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I'll repeat my usual complaint about the 2009 intergenerational mobility survey cited in the article as demonstrating the U.S. has lower income mobility than, s

I'll repeat my usual complaint about the 2009 intergenerational mobility survey cited in the article as demonstrating the U.S. has lower income mobility than, say, Denmark. It's a survey of relative mobility, which in a society with a much narrower ("equal") income distribution will show more "mobility" even with much smaller absolute income changes. Suppose the middle 80% of earners in nation A make between $50,000 and $70,000, while the middle 80% of nation B make between $20,000 and $100,000. If across one generation a father in nation B making $50,000 has a son who makes $100,000, that represents substantially less "mobility", as this survey defines it, than a father in nation A making $50,000 who has a son that makes $70,000. The difference between income distributions in Denmark and the U.S. are likely not this stark, but I bet it's significant. AFAIR the survey makes no attempt to account for this.

_delirium 13y ago
That's a fair criticism. It's certainly true that given some assumptions about random income changes, there's more mobility in narrower income distributions than wider ones without anything "real" happening. I do think it depends on what the study is trying to show, though, which in part depends on where in the web of arguments and counterarguments in falls. One very common argument I hear from Americans is something like this: it's true that (some of) Europe has lower income inequality than the US. However, Europe's inequality is more entrenched and hereditary, and therefore actually worse than America's in social effects, even though in magnitude it seems less bad. The difference between wealthier and poorer parts of society, this argument goes, is higher in America, but this is not as harmful because the divergence is just based on what you make of yourself and changes generation to generation, rather than being based on rigid notions of class or heredity like in Europe and persisting across generations. So the European rich man might only be 10x as rich as the poor man, while the American one is 100x, but the European has this 10x difference predestined from birth, whereas the American's 100x arises only during life. This study seems to show that particular narrative doesn't quite go through: the U.S. has a larger class divide and it persists across generations more than Europe's smaller class divide does. The second part may well be redundant, as you point out (it might only persist more because it's larger), but that doesn't necessarily make the problem any less bad.
- twoodfin 13y ago
  My point is that I don't think it shows that, and just because the U.S. is such an "unequal" society. Moving from the 40th income percentile to the 20th in the U.S. represents a major absolute gain in income and presumably quality of life. I suspect it's not as dramatic a change in Denmark along either measure. To the survey, they're the same magnitude of change, and there's no accounting for the more impressive absolute change in the American case.
  - _delirium 13y ago
    But flipped the other way around, the more impressive American absolute change is only an artifact of its larger inequality. Danes are not moving around between $15k and $40k incomes, because nobody makes a $15k income (minimum wage is $38k/yr). So that whole bit of the "American dream" mobility has just been cut off, with no loss to society... Relative position also matters quite a bit. In Denmark, you can be born on the lower end of society, and end up as one of the country's elites, with greater probability than is the case in the US. I take this as the "Horatio Alger" myth: you are born to a dock worker, and end up President of the USA, or CEO of a Big Company, a unique trajectory only possible in America. But you are actually more likely to make this dockworker-to-PM or dockworker-to-CEO transition in Denmark, contrary to the myth! Put differently, who constitutes the elite in Denmark is less determined by parentage, whereas the American political/economic/cultural elite is more heredity-determined, because the differences from birth are too large to overcome. I think this question of which stratum of the previous generation's families this generation's CEOs/etc. come from has significant implications for society: if it's only from last generation's top-20%, this produces a multi-generational elite, which is generally bad. It could well be that one way to combat the emergence of a multi-generational elite is simply to reduce income inequality.
    - judk 13y ago
      Hmm. Steve Jobs Sergey Brin Jeff Bezos David Koch Michael Dell Bill Clinton
      - 13y ago
rcthompson 13y ago
Page 82 of the study [1] has two maps: one for absolute upward mobility and one for relative upward mobility. They look mostly the same. I guess you're talking more about comparing the U.S. to Denmark, but as the maps show (and the linked article mentions), taking the U.S. as a whole is absurd anyway. [1] This one: http://obs.rc.fas.harvard.edu/chetty/mobility_geo.pdf http://obs.rc.fas.harvard.edu/chetty/mobility_geo.pdf
- twoodfin 13y ago
