Results for “chetty”
74 found

How much does social mobility ever change?

by  Tyler Cowen in

Here is Dylan Matthews interviewing Gregory Clark about his new book The Son also Rises:

Another remarkable feature of the surname data is how seemingly impervious social mobility rates are to government interventions. In all societies, what seems to matter is just who your parents are. At the extreme, we see in modern Sweden an extensive system of public education and social support. Yet underlying mobility rates are no higher in modern Sweden than in pre-industrial Sweden or medieval England.

There was one case where government interventions did seem to promote mobility, which was in Bengal, in India. There the strict quota system in educational institutions had benefited significantly people with surnames associated with the Scheduled Castes.

But the bizarre element here is that these quotas did not help those truly at the bottom of the social ladder. Instead, the benefits went to families of average social status whom the British had mistakenly classified as Scheduled Caste. These families have now become a new elite. The truly disadvantaged, such as the large Muslim community, have been correspondingly further burdened by being excluded from these quotas.

Interestingly, in China, the extreme social intervention represented by the Communist Revolution of 1949, which included executing large numbers of members of the old upper class, has not resulted in much of an increase in social mobility. Surnames of high status in the Imperial and Republican era continue to be overrepresented among modern elites, including Communist Party officials.

The families that have high social competence, whatever the social system is, typically find their way to the top of the social ladder.

The interview is interesting throughout. And you will of course note the new Chetty results — created with entirely different methods and data — showing economic mobility has not much changed in the United States for decades.

For the initial pointer I thank Samir Varma.

Assorted links

by  Tyler Cowen

1. Japanese macaque monkeys optimizing (not just satisficing) in hot springs.

2. First issue of Review of Behavioral Economics, a new journal edited by J. Barkley Rosser and Morris Altman.

3. The guy who hacked OKCupid.

4. Norwegian geoengineering, sort of.

5. Predicting the popularity of the obvious method.   And the classic jam experiment does not replicate.

6. The hurdle model and what makes for a good paper.

7. Further interpretation of the new Chetty mobility results.

Upward mobility in the United States is not declining as many citizens think

by  Tyler Cowen in

Here is the new Raj Chetty paper that everyone is talking about (pdf);

We use administrative records on the incomes of more than 40 million children and their parents to describe three features of intergenerational mobility in the United States. First, we characterize the joint distribution of parent and child income at the national level. The conditional expectation of child income given parent income is linear in percentile ranks. On average, a 10 percentile increase in parent income is associated with a 3.4 percentile increase in a child’s income. Second, intergenerational mobility varies substantially across areas within the U.S. For example, the probability that a child reaches the top quintile of the national income distribution starting from a family in the bottom quintile is 4.4% in Charlotte but 12.9% in San Jose. Third, we explore the factors correlated with upward mobility. High mobility areas have (1) less residential segregation, (2) less income inequality, (3) better primary schools, (4) greater social capital, and (5) greater family stability. While our descriptive analysis does not identify the causal mechanisms that determine upward mobility, the new publicly available statistics on intergenerational mobility by area developed here can facilitate future research on such mechanisms.

Here is summary coverage from David Leonhardt.  The highly reliable David starts with this: “The odds of moving up — or down — the income ladder in the United States have not changed appreciably in the last 20 years, according to a large new academic study that contradicts politicians in both parties who have claimed that income mobility is falling.”

Confusing issues of equality and mobility remains rife in current discourse.

Assorted links

by  Tyler Cowen

1. A polemic in favor of Texas and against the stability of tech jobs.

2. James Bessen at The Washington Post reviews *Average is Over*.  I agree with him that numerous decades later, things will be fine.  Kevin Drum responds along different lines.

3. Reihan on ACA and Medicaid reform.

4. A good criticism of Chetty on economics as a science.

5. One overview of the new jobs report.  And how much has sequestration hurt the DC-area job market?

6. David Romer on why do firms prefer more able workers?

Where is income mobility high and low?

by  Tyler Cowen in

Climbing the income ladder occurs less often in the Southeast and industrial Midwest, the data shows, with the odds notably low in Atlanta, Charlotte, Memphis, Raleigh, Indianapolis, Cincinnati and Columbus. By contrast, some of the highest rates occur in the Northeast, Great Plains and West, including in New York, Boston, Salt Lake City, Pittsburgh, Seattle and large swaths of California and Minnesota.

Check out the map at the NYT link.  Based on eyeballing, western North Dakota seems to do best and northwestern Mississippi seems to do worst.

This is based on work by Raj Chetty, Patrick Kline, and Emmanuel Saez, and the other results are quite interesting:

The researchers concluded that larger tax credits for the poor and higher taxes on the affluent seemed to improve income mobility only slightly. The economists also found only modest or no correlation between mobility and the number of local colleges and their tuition rates or between mobility and the amount of extreme wealth in a region.

But the researchers identified four broad factors that appeared to affect income mobility, including the size and dispersion of the local middle class. All else being equal, upward mobility tended to be higher in metropolitan areas where poor families were more dispersed among mixed-income neighborhoods.

