New Studies: Income Inequality Not Caused by Market or Cured by Socialism

Often, social science researchers will jump to conclusions that their data do not warrant. But more often, media and pundits misunderstand or twist (or simply don’t read and make up) findings to support a conclusion that the data do not warrant. 

So, I read a post by Dylan Matthews at WonkBlog, discussing some new findings on social mobility. The title gives away his conclusion – “How your last name will doom your descendants centuries from now.” Social structure inequalities rule, and the government can and should equalize. It turns out, however, that the papers provide some rather devastating evidence against the Progressive project.

Here’s Matthews:

It’s well known that there’s a huge correlation between the earnings and social status of a person and the earnings and social status of that person’s parents. That correlation varies a lot by country. It’s very high in the United States, where there’s widespread economic inequality, and in Britain, which has a formal class system. But it’s much lower in Scandinavia.

Now, two researchers argue that the link is bigger than we thought — even in Scandinavia. . .

. . .There are a few takeaways here. One is that family status could be more powerful than past measurements have suggested. Clark and Cummins note that their estimates suggest that family background has a much bigger impact on social status than previous studies have found. Another is that genetics likely has little to do with those results. Clark and Cummins studied surnames across eight generations. So, two people with the same surname in 1800 and 2011 would only share 0.58

= 0.4 percent of their DNA.And perhaps the most bracing revelation from the studies is that we haven’t gotten that much better at promoting upward mobility. . . At that rate, we won’t wipe out inheritance-based inequality for another 600 years.

So, so much wrong here, its difficult to know where to begin. Dylan sets up the impression that economic and other structures are most to blame for inequality with his comparison of the unequal capitalist and social structures in the U.S. and Britain to the more egalitarian Scandanavian countries. And then he uses papers from Gregory Clark and Neil Cummins and Gregory Clark (all by his lonesome) to bolster this impression.

A few big problems:

  1. Dylan gets genetics and heritability cartoonishly wrong. People do not mate randomly, especially in class-system societies and for people with “unusual surnames,” who would be more likely to come from a different cultural background than those with common surnames. He should read up on assortative mating. In class-based societies, what types of people are most likely to break the class barrier? Extraordinarily talented and intelligent individuals in the lower class. The persistence of differential life outcomes in human lineages certainly can be due in large part to persistent differences in genetics. 

  2. Family “status” does not equal family “background.” The Clark/Cummins paper uses the term family “environment,” a better term, and makes clear that this is separate from raw material or social advantages. Family environment can mean parenting and culture.
  3. The conclusions of both papers is that radical equalitarian social engeneering such as has been implemented for generations now in places like Sweden has not worked and is unlikely to work in the future. Dylan, however, somehow gets from all of this that we just need better Progressive social engineering.

From the Clark/Cummins paper (emphasis added):

A further surprise is that the rate of regression to the mean for both wealth and other status measures changes little over time, even though between 1800 and 2011 there have been substantial institutional changes in England. Wealth and income was lightly taxed, or not taxed at all, for most of the nineteenth century, but heavily taxed for much of the late twentieth century. Nineteenth century Oxford and Cambridge were exclusive clubs with strong ties to particular private high schools. By the 1940s they began a process of opening up admissions to students from a wider variety of educational backgrounds. And state financial support for students from poorer backgrounds became considerable. 

The modest effects of major institutional changes on social mobility implies that the important determination of persistence is transmission within families – either through genes or family environments – and that there may be modest prospect of increasing mobility through state action.

From the Clark paper (emphasis added):

Such enhanced mobility in a country like Sweden would suggest that institutional arrangements – the support for public education, for example, or the progressive taxation of wealth – play a vital role in determining rates of social mobility. The implication is that the lower rates of social mobility observed in countries such as England or the USA represent a social failure. The life chances of the descendants of high and low status ancestors can be equalized at low social cost. Sweden is, after all, one of the richest economies in the world.

Here I show, however, that in Sweden true intergenerational mobility rates for measures of status such as occupation or education are much lower, and in the modern era do not exceed the rates of the eighteenth century. Whatever the short run mobility of income, or years of education, there is considerable persistence of status – measured through wealth, education and occupation – over as many as 10 generations in Sweden.