  I was referring to this survey on international intergenerational mobility, not the U.S. specific one: http://cee.lse.ac.uk/ceedps/ceedp111.pdf http://cee.lse.ac.uk/ceedps/ceedp111.pdf
  - rcthompson 13y ago
    Ah, I see. I didn't look closely at that one. I was more interested in the differences-within-USA aspect.
silvestrov 13y ago
Accounting for the difference would be an advantage for Denmark: the poor in Denmark gets much more money than the poor in the US in addition to having free healthcare. To be poor in Denmark [1]: 36 year old woman on welfare, single, 1 kid at home. She gets $2884 per month AFTER taxes, free healthcare. After paying for rent, utilities, internet, TV licence, dog food and vet bills, kids football expenses, medicine, private debts, and cigarettes, she has (by her own calculation) $917 left over each month for food, clothing and housekeeping. She has been on welfare for the last 20 years. This example made a huge media storm in Denmark because she gets more money than those working minimum-wage jobs. 1: http://cphpost.dk/news/poverty-media-stunt-backfires.153.html http://cphpost.dk/news/poverty-media-stunt-backfires.153.htm...
- dalke 13y ago
  My first thought is "sounds like it's time to raise the minimum wage." Then I wondered. Should someone who is physically or mentally unable to work always, for the rest of their entire life, get less than minimum wage? I mean, an employee at McDonald's takes home, what, $28,000 a year post-tax [1]? That's $2,300/month, which isn't much below the $2,884 you quoted. Except most McDonald's employees have the ability to get jobs in the future which pay much more. So shouldn't the debate include not only a comparison to low-end jobs but the average lifetime earnings? [1] http://www.cjr.org/the_audit/the_minimum_wage_and_the_danis.php http://www.cjr.org/the_audit/the_minimum_wage_and_the_danis....
  - OoTLink 13y ago
    Why should someone that is mentally/physically unable to contribute to society live in poverty?
    - dalke 13y ago
      Mmm, you changed my wording from "unable to work" to the much more ambiguous "unable to contribute to society." But otherwise, yes. Given the massive improvements in efficiency over the last 200 years, why should the relatively small number of people who are unable to work be forced to live in poverty?
Retric 13y ago
Denmark's average income is higher than the US so the comparison does not favor the US. Basically, there poor make more money than our poor. And there mobility is higher so moving to denmark looks like a great idea for the average American who wants to get ahead. Denmarks per capita GDP 56,210.23 USD USA per capita GDP 49,965.27 USD. They also have lower per capita public debt and universal healthcare. Largely because they don't waste as much money on useless military expenditures and a pointless war on drugs / terror. Edit: US government spending 40% of GDP, Denmark's is 57% GDP so there still spending significantly more. PS: Denmark also had a much higher GDP growth 2000-2013 than the US granted lower last year.
- alexeisadeski3 13y ago
  Your point is irrelevant to this discussion.
- spikels 13y ago
  The Danish GDP number you quote is based on the Danish Kroner to US Dollar exchange rate. This does not take into account the much higher cost of living in Denmark. This is why it is generally preferred to use Purchasing Power Parity (PPP) to compare incomes across countries. This tells a very different story: Per Capita GDP (PPP) 2012 USA 51,704 USD Denmark 37,324 USD So after taking into account the much higher cost of living in Denmark the per capita GDP in the US is actually 38% higher! http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_... Edit: Accidentally hit submit before I was ready to post...
  - Retric 13y ago
    Your numbers are even more in favor of Denmark. (Denmarks 51,704 USD vs USA 37,324 USD) so what's your point?
    - spikels 13y ago
      Sorry to mislead you. Accidentally hit submit and had the USA and Denmark swapped. Numbers are correct now. Delete your post if you like...
rektide 13y ago
The swarths of pure white just left of center indicate the problem exactly. These are not some ideal perfect American dream-land. Follow the graph and one might think Nebraska, the Dakotas, Iowa, Minnesota were some kind of dream land. The graph measures who gets to the top quintile (1/5). Yet the article only mentions quintile once, in nondescript passing.
ronaldx 13y ago
I feel like you've defined the point of the mobility study, so I don't believe it ought to be accounted for. The person who earns $100,000 in nation A can now comfortably afford a top 10% lifestyle in that country. For example, the very best housing of the country is reserved for them (if they want it: they have first dibs). They now have significantly more economic power than their parents had, at least within their country. That would seem to be less true in nation B - person B might have observed their objective wealth to have increased similarly to person A, but they have been less able to change their relative status in the world and are less able to move up any ladder-based system (I propose that land ownership/housing is typically one such system) and are more dependent on factors outside of their control.

