar case. A bunch of rice farmers with vast ancestral lands, some families owning multiple square miles. And when a new town or school is built nearby, they suddenly own 1,000 rental apartments. Dad goes from rice farming to collecting rents full-time.
- brador 10y agoSeems land taxation + basic income would be a great combo to spread wealth around.
- SmellTheGlove 10y agoI happen to think that if you want to maximize human potential across the board, you need to take away the threats to existence at the individual level - meaning a place to live, food, healthcare, education. If your basic needs are met, theoretically, you're free to explore and innovate (or sit on your ass, but I think the propensity for that is overblown). That's not just to help poor people either, that could boost your middle class output as well - use me for an example, I'm educated, relatively advanced in my career for my age, but I'd probably be doing something different if I didn't have to worry about student loans to repay and a roof over my family's head. Maybe that something different would be more impactful, maybe it wouldn't, but it'd be different. I digress. I really hope to see UBI attempted somewhere to see if it works. We do already tax land in most (all?) of the developed world. I honestly have no idea of the tax structure on land in 15th century Florence, but I'm inclined to check that out after work today. Of course, goals vary across humans. Advancing the whole at the relative expense of another makes the people who are already ahead a bit nervous. That's not wrong, either, it's just human nature. Advance the baseline far enough and it begins to matter less.
- huherto 10y agoAFAIK, we have tax on property. We tax the land plus the value added to the land by building on it. IMH, we shouldn't tax the construction since that is disincentive for economic activity. But the land? Some land just becomes valuable because it is near other valuable properties.
- aaron-santos 10y agoGeorgism gets a lot of support on HN, but how exactly would the unimproved value of land be determined? Similar to the appraisal system we have in place for houses, or something different?
- eldavido 10y agoRead Piketty's Capital; there's a great discussion about how wealth has been held across several capitalist countries for the past 200-300 years. What's striking is that the value of agricultural land in the US around 1700-1800 was, if memory served, something like 50% of aggregate US wealth, whereas today it's <1%, with the dominant portion being residential real estate and business equity (which includes commercial RE, I think). According to the book, US wealth is about 50/50 between those two categories. Which is all to say, land hasn't been that great of a bet growth-wise for the past 100 or so years in the US. I don't know how one would've fared over 700 years of Italian history, though. More broadly, I think the biggest determinant of wealth is one's attitude toward generation of income. In a capitalist economy, long-term wealth is generated by the acquisition, improvement, and operation of assets; it's the same deal whether you're a business owner/founder, investment banker doing leveraged buyouts, landlord, miner, whatever. Get assets (build/buy), work on them, then use them for income or sell them to buy other/more assets. Very different attitude toward income than "Get a job". I wonder how correlated attitude is with wealth?
- ori_b 10y agoI'm curious how much of the agricultural land then is the residential land today.
- bksjdf 10y agoIts just much easier to maintain your wealth and expand it if you have a lot to begin with.
- cs702 10y agoFascinating: income mobility in one generation (PARENT -> CHILD) cannot be extrapolated to multiple generations (PARENT -> CHILD -> CHILD ...), because socioeconomic status persists across generations even if income fluctuates from one generation to the next. The example given in the OP is telling: "It's not unusual for the child of an economically successful professional to attend an elite educational institution and then move into an artistic or academic or nonprofit career or political career that might still involve traveling in elite circles but at a much lower salary level than his father's. If the professional's grandson then also attended an elite college and moved into a high-paying career in business and law, statistics would show a great deal of economic mobility while common sense would indicate three generations' worth of a high-status family." And it's not just Florence. The article mentions another study in Sweden that reached similar conclusions. I wonder how the US compares to European cities/countries.
- huherto 10y ago> because socioeconomic status persists across generations even if income fluctuates from one generation to the next. Or it could be regression to the mean?
- AnimalMuppet 10y agoOnly if you define "mean" as "this family is upper class on average, and that family is lower class on average" - which I think is a pretty funny definition of a mean to regress to.
