Poverty traps and demands for loyalty

The new Roland Fryer paper looks promising:

This paper develops a model of social interactions and endogenous
poverty traps. The key idea is captured in a framework in which the
likelihood of future social interactions with members of one’s group is
partly determined by group-specific investments made by individuals. I
prove three main results. First, some individuals expected to make
group-specific capital investments are worse off because their observed
decision is used as a litmus test of group loyalty – creating a
tradeoff between human capital and cooperation among the group. Second,
there exist equilibria which exhibit bi-polar human capital investment
behavior by individuals of similar ability. Third, as social mobility
increases this bi-polarization increases. The models predictions are
consistent with the bifurcation of distinctively black names in the
mid-1960s, the erosion of black neighborhoods in the 1970s, accusations
of ‘acting white,’ and the efficacy of certain programs designed to
encourage human capital acquisition.

I have observed similar behavior among small ideological groups.  The more some members from that group succeed, the stronger the litmus/loyalty test required from remaining members.  Polarization accelerates.  Those who are left behind are often worse off than if a pooling equilibrium — everyone together in the same boot — had held.


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