When comparing many countries, not just the rich but also across the entire globe, researchers have consistently found that the higher the level of income inequality about a generation ago, the more strongly children’s adult prospects are tied to their family backgrounds. This relationship between higher inequality and lower social mobility has become known as The Great Gatsby Curve.
Economic theory, statistical measurement, and public policy have all been most constructively informed by this picture when they explore
What kind of inequality matters?
What kind of social mobility do we care about?
Which cross-country comparisons are most judicious, from which policy learning is best informed?
Watch this interview produced by the Institute for New Economic Thinking ,who gave me the opportunity to explain what the Great Gatsby is, and highlight how it offers a constructive framework for deeper conversations about the relationship between inequality and social mobility.
We should care about inequality because it has the potential to shape opportunities for the next generation. My presentation at the European Investment Bank offers a framework for thinking about this relationship, and for understanding why the adult outcomes of children are more closely tied to their family background—with the poor raising the next generation of poor adults, and the rich more likely to see their children to be rich in adulthood—in countries with greater inequality.
Differences in families, labour markets, and public policy all play a role in understanding why the United States and the United Kingdom have relatively less social mobility than many other countries.
My meeting with senior Treasury officials began with the nonchalantly stated advice “In the event of an earthquake we like to get under the tables and hold on to the legs so that they don’t get away from us.”
As a Canadian, albeit one who has visited New Zealand three times in the past decade, I naively took this as a metaphor for the earth-shattering ideas the public service expects from its consultations with outside experts.
I assure you that the dozen or more participants gathered to discuss how the government might contribute to building “a more inclusive New Zealand” offered advice that was far from ground breaking.
It is sometimes said that think tanks are good for democracy; indeed the more of them, the better. If there are more ideas in the public arena battling it out for your approval, then it’s more likely that the best idea will win, and that we will all have better public policies. But intuitively many of us have trouble believing this, have trouble knowing who is being truthful, and don’t know who to trust.
This battle of ideas, studies, and statistics has the potential to make many of us cynical about the whole process, and less trusting of all research and numbers. If a knowledgeable journalist like the Canadian Kady O’Malley expresses a certain exasperation that think-tank studies always back up “the think-tank’s existing position,” what hope is there for the rest of us? A flourishing of think tanks just let’s politicians off the hook, always allowing them to pluck an idea that suits their purposes, and making it easier to justify what they wanted to do anyways.
Maybe we shouldn’t be so surprised that think tanks produce studies confirming their (sometimes hidden) biases. After all this is something we all do. We need to arm ourselves with this self-awareness. If we do, then we can also be more aware of the things in a think tank’s make-up that can help in judging its credibility, and also how public policy discussion should be structured to help promote a sincere exchange of facts and ideas.
I was very pleased to speak at the 2014 International Policy Conference on the theme “Inequality: Defining our Time?” held at Millersville University on November 6th and 7th, 2014. I spoke on the very kind invitation of Professor Ken Smith and the Department of Economics at Millersville University.
My talk was called “Inequality, Life Chances, and Public Policy: How to Slide Down the Great Gatsby Curve,” and you can watch it here if you have an interest.
The discussant, who begins speaking at about 47 minutes into the talk, is Professor Antonio Callari of Franklin and Marshall College. He offered some interesting remarks about how the theme of the talk relates to developments in Lancaster PA, where the conference was held.
[ One silly grammatical error that I wish I could take back occurs when I say “the more statistically significant among you,” when my intention was “the more statistically savvy among you.” ]