- aab0 10y agoNothing funny about it. Genetic differences drive a lot of inter-personal differences; combine that with assortative mating, and that'll explain some of this intergenerational stickiness in a way that landholdings cannot.
- tlarkworthy 10y agoWell, if you distilled that into a quantitative experiment then you would be famous. I don't think that chain of reasoning has any scientific basis (yet?).
- theandrewbailey 10y ago> A lot has changed in the Italian city of Florence in the roughly 700 years since the 1427 census The author must have been using some really bad floating point math, there.
- mfoy_ 10y agoHe even mentions "700 years" and "seven centuries" multiple times... Did he actually mix up "not quite 600" with "roughly 700"? Or did the census of 1427 happen... not in 1427?
- dragonwriter 10y agoDoesn't everyone round time periods to the nearest multiple of 350 years?
- panglott 10y agoI suspect that since the 9th century CE was 1200 years ago, he added an extra hundred years in the wrong direction when thinking about the 15th century (i.e., he thought 1427 was in the 14th century, which is seven centuries before the 21st century).
- Luc 10y ago1. 15th century (1427) 2. 16th 3. 17th 4. 18th 5. 19th 6. 20th 7. 21st (now)
- theandrewbailey 10y agoThat makes about as much sense as counting the 4 months of November to February as 2 years because it exists in 2 calendar years.
- maxerickson 10y agoIt can be an explanation of the error without being a defense of it.
- mfoy_ 10y ago>relatively low 0.2 percent elasticity of income in the Nordic countries and a relatively high 0.5 percent elasticity of income in places like the UK, the US, and Italy. An elasticity of 1 would mean that income status is perfectly inherited between father and son, whereas an elasticity of 0 would mean no inheritance. I assume the author means 20% and 50%, respectively? If "1 percent" is all of it and "0 percent" is none of it then I assume he confused percentages with probabilities.
- tokai 10y agoWouldn't you say that 50/100 = 0.5?
- thomasfoster96 10y agoYes, but expressed as a percentage, that's 50%. As in, 50 is 50% of 100.
- mfoy_ 10y agoI would! However, a "probability of 0.5" and "0.5 percent" are different things by two orders of magnitude. "0.5 percent" is "0.5%" which is 0.5/100, not 50/100.
- thechao 10y agoVerizon ... statistics?
- unchocked 10y agoYes, you are completely right. The author just threw in the word "percent" like the 100x scaling factor between that and decimal probability is nothing.
- btilly 10y agoIf you're going to add theories about why, let's add some more. 1) Last names matter. If you have a name associated with success, you get more chances, which results in more opportunities and a better chance of success. 2) Genetics matter. A person whose parents were unsuccessful but whose background includes genetics for intelligence and beauty will tend to have an innate advantage. 3) Family stories matter. People who know their ancestors did amazing things sometimes try to live up to the family reputation with good results.
- jkot 10y ago> The truth, however, is that we don't really know what's going on. Over 14 generations you will get ~ 50k relatives who live today. I bet some of them are not rich.
- civilian 10y agoYou're not taking cousin marriage into account--- a lot of those 50k people are the same people. And I'm using the loose definition of "cousin"-- any non-immediate, however distant, family relative.
- pattisapu 10y ago> As Gary Becker and Nigel Tomes concluded back in 1986, "Almost all the earnings advantages or disadvantages of ancestors are wiped out in three generations." Ibn Khaldun said something similar too.
- buckbova 10y agohttps://en.wiktionary.org/wiki/clogs_to_clogs_in_three_generations https://en.wiktionary.org/wiki/clogs_to_clogs_in_three_gener... I've heard it "sandals to sandals in three generations" as well.
- forkandwait 10y agoAssuming it's an ergodic process, which is likely an unwarranted assumption.
- strictnein 10y agoSome discussion in The Millionaire Next Door about this as well. The conclusion, if I recall correctly, was that there was an inverse relationship between the financial success of the child and the amount of money they were provided from their wealthy parents. More money from the parent generally just meant more consumption by the child, while depleting the assets of the parent. Thus less is inherited and the child has not learned to save and spends it all.