_delirium 13y ago

That's a fair criticism. It's certainly true that given some assumptions about random income changes, there's more mobility in narrower income distributions than wider ones without anything "real" happening. I do think it depends on what the study is trying to show, though, which in part depends on where in the web of arguments and counterarguments in falls. One very common argument I hear from Americans is something like this: it's true that (some of) Europe has lower income inequality than the US. However, Europe's inequality is more entrenched and hereditary, and therefore actually worse than America's in social effects, even though in magnitude it seems less bad. The difference between wealthier and poorer parts of society, this argument goes, is higher in America, but this is not as harmful because the divergence is just based on what you make of yourself and changes generation to generation, rather than being based on rigid notions of class or heredity like in Europe and persisting across generations. So the European rich man might only be 10x as rich as the poor man, while the American one is 100x, but the European has this 10x difference predestined from birth, whereas the American's 100x arises only during life. This study seems to show that particular narrative doesn't quite go through: the U.S. has a larger class divide and it persists across generations more than Europe's smaller class divide does. The second part may well be redundant, as you point out (it might only persist more because it's larger), but that doesn't necessarily make the problem any less bad.

twoodfin 13y ago
My point is that I don't think it shows that, and just because the U.S. is such an "unequal" society. Moving from the 40th income percentile to the 20th in the U.S. represents a major absolute gain in income and presumably quality of life. I suspect it's not as dramatic a change in Denmark along either measure. To the survey, they're the same magnitude of change, and there's no accounting for the more impressive absolute change in the American case.
- _delirium 13y ago
  But flipped the other way around, the more impressive American absolute change is only an artifact of its larger inequality. Danes are not moving around between $15k and $40k incomes, because nobody makes a $15k income (minimum wage is $38k/yr). So that whole bit of the "American dream" mobility has just been cut off, with no loss to society... Relative position also matters quite a bit. In Denmark, you can be born on the lower end of society, and end up as one of the country's elites, with greater probability than is the case in the US. I take this as the "Horatio Alger" myth: you are born to a dock worker, and end up President of the USA, or CEO of a Big Company, a unique trajectory only possible in America. But you are actually more likely to make this dockworker-to-PM or dockworker-to-CEO transition in Denmark, contrary to the myth! Put differently, who constitutes the elite in Denmark is less determined by parentage, whereas the American political/economic/cultural elite is more heredity-determined, because the differences from birth are too large to overcome. I think this question of which stratum of the previous generation's families this generation's CEOs/etc. come from has significant implications for society: if it's only from last generation's top-20%, this produces a multi-generational elite, which is generally bad. It could well be that one way to combat the emergence of a multi-generational elite is simply to reduce income inequality.
  - judk 13y ago
    Hmm. Steve Jobs Sergey Brin Jeff Bezos David Koch Michael Dell Bill Clinton
    - 13y ago

rcthompson 13y ago

Page 82 of the study [1] has two maps: one for absolute upward mobility and one for relative upward mobility. They look mostly the same. I guess you're talking more about comparing the U.S. to Denmark, but as the maps show (and the linked article mentions), taking the U.S. as a whole is absurd anyway. [1] This one: http://obs.rc.fas.harvard.edu/chetty/mobility_geo.pdf http://obs.rc.fas.harvard.edu/chetty/mobility_geo.pdf

twoodfin 13y ago
I was referring to this survey on international intergenerational mobility, not the U.S. specific one: http://cee.lse.ac.uk/ceedps/ceedp111.pdf http://cee.lse.ac.uk/ceedps/ceedp111.pdf
- rcthompson 13y ago
  Ah, I see. I didn't look closely at that one. I was more interested in the differences-within-USA aspect.