Income mobility was also higher in areas with more two-parent households, better elementary schools and high schools, and more civic engagement, including membership in religious and community groups.

Regions with larger black populations had lower upward-mobility rates. But the researchers’ analysis suggested that this was not primarily because of their race. Both white and black residents of Atlanta have low upward mobility, for instance.

Of course that is all correlation and not causation per se.  The Google link to the original research ought to be here, but right now the available links are down, perhaps soon they will come back up again.

“What’s the question about your field that you dread being asked?”

by  Tyler Cowen in

That is the new Edge symposium, with many excellent luminaries, including Jens Ludwig, Richard Thaler, and Raj Chetty from economics, with Sendhil Mullainathan playing host and interlocutor.  Chetty serves up these answers:

Here are three questions that come to mind that I dread answering as an economist working on policy issues:

1. If you were in charge, what policies would you enact today to raise growth rates and incomes for the average family in America?

2. Why do American students perform poorly relative to students in other countries and how can we fix education in the U.S.?

3. When are house prices going to recover to pre-recession levels?

Assorted links

by  Tyler Cowen

1. Erik Voeten with some remarks toward a theory of treaties.

2. Milton Friedman on the popularity of the Fed.

3. What V.S. Naipaul thinks of Jane Austen.

4. New paper on Albert Hirschman and the World Bank, and Rajiv Sethi on Hirschman.

5. Further skepticism on productivity increases in U.S. manufacturing.

6. Raj Chetty video lectures on taxes and redistribution, not viewed but self-recommending.

Eight top young economists on where the field is going

by  Tyler Cowen in

It starts with Nicholas Bloom and Raj Chetty, and includes Ali Wyne and Peter Leeson and Justin Wolfers,  among other luminaries,  courtesy of Big Think.  Here is Bloom:

I do not think that any one single breakthrough will happen.  The progress is likely to be heavily empirical—simply because more and more data is becoming available, and it is easy to analyze with fast computers (so empirics is now advancing faster than theory)—and spread across many hundreds of topics.  So economics has gone from Victorian science, where one genius in his shed could invent the steam engine over the weekend, to industrial science, where innovation comes in thousands of tiny steps made by dozens of research teams.

Here is Wolfers:

Economic theory will become a tool we use to structure our investigation of the data.  Equally, economics is not the only social science engaged in this race: our friends in political science and sociology use similar tools; computer scientists are grappling with “big data” and machine learning; and statisticians are developing new tools.  Whichever field adapts best will win.  I think it will be economics.

“The People’s Budget”

by  Tyler Cowen in

It is endorsed by Paul Krugman and also Jeffrey Sachs, so I thought I would give it a look.  It is from the Congressional Progressive Caucus.  One simple question is to ask how the rich are taxed:

1. There are separate rates in the mid- to high forties for millionaires, with strict limits on itemized deductions.

2. “Raise the taxable maximum on the employee side to 90% of earnings and eliminate the taxable maximum on the employer side.”  With volatile incomes, it’s tricky to translate that into an expected marginal rate or to figure out how much is infra-marginal.  See the technical appendix, p.8, for more details, though I find the entire proposal here poorly explicated.  In any case, it’s a big tax increase.

3. Tax capital gains and dividends at the normal income rates.  (I am not sure how loss offsets are to be treated, though it could make a big difference and significantly boost the demand for volatile stocks.)

4. I’m not sure what happens with state-level income tax rates but there’s certainly, in the proposal, no talk of them going down.  And since they’re probably not free market deregulators at the state and local level, I suppose I expect those taxes to go up, given Medicaid burdens, pension problems, ailing educational systems, and so on.

5. Estate taxes would be raised significantly (sock it to Boy Mankiw!), as would corporate income taxes, there would be new financial transactions taxes, there would be a new bank tax, and tax enforcement would be stiffer.

6. There are, by the way, no proposed cuts in benefits.

What is the final net income and also capital gains rate for wealthy taxpayers?  It’s hard to say exactly, but north of seventy percent for income rates (including state and local rates), and near fifty percent for capital gains rates, is not hard to believe.

Quick quiz #1: What are the capital gains tax rates in the European social democracies?

Quick quiz #2: From the climate change debates we learn the value of scientific consensus; what percentage of Democratic public finance economists would favor top income and capital gains rates in the neighborhood of seventy and fifty percent?  Some of them have read and digested, for instance, this paper by the impressive Raj Chetty.

Quick quiz #3: Does the technical report offer estimated labor supply and investment elasticities in response to these higher tax rates?  (p.s. the answer is “no.”)

I can tell you this: in the technical appendix; the assumption is that the net effect on growth, from investment changes, after all the new public sector investment is called into place, is a positive [sic] 0.3%.

There have been some good criticisms of the funny assumptions behind the Ryan plan, but actually this budget isn’t better, either in terms of its final conclusions, its adherence to best scientific practices, or its transparency in getting to its results.  Should we not apply equally high standards to both the Ryan budget and this?  There are plenty of good arguments that taxes have to go up, but this particular proposal isn’t one of them.  INSERT SNARKY CLOSING OF YOUR CHOICE I WON’T DO IT FOR YOU.