- mywittyname 10y agoIn the modern economy. Six-hundred years ago, there weren't many paths to land rights (thus wealth) besides inheritance.
- flubert 10y ago>Today's rich Florentines had rich ancestors Doesn't everybody alive today have rich ancestors? Like pretty much everyone is related to Charlemagne or Genghis Khan? https://www.google.com/#q=related+to+charlemagne https://www.google.com/#q=related+to+charlemagne http://www.nature.com/news/genghis-khan-s-genetic-legacy-has-competition-1.16767 http://www.nature.com/news/genghis-khan-s-genetic-legacy-has...
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- tropo 10y agoIndeed, because the lower classes tended to die.
- ptaipale 10y agoNot necessarily; just that classes mix and have always mixed (partly out of wedlock of course). When you go back, say, twelve generations, almost everyone has a few upper class ancestors among the 8190 (part of them are anyway overlapping duplicates). (FWIW, I have an ancestor 12 generations ago who was almost a nobleman, plundering Germany in 30 Years War and getting in return an estate that was tax-free for some generations, as long as the owner promised to send in a cavalryman to the Swedish king's service. But most of my ancestors were dirt-poor peasants like almost everyone was.)
- internaut 10y agoMy (with no evidence mind) intuition always suggested to me that there is some Group Selection going on in evolutionary terms. It could be on the memetic level. I am aware the Selfish Gene debunked this. Yet the way different classes of humans relate to each other, again and again the same coincidences. There's something going on but I don't know what it is. In my country there were originally two major tribal alliances literally going back thousands of years. Today the people in the two major political parties are descended largely from those two tribes. Also largely these are disjoint sets. If there was some crossover it could be just natural selection in the way we're all related to Genghis Khan but that there are no descendants of Tribe X in Party Y suggests something else is up.
- forkandwait 10y agoThe discussion of Becker reinforces my belief that the discipline of Economics exists primarily to justify pre existing power structures by using assumptions which are convenient but empirically unfounded.
- dismal2 10y agoalso, it conveniently explains/justifies PAST events but is useless for predict the future
- maxxxxx 10y agoYou are onto something here
- dv_dt 10y agoSo Economics might fit the definition of a modern mythology because the theories are stories told to explain the order of the world. (and because economics is so difficult to tie to real world, controlled experiments...)
- enoch_r 10y agoA paper by two economists finds evidence that intergenerational wealth effects have persisted over very long periods of time. They note that their results are "new and remarkable" in the context of a large existing body of empirical work studying and estimating historical intergenerational mobility. If the above reinforces your belief that "economics exists primarily to justify pre existing power structures by using assumptions which are convenient but empirically unfounded," then what exactly would weaken your position?
- antisthenes 10y ago> the discipline of Economics exists primarily to justify pre existing power structures by using assumptions which are convenient but empirically unfounded. If you think that's what Economics does, you either have not studied it, or somehow studied it under a unique professor in a unique environment, isolated from reality. Not to mention that your statement makes no sense at all, since if the power structures are already existing, then by definition, they are empirically founded.
- seizethecheese 10y agoUgh. If you look at the sourced article[1] the effect is actually very small: "When regressing the pseudo-descendant’s earnings on pseudo-ancestor’s earnings, the results are surprising: the long-run earnings elasticity is positive, statistically significant, and equals about 0.04. Stated differently, being the descendants of the Bernardi family (at the 90th percentile of earnings distribution in 1427) instead of the Grasso family (10th percentile of the same distribution) would entail a 5% increase in earnings among current taxpayers (after adjusting for age and gender)" http://voxeu.org/article/what-s-your-surname-intergenerational-mobility-over-six-centuries http://voxeu.org/article/what-s-your-surname-intergeneration...
