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"When regressing the pseudo-descendant’s earnings on pseudo-ancestor’s earnings, the results are surprising: the long-run earnings elasticity is positive, stati
by learn_more 8y ago
"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)."
So if your family was rich then, you probably make 5% more than than most people now. Nothing much to see here.
- ForHackernews 8y agoOver 600 years, that's still a surprising result!
- schnevets 8y agoI'm so grateful for the parent commenter who looked at the VoxEU source, because it helped put things into perspective. A 5% earning increase isn't too surprising, given that the land claims and other investments are still respected today. It's a bit like Fry's bank account on that early Futurama episode. Those 600 years were a battle between compounding interest and regional turmoil/uncertainty. It's pretty cool that the holdings still have a legacy while not stifling all social mobility.
- goofingaround 8y agoWhy do you think so? Given the magnitude of the result, the mechanism might be genetics rather than social immobility.
- femiagbabiaka 8y agoHow could someone be genetically predisposed to make more money?
- brixon 8y agoIt's been nurtured so long that it feels like nature.
- ikeboy 8y agoIQ is highly hereditable and has a higher correlation with income than the 5% here.
- vezycash 8y agoSoft skills, have been shown to be a higher predictor of income than IQ. You are right that something's been passed down - but it's not the genes. It's the social connection to: * Get jobs without applying for them. * To learn important economic news before anyone hears them. E.g. President bought 1200 Cuban cigar just before banning imports from CUBA. Read this: https://www.cigaraficionado.com/index.php/article/great-moments-kennedy-cuba-and-cigars-7840 https://www.cigaraficionado.com/index.php/article/great-mome... * To get contracts regardless of ones qualifications. I've read that Aristocrats ensure their kids have ivy league degrees to maintain a illusion of fairness. There's an article I read here on HN that says, Ivy league schools are successful because they select applicants who would be successful without them.
- ikeboy 8y agoIf genetics doesn't affect income, why is there a correlation between identical twins raised separately? See e.g. https://helda.helsinki.fi/bitstream/handle/10138/38881/HECER_DP364.pdf https://helda.helsinki.fi/bitstream/handle/10138/38881/HECER...
- verbify 8y agoSurnames are heritable through the male line only. Genes are heritable through both parents. Wealth is some societies is heritable mostly through the male line, and in other societies through both lines. Assuming that in the ~584 odd years from the study to the present day that 20 generations passed (average of 30 years per generation), the specific great-great-grandparent who passed on that name has roughly a 0.5^30 on that person (which is an infinitesimally small number). However, rich people usually marry rich people. It's likely these results aren't just direct inheritance, or direct genetics, but it shows stratification within Italian society.
- dannykwells 8y agoI think the story might be more in the variance rather than the mean. Sure, those in the 90th percentile make only a little more, what about the 99.99th percentile? My guess is that the ultra elite still have huge amounts of wealth and the statistic was diluted with a large sample set.
- nerdponx 8y agoYou could at least partially address this concern with a non-parametric model of wealth ranking instead of absolute wealth level.
- safgasCVS 8y agoaverages/median Hide too much. Better question is What is the probability of being in the 90th percentile of wealth conditional upon your ancestors being in the 90th percentile of wealth and compare that against the bottom 10th percentile? Edit: added ‘median’ for the ctrl-f keyboard warrior
- digitalzombie 8y ago> averages Hide too much. I had to read the article because of your comment. You're wrong. When competent researchers talk about salary/income they always do median because average doesn't account of skew like Bill Gates. If you do a ctrl+f with mean or average you won't find it. But if you do ctrl+f and search for median you'll find it.
- safgasCVS 8y agoSo You think what I said is somehow undone by avg vs median? Hahaha thx for making me laugh
- toasterlovin 8y agoAgree that average hides the distribution, but median is simply a specific percentile value (the 50th), just not the 90th.