The Economics of the Great Gatsby Curve: a picture is worth a thousand words

A quick post to thank Scott Winship for his response to my feedback on his original article. His comments are now on the National Review web site.

But I am afraid they do not advance the discussion. I addressed all of the technical issues in my original paper (see the appendix). The internationally comparable estimates I offered account for these concerns.

But let me repeat the picture of the Great Gatsby Curve using the most recent information on the largest available set of countries.

Does anything said in this debate overturn the positive relationship? Is the suggestion really that this relationship would be reversed? I don’t think so.

We might argue about the exact slope but so what: the fact that this relationship is also found when other measures of generational mobility are used—like the correlation in years of education where there are less concerns about measurement issues—suggests it is robust.

The best part of Scott’s response is the suggestion that we should start thinking about how inequality, and what kind of inequality, influences opportunity. And that is why I suggested those interested in public policy give the Haskins – Sawhill book a careful read. It is written in a bi-partisan way, faithful to the evidence, and linked to policy levers.

The contribution of the Great Gatsby Curve is to make these sorts of issues the subject of careful consideration and debate.

[Update: this post was updated with a revised figure on January 27, 2012, and detailed source information is provided in the updated version of the original post available here.]


16 thoughts on “The Economics of the Great Gatsby Curve: a picture is worth a thousand words

  1. Fascinating graph.

    An obvious conjecture would be that the story behind the countries with high social mobility is primary/secondary education. Is that borne out by the data?

    1. That is certainly part of the story in many countries, but each country has its own story related not just to social investments like education and health but also family function and the nature of the labour market. My own sense is that this should be the starting point for more detailed institutional studies along these three dimensions, probably focused on pair-wise comparisons. My co-authors and I attempt to do this in a limited way with a Canada-US comparison.

    1. I heard about it when it came out, but have never gotten around to reading it. My understanding is that they use a version of this curve. Is that right?

      I also understand that they try to tell a causal story between inequality and well-being, but was not certain how convincing it is.

      Do you have insights?

  2. Hmm, that’s a bit weird, is the Gini coefficient of the US really at about 40 (=0.4) and that of Germany even below 30? Those numbers have been reported with higher values in the recent years. The US Census Bureau put the coefficient for the US at 0.468 in 2009. So, excuce me pls, but are your 2011 numbers based on a different data set or calculation, or did you make a mistake with naming the axis in your graph, maybe? Not that that’s overly important, the message still stays the same, of course.

    1. Looking into your “chasing the dream” paper, I see that’s where the mobility estimates come from. And in your earlier post about the Gatsby Curve you explain that the Gini coefficents are from the 80s, for proper intergenerational comparison. Ok, so no mislabeling of the axis.

      But, sorry, imho you should mention the vintage of the data (and preferrably the source, too) in the graph, instead of only writing “Miles Corak (2011)”, which leaves the impression that this is the current situation regarding inequality. It’s how it was in the 1980s and it has become worse since then! This graph will probably gain a lot of attention, and not only among scientists, so please don’t accidentially understate how dire the inequality problem has become nowadays!

  3. Congratulations Miles on having the Gatsby chart picked up by the White House and used in the 2012 Economic Report of the President (pg. 177).

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