- jerf 10y agoThis strikes me as proving an awfully small result too concretely. Across the several thousand ancestors you have going back 600-700 years (if not millions of ancestors; a rather conservative "one generation every 25 years" for 600 years yields 2^24-ish possible ancestors, ~16 million, though most people's family trees do not actually branch that much in the less mobile times of the past), the one from which your patrilineal name comes from is even 5% relevant to your life today? Is this one of those cases where hard science and math prove something very counterintuitive, or one of those cases where soft science and math gets popular because it was poked and prodded until it yields a counter-intuitive result that would get into the news?
- panglott 10y agoMy thought was similar: how long ago was the most recent common ancestor of Florentines (barring immigration)?
- shmageggy 10y agoThanks for pointing this out and citing the paper. When I saw the Andersson graph I thought, "oh hey, those two roughly Gaussian distributions are indeed a wee bit distinguishable", then I read > were drastically more likely to be in the Swedish financial elite than people with the surname Andersson. and I was like, "Drastically? Really?" Another day another shoddily reported science article.
- Kinnard 10y agoWould love to see an analysis predating the Renaissance and the Black Death I imagine these had a big impact but analyses of China and England have shown even revolutions fail to displace entrenched power blocs: http://qz.com/314720/heres-the-surprising-social-trait-that-the-english-and-chinese-have-in-common/ http://qz.com/314720/heres-the-surprising-social-trait-that-... https://medium.com/@blackbitcoiners/bitcoin-has-failed-cdad9ea3bf55 https://medium.com/@blackbitcoiners/bitcoin-has-failed-cdad9... http://www.lse.ac.uk/economicHistory/workingPapers/2013/WP181.pdf http://www.lse.ac.uk/economicHistory/workingPapers/2013/WP18... I'd love for pg to way in too as a former florentine, an expert of the Renaissance, a promulgator of a contemporary renaissance(through YC [hackers==painters]), and thereby, a wealth transfer/creation expert.
- mrow84 10y agoYou can get a large inequality effect just from differences in inheritance between children. If we call the child who gets the bulk of the inheritance the "first child", then the first child of the first child, etc., will end up being very wealthy. You can see it in a very simple model: 1. start with a fixed size population, each starting with the same amount of wealth 2. pair the members of the population randomly to form two "parents" 3. combine the wealth of the two "parents" 4. split the wealth into two unequal parts with some fixed ratio (say 3:1) 5. assign the two parts to two "children" of the "parents", resulting in a population of the same size as the original If you repeat the above procedure (from step 2) for only 5 or 6 generations then you get a distribution that is positively skewed, to a degree depending on the ratio (3:1 gives quite a large skew). It is a simple model, and I have only evaluated it numerically, but it shows how strong an effect you can get from only a single process (differential inheritance in this case). I am fairly certain that things like assortative mating would produce similar (compounding) effects.
- mrow84 10y agoSo I just did an experiment with simple assortative mating, where the population is drawn into an ordered list, with the probability of selection being proportional to wealth, and then paired off according to their order in the resulting list (so the wealthy are more likely to mate with each other). The results surprised me somewhat, though as with most things are somewhat obvious in retrospect. If you take a (model) world with unbiased inheritance (a 1:1 split between the two children), then no "mating strategy" is able to increase wealth inequality - at worst it can keep it the same as it was. This can be seen by noting that neither of the children of the two wealthiest members of the population can have more than the wealthiest of their two parents. Over many generations, unless the mating selection is extremely carefully chosen, the wealth distribution will collapse to perfect equality, for any mating strategy. Assortative mating therefore can at worst exert a drag on the (natural) restoration to equality. In a (model) world with biased inheritance this leads to greater amounts of wealth inequality, because the expansion of inequality through the unequal inheritance is "resisted" less by the reduction in inequality caused by mating. In conclusion: try and treat your kids the same if you want a more equal world!
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- jhallenworld 10y agoThe wealth certainly does not always last, one example is the Vanderbilts: http://www.nytimes.com/1989/09/24/books/more-money-than-anyone-else.html http://www.nytimes.com/1989/09/24/books/more-money-than-anyo...
