Reality is not a friend of generosity

An excellent post from How much social mobility do people really want? by Richard V. Reeves and Nathan Joo describing positive aspirations and incoherent goals. Read the whole thing.

Four out of ten children born at the bottom will remain there as adults—and about the same stickiness can be seen at the top. In a world of ‘perfect’ relative social mobility, each person, regardless of background, would have precisely a 20 percent chance of ending up in each quintile.

[snip]

But no such ‘20 percent society’ like this has ever existed, and we wouldn’t want it to. Many of the mechanisms leading to the inheritance of status are legitimate, even laudable, such as committed and engaged parenting, an emphasis on education, and the transmission of productive values.

On the other hand, most observers would consider a world in which status was completely dependent on origins—a caste system, in other words—as morally objectionable.

[snip]

So, if 20 percent is too low, and 100 percent is too high, what would the ‘right’ figure be?

Shai Davidai and Thomas Gilovich have taken the radical step of asking ordinary people. Respondents were first asked to estimate rates of upward mobility from the bottom quintile, and downward mobility from the top. In general, people overestimate the degree of social fluidity.

Of more interest, however, is the second set of questions on the rates of upward and downward mobility people that would consider ideal. Respondents were split into liberals and conservatives in order to highlight ideological differences.

[snip]

Americans across the ideological spectrum want to see people born at the bottom to rise up the income ladder to a much greater extent than they do:

In fact, Americans here seem to want something close to the utopian ideal of a 20 percent society.

But when asked about ideal rates of downward mobility from the top quintile, a very different answer emerges. Americans are against people being stuck in poverty, but are much less worried about the persistence of relative affluence. In fact, the ideal rate of stickiness at the top closely mirrors the real data.

This is not the result of conservativism—in fact, liberal respondents were slightly more in favor of the perpetuation of upper middle class than conservatives.

But—here’s the bad news—relative mobility is a zero-sum game

Psychologically, these findings make perfect sense. The idea of people losing ground is much less appealing than the idea of people moving up. But they create mathematical difficulties. Davidai and Gilovich forced their respondents to make their ideal categories add up to 100 percent, but only asked about the top and bottom quintiles. Alert readers will already have noticed a problem here. If the bottom quintile is full of Horatio Alger figures, but the top quintile is fairly persistent, this is probably bad news for the people in between.

Liberals want 14 percent of the bottom quintile to rise to the top, but also want 43 percent of those born at the top to stay there. That’s 57 percent of the top-quintile slots accounted for. This leaves only 43 percent left for all of those from quintiles 2, 3 and 4. That’s 14 percent each—the same as for the bottom quintile. To ensure that almost half of the kids of the upper middle class can stay there, even liberals seem to want kids from every other rung of the ladder to have just a one in seven chance of reaching the top quintile.

This is the classic issue of trade-offs. It is also an illustration, I think, that most people don't know what they are talking about when it comes to relative and absolute issues of income inequality and income mobility. We want people to be able to rise up but we don't want people to slide down. That is very generous but reality is not a friend of generosity.

This is why I think the focus on income inequality is a red herring. Help people improve their productivity first. Make that the primary focus. You can't micro-manage a system as complex as human aspirations and the free market to arrive at a pre-ordained "fair" level of income mobility. You will kill the goose and people won't be happy with the outcome anyway because they want everyone to be above average. An outcome precluded by reality.