I read an interesting article today at MSN Money. It made reference to something called “The Great Gatsby Curve” that basically indicated that higher levels of income inequality are correlated to lower levels of economic mobility across generations of families.
In other words, the family income level you grow up in is a major indicator of the family income level you yourself will be a part of as an adult. Poor children tend to become poor adults, and rich children tend to become rich adults. Of course, this is nothing new. I’ve read of similar studies in the past that point to the same conclusion. I even wrote a post probably a year or so ago about a study that showed that poor high school students with high SAT scores went on to earn a college degree at a lower rate than rich high school students with only average SAT scores.
I’ve always been interested in this topic because I always felt like I was one of those “poor kids” growing up. We had periods of time where my family was on WIC, free lunches and textbook rental at school, etc. While I can look back and say that my family was never quite poverty-level, we were definitely “working class”. But, I’m actually one of the exceptions in that I went to college, then went on to earn my MBA, and I would put my current family as right smack dab in the middle of “middle class”. So, it is certainly still possible to move up the economic ladder. But I always wonder what exactly it is that allows some people to climb the ladder and others to remain in the same place.
Even in my immediate family growing up, I look back and wonder about this. There were four of us kids in the family, and every one of us are now adults ranging from 29 years old to 19 years old. It’s definitely a tale of two cities. Two of us went on to college and graduated. The other two barely graduated high school. Two of us are driven to achieve, to improve our situation and make better lives for ourselves. The other two are kind of stuck, lacking ambition, without the drive to make things better.
Family Economics vs. Internal Characteristics
It always makes me wonder just how much economic mobility is really based on your family’s income and how much it’s really based on personal characteristics and traits (regardless of family income). To an extent, I think it’s a cop-out for people to say “I grew up in a poor family, and that’s why I’m poor. I didn’t have a choice”. But again, I can definitely see how it plays a role. Maybe if my family had more resources growing up, my other two siblings could have gotten extra help to nudge them toward a more successful future. On the flip side, I can definitely see how it’s fairly easy for the rich to stay rich. With more family resources, they are able to devote more to the children to help them get through difficulties and provide opportunities for learning and development.
What can we do about it?
All this leads to the question: What can we do enable greater economic mobility? We already have a number of social programs aimed at helping the poor. While some kids are able to really take advantage of these things and make a better life for themselves, the results are definitely mixed. I don’t have the answer. I know that simply spending more tax dollars on more government programs probably isn’t going to solve the issue. Even among poor high school students that earn full scholarships to college, their college graduation rate is substantially lower than higher-income students earning similar high school grades. Money alone isn’t the answer, though I’m not sure what exactly the answer is…
What do you think? Is there a way to promote increased economic mobility? Are current social programs doing enough? Do we need more, and if so what kind? Is promoting economic mobility even something we should be striving for?