American genes, European culture?

By M.S.

A PROPOS of the argument over statistics showing that intergenerational income mobility in America is lower than that in most of Europe, Tyler Cowen hypothesises:

Why do many European nations have higher mobility? Putting ethnic and demographic issues aside, here is one mechanism. Lots of smart Europeans decide to be not so ambitious, to enjoy their public goods, to work for the government, to avoid high marginal tax rates, to travel a lot, and so on. That approach makes more sense in a lot of Europe than here. Some of the children of those families have comparable smarts but higher ambition and so they rise quite a bit in income relative to their peers. (The opposite may occur as well, with the children choosing more leisure.) That is a less likely scenario for the United States, where smart people realize this is a country geared toward higher earners and so fewer smart parents play the “tend the garden” strategy. Maybe the U.S. doesn't have a “first best” set-up in this regard, but the comparison between U.S. and Europe is less sinister than it seems at first. “High intergenerational mobility” is sometimes a synonym for “lots of parental underachievers.”

Among the unexamined assumptions here is the notion that "smarts" are innate, while "ambition" is environmentally determined. Actually, it's more than that: "smarts" are assumed to be both innate and inherited, while "ambition" is not inherited, but appears to be sometimes environmentally influenced (ie, Europeans are less ambitious than Americans) or sometimes individually varying for unknown reasons (ie, some European children become more ambitious than their parents, for unspecified reasons, even though their overall environment is not ambitious). Why would we believe this to be the case?

Another issue I have with this hypothetical mechanism is that it posits that the reason Europeans are more likely to switch income categories is that fewer of them are trying to switch income categories. It makes sense that an ambitious person might find it easier to move up the income ladder in a society where most others weren't so ambitious. But if you measure the overall income mobility of the society, it seems like the easiness for a given ambitious person will be canceled out by the widespread lack of ambition that made it easy in the first place. This idea seems to me to suffer from a nobody-goes-there-it's-too-crowded problem.

Finally, returning to the innateness of "smarts", it's a truism that variance in characteristics is more due to innate/genetic reasons when the external environment is more homogenous. For example, if two tulips are raised in identical circumstances, then all the variation in observed characteristics will be due to genetic differences, whereas if one tulip is given more light than the other, much of the variation will be due to environmental factors. In the northern European countries that show higher intergenerational mobility than America does, the quality of the school systems is far more homogenous than in America. Schools for poor Dutch and Swedish kids are much better than schools for poor American kids. If income is dependent on innate "smarts", this should mean that more, not less, of the observed variation in Dutch and Swedish incomes is due to innate smarts. In America, meanwhile, more of the observed difference in incomes should be due to the environmental influence of having attended rich or poor schools. To put it in plain language, if you think smarts are innate but ambition is learned, and you know school quality in America varies widely on income lines while schools in Sweden vary less, and you know there's more intergenerational mobility in Sweden, then your conclusion would be that poor kids in America go to lousy schools where they aren't taught how to be ambitious (rich kids go to good schools and are), while poor kids in Sweden are being taught how to be ambitious but end up with different incomes due to their varying innate smarts.

Now let's recall why we were having this argument in the first place. Progressives have been arguing that massive and growing income inequality in America is a moral problem. Conservatives have responded that it's not a moral problem, because America is the land of opportunity: those increasingly disadvantaged poor people can rise up and become rich if they try hard enough. Progressives responded that this isn't true, actually America has less income mobility than most other rich countries, and there's more income mobility in societies that are less unequal. Now Mr Cowen responds that, while there may be more income mobility in other countries, this could be because in America all the smart people are extremely ambitious, so income differentials basically reflect innate differences in ability and there's no way for poor people to move up the income ladder even if they are ambitious. If this were true, and for the reasons outlined above I think it's not, then the argument is that massive and growing income inequality in a society where poor people have relatively little hope of advancing themselves no matter how hard they try is not a moral problem because...?

(Image credit: Ssolbergj)