quote:

---

It has always been good to have a rich or powerful father. Last week my Princeton colleague Alan Krueger wrote a column for The Times surveying statistical studies that debunk the mythology of American social mobility. "If the United States stands out in comparison with other countries," he wrote, "it is in having a more static distribution of income across generations with fewer opportunities for advancement."

---

I tried to find the Krueger column, but couldn't.
Here's the Krugman site, though:

The actual facts presented in the article, though, were consistent with other studies I’ve seen over the years and didn’t really surprise me. Nor did they seem to support the tag line that Krugman picked. (Actually, there were no facts presented at all with respect to comparisons between countries).

quote:

---

New studies by Bhashkar Mazumder of the Federal Reserve Bank of Chicago suggest that the similarity in income is even greater. Using Social Security records, he averaged fathers' earnings over 16 years (1970 through 1985) and sons' earnings over four years (1995 through 1998), and found that around 65 percent of the earnings advantage of fathers was transmitted to sons.

---

quote:

---

So that grandson (or granddaughter) mentioned previously could expect to earn 42 percent more than average. After five generations, the earnings advantage would still be 12 percent.

---

quote:

---

Furthermore, the degree of persistence across generations is strong for both rich and poor. Thomas Hertz of American University finds that a child born in the bottom 10 percent of families ranked by income has a 31 percent chance of ending up there as an adult and a 51 percent chance of ending up in the bottom 20 percent, while one born in the top 10 percent has a 30 percent chance of staying there and a 43 percent chance of being in the top 20 percent.

---

And then we take a turn…

quote:

---

Why is there such a strong connection between parents' socioeconomic status and their children's? A large part of the answer involves intergenerational transmission of cognitive ability and educational level.

---

quote:

---

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.

---

quote:

---

And I thought I read somewhere recently that your average Swede barely earns that of those in the poorest US state.

---

The New York Times Magazine article from a few weeks back (sorry, can't find the link) addressed that, I think.

The US is a country where 1% of the people own 40% of the wealth. This tends to mask the depth of poverty in which some of its citizens live.

quote:

---

Cognitive ability. Isn’t this exactly the -- much maligned -- Bell Curve thesis? (ie, the barriers aren’t so much institutional or structural or given to privilege as they are genetic). So what are we saying here?

---

Not necessarily. Cognitive ability also can refer to the tendency of rich households to offer better health in childhood, which has a direct bearing on brain development. I'm not a biologist or biochemist so I can't tell you what specifically is impacted in childhood development if lack of a nurturing and well-fed environment occurs to a child, but on balance I would suggest that poor nutrition and lack of a good familial environment would negatively impact future educational potential, which in turn feeds into a poor child likely remaining poor, especially given the rising "educational premium" during the 1990s rather than the falling one during the 1970s.

quote:

---

Kreuger is a former Clinton Labor Dept. economist who opposed Welfare Reform, is a big minimum wage enhancement advocate (actually arguing that it doesn’t impact joblessness)

---

Here's the first few lines of his actual cv:

quote:

---

Bendheim Professor of Economics & Public Policy, Department of Economics and Woodrow

Wilson School, Princeton University, July 1992-present.

Professor of Economics & Public Affairs, Department of Economics and Woodrow Wilson

School, Princeton University, July 1992-present.

Assistant Professor of Economics & Public Affairs, Department of Economics and Woodrow

Wilson School, Princeton University, 1987-1992.

Chief Economist, U.S. Department of Labor, August 1994 - August 1995.

Education

Harvard University, Ph.D., Economics, 1987
Harvard University, A.M., Economics, 1985
Cornell University, B.S., Industrial & Labor Relations, with Honors, 1983

Editorial Experience

Editor, Journal of Economic Perspectives, April 1996-present; co-editor, August 1995-March 1996
and April 1993-August 1994; Associate Editor, 1992-1993.

Board of Reviewing Editors, Science, 2001-present

Associate Editor, Quarterly Journal of Economics, 1992-1997.

Board of Reviewers, Industrial Relations, 1992-1996.

Co-editor, Economics Letters, 1992-1994.

Professional Affiliations

Research Associate, National Bureau of Economic Research, 1992-present; Faculty Research

Fellow, 1987-92.

Director, Industrial Relations Section, Princeton University, 2001-present. Acting

Director, Fall 1990, Research Associate, 1987-present.
Research Associate, Office of Population Research, Princeton University, 1993-present.

Research Fellow, IZA, Bonn Germany, 2000-present.

Research Associate, Center for Research on Health and Well-being, Princeton University, 2000-

present.
Research Associate, Institute for Policy Reform, 1993-1994.

Administrative Responsibilities

Director, Princeton University Survey Research Center, January 1993-present.

Director, Princeton University Industrial Relations Section, July 2001-present.

Director, National Bureau of Economic Research Program on Children's Economic Welfare, May

1993-August 1994.

Awards and Fellowships

Fellow, Center for Advanced Study in the Behavioral Sciences, Stanford University, 1999-2000.

Awarded David N. Kershaw Prize by Association for Public Policy and Management, November 1997.

Elected Fellow of Econometric Society, December 1996.

Teaching Prize, Woodrow Wilson School, Princeton University, Fall 1996.

Alfred P. Sloan Research Fellow in Economics, 1992-94.