- enoch_r 10y agoI found this quite interesting: > We also find two further interesting pieces of evidence. First, we show that intergenerational mobility in the 15th century was much lower than at present – the intergenerational earnings elasticity between two successive generations was estimated to be between 0.8 and 0.9, thus depicting a quasi-immobile society in 1427. It is plausible, though we do not have direct evidence for this, that earning elasticity was close to 1 until the 20th century (before the Italian industrial revolution and mass schooling) and lower in the subsequent period. This may explain why we still find some degree of inheritance of socioeconomic status after six centuries. So Yglesias, playing the "debunked!" card[0], says "look--here is proof that our estimates of intergenerational income mobility are TOTALLY WRONG!" In fact, there's a good chance that current studies (showing high mobility) are perfectly consistent with this paper, since it found that moblity rose dramatically since the beginning of the studied period. [0] http://slatestarcodex.com/2014/12/13/debunked-and-well-refuted/ http://slatestarcodex.com/2014/12/13/debunked-and-well-refut...
- strictnein 10y agoYglesias consistently strikes me as someone who was told they were very clever far more than was actually warranted.
- phantom_oracle 10y agoAnybody curious to know how wealth can be preserved in perpetuity should read up on what John D. Rockerfeller said about it. Taxation on income is a pittance to where wealthy individuals source majority of their income. A rich guys 3 kids could virtually pay zero income-tax their whole lives but live princely lives with capital gains, trusts, etc.
- leroy_masochist 10y agoI am skeptical of any study that uses Italian tax records as an empirically sound data source. Additionally, Yglesias' writeup of the study is short on specifics. What was the number of people with a given surname in 1427, and in 2011? In other words, is it possible that "Family A" was a big, wealthy and powerful family in the 1400's, but today there are only four people with that last name in Firenze and three of them happen to be in high-wage jobs? Are income figures median, or mean? Neither Valentino nor Vasco Rossi lives in Firenze, but if they did, they'd be skewing the mean income score for the Rossi name. Are we sure the people today with a given surname are the actual descendants of people in 1427? And, if they are, what do we know about whether the family has stayed wealthy in the years between then and now? All in all, this article seems more clickbait-y than insightful.
- jerryhuang100 10y agoI guess this eco-mobiilty all depends on the social structures and political environments. There is a Chinese proverb "富不過三代", or, fortune won't last three generations. The Chinese genealogy is relatively complete and you can actually trace Confucius' offspring to this date. But you'll be surprised to find big names today rarely also have some big name ancestors 500 years ago. One reason is that the Chinese social and political are constantly changing. In China the longest dynasty Ching lasted 268 yrs. Basically every 70-150 years there is a game-of-thrones type of revolutions going on, and the entire soc-pol systems flopped. Another reason is that a common used punishment by the emperor in the past is collective punishment, i.e. if someone is sentenced to death, all his/her relatives up to three upstream and three downstream, sometimes even all cousins, are also sentenced to death. If someone did escaped they would just change their surnames (and Chinese people change surnames relatively more frequently than we would think.) That's probably why a big-shot in the history book might have no offspring to be found nowadays.
- lormayna 10y agoFlorentine here. The owner of my company is one of them, he is from a very ancient and important family.
- lifeisstillgood 10y agoThis looks like brand longevity - the nobility has great brand name awareness, and as they come under financial threat there are plenty of investors willing to marry in to the name and provide new liquidity. I doubt all the rich families of 1300 survived but I also doubt that the winners never took outside investment
- internaut 10y agoYes, families of the past were a lot more like corporations today. House this or Clan that. It was basically GOT. The modern family must look weird from a historical perspective. Also in Japan men are often adopted into families to continue that line for the corporation. https://en.wikipedia.org/wiki/Japanese_adult_adoption https://en.wikipedia.org/wiki/Japanese_adult_adoption
- mcv 10y ago700 years since 1427? What century are we in again?
- otempomores 10y agoTodays rich familys tell todays peasants that hard work will get them there?