From: Chris Rasch (crasch@openknowledge.org)
Date: Tue Feb 20 2001 - 01:17:30 MST
Max More wrote:
> The figures for social mobility anywhere are suspect, unless they give
> dynamic rather than static data. (This has often not been the case.) The
> overall composition might look static if about the same percentage remain
> in specified groups, but you may find that the individual in those groups
> change greatly over time. Contrary to what you suggest here, I believe this
> is often the case in the US. I've seen studies to this effect, but cannot
> remember where either!
>From the home page of
Professor Steven G. Horwitz
Department of Economics
St. Lawrence University
http://it.stlawu.edu/shor/Good/myths.htm
If we compare two years [1975 and 1991], some/most of the people who were
poor in the
first year will not be the same people who are poor in the later year.
Some highlights of these last three tables: The biggest is the number
of people who start in the bottom quintile and work their way out.
>>>>
In table 5, over 85% of the poorest quintile in 1979 were no longer in
that quintile in 1988. In table 6, the number is almost 95% for the
longer period of 1975 to 1991. The vast majority of the people poor
in year x are not going to be poor in the near future.
<<<<<
(If you are
thinking this is only a long-run phenomena, consider this: according
to the Census Bureau, between 1984 and 1985, 18.2% of families in the
lowest quintile had moved up one or more quintiles. For 1985-86, the
number is 18.4% and it's 17.0% for 1987-88. So there are steady
year-by-year gains.) Even for the rich, there's no guarantees.
Granted, if you started the period rich, you were more likely to stay
in your quintile than were the poor, but even there the odds were
roughly 50/50. Over 1/3 of the top 20% of income earners in 1975 were
no longer in the top quintile by 1991, and the numbers are comparable
for the 1979-88 data.
Table 7 is fascinating as well. This table shows the average income
gains of the specific households that were tracked over the 16 year
period. The dollars are all converted to 1997 dollars to take out the
effects of inflation. Families who were in 1975 in the bottom 20% had
an average income increase of almost $28,000 by 1991, while the folks
in the top 20% only gained an average of $4,354. So the rich did get
richer over this period, but the poor's income grew substantially more
than that of the rich! That is, the rich got richer but the poor got
even richer, not just in percentage terms but in absolute terms.
Again, this data is tracking specific families.
One footnote to all of this: among those who began in the lowest
quintile in 1975, 98% had higher incomes (in real terms) over the
course of the next 16 years, even if not all of them got out of the
lowest quintile. Two-thirds of those who were in the lowest quintile
in 1975 had higher incomes in 1991 than the middle quintile had in
1975. You need to remember that as the economy grows, the range of
the quintiles grows as well, so even those who remain in each quintile
are going better in absolute terms.
It also seems appropriate to mention that all of these gains by the
poor were during the so-called Decade of Greed, pillioried by those on
the left for its supposed cold-heartedness and mistreatment of the
poor. You can make your own call on that claim.
A good deal of this is explained by demographic factors. For example,
the bottom quintile tends to be disproportionately young people and as
they age, they move up the ladder. Even if that explains a good deal
of what we see here, so what? It still contradicts the usual
understanding of the data. The real policy question here is income
mobility. How easy is it for folks who start poor to move their way
up? The answer to that is "pretty easy." That paints a far different
picture of how the poor are doing over time than the static and
misleading idea that the poor are getting poorer that is taken from
year-to-year comparisons of the quintiles.
-- Use e-gold? Send me two cents: twocents@openknowledge.org">http://2cw.org/?257121&twocents@openknowledge.org
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