NBER Olin Fellow in Economics, 1989-90.

---

quote:

---

n other words (notice the choice of presentation?) a child born in the bottom 10% -- and that’s really a bad situation -- has an even chance of joining the top 4 of 5; which is, at it’s worse, low middle-class. And, a child born in the top 10% -- which is a really good situation -- has a 57% chance of joining the same group!

---

Sorry SHH. You are taking serious liberties with these numbers and drawing completely erroneous conclusions.

The study says that if you are born in the lower 10%, then you have a 51% chance of rising no higher than the lowest 20%. This is not choice of presentation, this is the fact that the study found. This does not mean, as you say, that you therefore have a 49% chance of ending up anywhere at all in the top 80% as if it were all one happy family of equally distributed income above that mark.

We don't have the figures on hand, but the other 49% could easily be a 48% chance of getting into the 30% range, a 1% chance of getting into the 40% range, and a 0% chance (in terms of statistical significance) of ascending any higher.

As I say, we can't know, but I have no doubt in my mind that the number of people born in the bottom 10% who rise above the lowest 50% (who are not very prosperous, in the US) are statistically insignificant.

But recall the initial claim from Krugman:

quote:

---

It has always been good to have a rich or powerful father. Last week my Princeton colleague Alan Krueger wrote a column for The Times surveying statistical studies that debunk the mythology of American social mobility. "If the United States stands out in comparison with other countries," he wrote, "it is in having a more static distribution of income across generations with fewer opportunities for advancement."

---

First off, I didn’t see any data that ‘debunked’ anything. My read on the data suggests there’s a lot of churning. Others may think differently.

Secondly, the one featured study about mobility was from Thomas Hertz. As far as I can tell, he’s just some unknown professor. (A Google generated zip, and on the University site he doesn’t even have a resume up like most of his peers. So, he’s an unknown). Not that there’s anything wrong with that.

Thirdly, Kreuger, to his credit, points out the ‘inheritability’ and ‘cognitive ability’ factors, which, Doc’s above valid comments notwithstanding, run against the implied message of monied privilege from Krugman.

So here’s what stinks: Kreuger writes an article cherry-picking through some ambiguous research which, at best, presents more questions than answers (and even suggests a counter thesis), and then, with no data at all, he takes a huge leap to the conclusion that, “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”. Which Krugman then takes and runs with into his usual routine; which itself has its own spin. I’m sorry, but those dots do not seem to connect.

PS: Economic and financial analysis is what I do to make a living. You might be surprised just how easy it is to establish your desired conclusion and then construct an entirely legitimate set of conditions and data that support the conclusion. Anytime I see data presented in statistical groupings (eg, quintiles of the whole) or, even more so, percentage changes among those groupings, I immediately get suspicious because it’s all too easy to ‘mine’ for the desired presentation while omitting, intentionally or otherwise, a more obvious overall conclusion.

If this is the best Krugman can do, I remain unconvinced.

[ November 24, 2002: Message edited by: SHH ]

quote:

---

Anytime I see data presented in statistical groupings (eg, quintiles of the whole) or, even more so, percentage changes among those groupings,

---

Economists routinely "slice" the population up into quintiles or deciles and analyze percentage changes among them because it is instructive to approximate the smooth gradual changes from one income to the next by a series of stagewise progressions, especially if one wishes to avoid exhaustive discussions of the data and to focus on the general implications thereof.

Markov Chains, which you may be familiar with, are an excellent tool for analyzing changes in population distributions between income levels, and to some extent if you know that certain percentages from each decile move above or below, you can solve the system to get the other percentages.

However Markov chains get to be quite cumbersome if you must work with centiles (hundredths) rather than deciles (tenths), so the compromise as far as the data entry and linear algebra go, is to use the deciles and approximate the movements between them by stagewise increments, for example, 2% of people from the 10th decile move to the first decile, and, say, 3% of people from the first decile move to the 10th.

You then set-up your transition matrix and then solve it.

This is, of course, a huge oversimplification given that the Markov chain theory I studied only handles populations which do not increase or decrease as a whole and not changing populations, but the principle is valid even for changing populations.

So what I'm driving at is that the true likelihood of a person in the bottom decile moving straight up to the top decile is not simply 100 percent minus the percentage which remains in the decile.

[ November 24, 2002: Message edited by: DrConway ]

Although I studied the Markov Chain and even scored well on the test, I rarely find these sophisticated techniques applicable in the real world because the data is either corrupted or unavailable. An economist is, after all, a scientist who observes what actually works in practice and then tests to see if it works in theory.

The more basic problem with statistical income groupings is that there is no negative income and maximum income is infinity; so the range of context is boxed. (We can all float up and STILL bitch about disparities). This obvious flaw is lack of context. If the upper quintile was $1B/yr and the lower $200K/yr and there were an x% change from one to the other, would that be a crisis? Or, to turn it on its head, if my neighbor and I are both making $40K/yr in 2001 and then she’s making $60K/yr in 2002, how was I hurt exactly? (Other than Pride and Envy, that is.)

Seven Deadlies

[ November 24, 2002: Message edited by: SHH ]

quote:

---

Kreuger writes an article cherry-picking through some ambiguous research which, at best, presents more questions than answers (and even suggests a counter thesis), and then, with no data at all, he takes a huge leap to the conclusion that, “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”

---