Twin peaks of intergenerational mobility

There is a lot of news about economic mobility from recent weeks. Some of it draws from Pew’s Economic Mobility Project. Not as recently, there was an excellent review and analysis by Emily Beller and Michael Hout in the Future of Children a few years ago. In between, I somehow missed a collection of economic analyses in a book titled, Unequal Chances: Family Background and Economic Success, edited by Samuel Bowles, Herbert Gintis, & Melissa Osborne Groves.

The first chapter is posted free, and it includes a good introduction to the statistical and conceptual issues that arise when trying to understand patterns of mobility across generations. It includes a discussion of heritability, genetics, IQ and the like, which is quite approachable to the reader who is ready to think about decomposing correlations.

One good example regarding genetic heritability of traits that determine income: race in South Africa, which is almost entirely inherited (since there’s very little interracial marriage) and has a huge effect on income, but the effect of which is still social/environmental, not “natural.”

Anyway, I like this “twin peaks” figure, which shows the relationship between parent and child family income decile:

Probability of offspring attaining given income decile, by parents’ income deciles, United States. Based on total family income for black and white participants in the Panel Study of Income Dynamics who were born between 1942 and 1972, and their parents. The income of the children was measured when they were aged 26 or older, and was averaged over all such years for which it was observed. The number of years of income data ranged from 1 to 29 with an average of 11.5; the median year of observation was 1991. Parents’ income was averaged over all observed years in which the child lived with the parents. The number of years of income data ranged from 1 to 27 with an average of 11.9; the median year of observation was 1974. The simple age adjusted correlation of parents’ and children’s incomes in the data set represented in the figure is 0.42.

So, 30% of children from the top decile stay there (point D), 32% of children from the bottom decile stay there (C), while the odds of making it from the top to the bottom, or vice versa, are both less than 2% (A and B).

There is a nice symmetry to the figure, but it’s important to know that what’s happening up and down the distribution is highly varied, according to the analyses in the book. For example, at the top there is a lot of transmitted wealth. At the bottom there are a lot of health crises and premature deaths, including from violence. And the bottom is much stickier for Black children than for Whites.

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