Thread by @swinshi

A few thoughts on @ezraklein 's interview with Raj Chetty on the American Dream. vox.com/2019/8/15/2080…. I'm a big fan of both of them. But, we need to be clear about what we mean by "economic mobility" and about whether we're looking at trends or cross-national comparisons. /1

First on trends. Raj is right that few people (not me!) dispute that absolute mobility (outpacing your parents) has declined over time in the US. However! What's fascinating to me is that there's no discussion here of Raj's earlier finding about relative mobility trends. /2

Relative mobility is abt changing positions in the income distribution. If you were raised by parents in the poorest fifth, can you escape the poorest fifth? Prior to Chetty's abs mobility paper, liberals worried more about rel mobility, conservatives more about abs mobility. /3

That's because conservatives tend to think what's more important is economic growth (rising tide lifts all boats) and liberals tend to think what's more important is not being constrained by your origins. (Full disclosure, I think both are equally important.) /4

Here the ironies begin. Chetty's relative mobility paper ratified two decades of previous research concluding that relative mobility has NOT fallen. (Nor increased substantially, to be sure.) /5

(In fact, in the subsequent abs mobility paper, the results are based on the assumption--justified by the earlier paper--that relative mobility has held constant.) /6

The rel mobility paper was a bummer for people who wanted to say the American Dream was dead. But then @DLeonhardt convinced Chetty to look at abs mobility trends, and abs mobility has fallen. Now people can bemoan the decline of the American Dream again (as Chetty does). /7

More on absolute mobility trends in a sec. Let's talk cross-national comparisons... /8

Here's the headline of the @voxdotcom transcript: "You have a better chance of achieving 'the American dream' in Canada than in America". Is that true? Well...let's start with absolute mobility, which is what Chetty refers to when he says the American Dream is in decline /9

There has been a single study outside the US looking at absolute mobility as Chetty defines it. It so happens it is a study of Canada. It so happens Canada and the US have the same absolute mobility levels. Ungated version: publications.gc.ca/collections/co… /10

What about relative mobility? Here the answer is more complicated. A number of studies indicate that the US has similar relative mobility levels to other countries (including Canada) when parent earnings are compared to grown child earnings /11

When parent family income is compared to grown child earnings or income, the US generally looks worse than other countries. I believe that, though it should be said that this literature is not as all as well developed as the earnings mobility literature. /12

Those findings and much more are in my report for @ArchbridgeInst archbridgeinstitute.org/wp-content/upl…. /13

So the American Dream is either surviving nicely or declining, either as good as in other countries or worse. It's complicated! But back to absolute mobility... /14

There’s something weird about the goal of wanting to maximize absolute mobility. Doing so would likely reduce relative mobility. That’s because the lowest absolute mobility rates are among the kids of rich parents. /15

Over 9 in 10 poor kids end up better off than their parents in absolute terms--Chetty's numbers. If we increased absolute mobility, fewer rich kids would fall down the income distribution, and relative mobility would fall. /16

There’s also a tradeoff between absolute living standards and absolute mobility. Would you rather be born in the top fifth and have less absolute mobility or in the bottom fifth but have more absolute mobility? /17

Would you rather have been born in 1940 and experienced more absolute mobility (growing up at a 1940s living standard) or have been born in 1980 and experienced less absolute mobility? Would you rather live in China, where absolute mobility is probably quite a bit higher? /18

It’s relative mobility from the bottom that should be what people care about, & specifically for African Americans. brookings.edu/research/the-i…. Poor kids outpace their parents (low bar), but they still tend to be among the poorest in their own generation. /19

Conservatives self-owned themselves on mobility. When everyone was talking about rel mobility, conservatives said, “Oh what really matters is abs mobility.” But liberals are no more intellectually consistent, switching btwn abs and rel mobility depending on which looks worst. /20

Conclusion: the real world is more complicated than your political agenda. /fin

Should have tagged @OppInsights here too. (They do fantastic and important work!)