Random commentary and senseless acts of blogging.
The first Republican president once said, "While the people retain their virtue and their vigilance, no administration by any extreme of wickedness or folly can seriously injure the government in the short space of four years." If Mr. Lincoln could see what's happened in these last three-and-a-half years, he might hedge a little on that statement.
Prisoners of Azkaban
Monday, November 18, 2002
Here's another US - Sweden economic comparison that, for some reason, Glenn neglected to blog: (link from Brad Delong)
It seems increasingly apparent that the secret to success is to have a successful parent. Consider some prominent examples: George H. W. Bush and George W. Bush; Bobby Bonds and Barry Bonds; Henry Fonda and Jane Fonda; Estée Lauder and Ronald Lauder; Julio Iglesias and Enrique Iglesias; Sam Walton and Jim, John, S. Robson and Alice Walton.
As more recent and better data have become available, economists have marked up their estimate of the impact of parents' socioeconomic status on their children's likelihood of economic success.
It turns out that the famous line attributed to Andrew Carnegie — "from shirt-sleeves to shirt-sleeves in three generations" — is an understatement. Five or six generations are probably required, on average, to erase the advantages or disadvantages of one's economic origins.
This represents a marked departure from past thinking. In the 1980's, when Gary S. Becker of the University of Chicago pioneered the economic theory of intergenerational transmission of economic status, it was believed that the correlation between a father's and son's income was only around 0.15 — less than half the correlation between fathers' and sons' heights.
The early studies suggested that if a father's income was twice the average, his son's expected income would be 15 percent above average, and his grandson's just 2 percent above average. This is fast "regression to the mean," a concept Sir Francis Galton used to describe the progression of offspring toward the average height.
Landmark studies published by Gary Solon of the University of Michigan and David J. Zimmerman of Williams College in The American Economic Review a decade ago, however, led economists to revise substantially upward the estimate of the similarity of fathers' and sons' incomes. They noted that income fluctuated for idiosyncratic reasons from year to year — an employee could lose a job, for example — so estimates that depended on a single year were based on "noisy" data. Also, the samples previously analyzed represented only a narrow slice of the population at different points in individual careers. These factors caused the correlation in annual incomes to understate the correlation in "lifetime" incomes.
Averaging earnings over five years produced a correlation of around 0.40 for fathers' and sons' earnings — the same as the correlation between their heights. If people's incomes were represented by their heights, the similarity in income between generations would resemble the similarity observed in the heights of fathers and sons....
Perhaps the only legitimate use of the intergenerational correlation in income is to characterize economic mobility. The data challenge the notion that the United States is an exceptionally mobile society. If the United States stands out in comparison with other countries, it is in having a more static distribution of income across generations with fewer opportunities for advancement.
Anders Björklund of Stockholm University and Markus Jäntti of the University of Tampere in Finland, for example, find more economic mobility in Sweden than in the United States. Only South Africa and Britain have as little mobility across generations as the United States.