silvestrov 13y ago

Accounting for the difference would be an advantage for Denmark: the poor in Denmark gets much more money than the poor in the US in addition to having free healthcare. To be poor in Denmark [1]: 36 year old woman on welfare, single, 1 kid at home. She gets $2884 per month AFTER taxes, free healthcare. After paying for rent, utilities, internet, TV licence, dog food and vet bills, kids football expenses, medicine, private debts, and cigarettes, she has (by her own calculation) $917 left over each month for food, clothing and housekeeping. She has been on welfare for the last 20 years. This example made a huge media storm in Denmark because she gets more money than those working minimum-wage jobs. 1: http://cphpost.dk/news/poverty-media-stunt-backfires.153.html http://cphpost.dk/news/poverty-media-stunt-backfires.153.htm...

dalke 13y ago
My first thought is "sounds like it's time to raise the minimum wage." Then I wondered. Should someone who is physically or mentally unable to work always, for the rest of their entire life, get less than minimum wage? I mean, an employee at McDonald's takes home, what, $28,000 a year post-tax [1]? That's $2,300/month, which isn't much below the $2,884 you quoted. Except most McDonald's employees have the ability to get jobs in the future which pay much more. So shouldn't the debate include not only a comparison to low-end jobs but the average lifetime earnings? [1] http://www.cjr.org/the_audit/the_minimum_wage_and_the_danis.php http://www.cjr.org/the_audit/the_minimum_wage_and_the_danis....
- OoTLink 13y ago
  Why should someone that is mentally/physically unable to contribute to society live in poverty?
  - dalke 13y ago
    Mmm, you changed my wording from "unable to work" to the much more ambiguous "unable to contribute to society." But otherwise, yes. Given the massive improvements in efficiency over the last 200 years, why should the relatively small number of people who are unable to work be forced to live in poverty?

Retric 13y ago

Denmark's average income is higher than the US so the comparison does not favor the US. Basically, there poor make more money than our poor. And there mobility is higher so moving to denmark looks like a great idea for the average American who wants to get ahead. Denmarks per capita GDP 56,210.23 USD USA per capita GDP 49,965.27 USD. They also have lower per capita public debt and universal healthcare. Largely because they don't waste as much money on useless military expenditures and a pointless war on drugs / terror. Edit: US government spending 40% of GDP, Denmark's is 57% GDP so there still spending significantly more. PS: Denmark also had a much higher GDP growth 2000-2013 than the US granted lower last year.

alexeisadeski3 13y ago
Your point is irrelevant to this discussion.
spikels 13y ago
The Danish GDP number you quote is based on the Danish Kroner to US Dollar exchange rate. This does not take into account the much higher cost of living in Denmark. This is why it is generally preferred to use Purchasing Power Parity (PPP) to compare incomes across countries. This tells a very different story: Per Capita GDP (PPP) 2012 USA 51,704 USD Denmark 37,324 USD So after taking into account the much higher cost of living in Denmark the per capita GDP in the US is actually 38% higher! http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_... Edit: Accidentally hit submit before I was ready to post...
- Retric 13y ago
  Your numbers are even more in favor of Denmark. (Denmarks 51,704 USD vs USA 37,324 USD) so what's your point?
  - spikels 13y ago
    Sorry to mislead you. Accidentally hit submit and had the USA and Denmark swapped. Numbers are correct now. Delete your post if you like...

rektide 13y ago

The swarths of pure white just left of center indicate the problem exactly. These are not some ideal perfect American dream-land. Follow the graph and one might think Nebraska, the Dakotas, Iowa, Minnesota were some kind of dream land. The graph measures who gets to the top quintile (1/5). Yet the article only mentions quintile once, in nondescript passing.

ronaldx 13y ago

I feel like you've defined the point of the mobility study, so I don't believe it ought to be accounted for. The person who earns $100,000 in nation A can now comfortably afford a top 10% lifestyle in that country. For example, the very best housing of the country is reserved for them (if they want it: they have first dibs). They now have significantly more economic power than their parents had, at least within their country. That would seem to be less true in nation B - person B might have observed their objective wealth to have increased similarly to person A, but they have been less able to change their relative status in the world and are less able to move up any ladder-based system (I propose that land ownership/housing is typically one such system) and are more dependent on factors outside of their control.