Interesting study, but the effects on earnings weren’t as extreme as the headline led me to believe:
> Stated differently, being the descendants of the Bernardi family (at the 90th percentile of earnings distribution in 1427) instead of the Grasso family (10th percentile of the same distribution) would entail a 5% increase in earnings among current taxpayers (after adjusting for age and gender).
A 5% difference in earnings between descendants of a 90th percentile family and a 10th percentile family may be statistically significant, but it’s still only 5%. A 5% difference in earnings isn’t going to move someone from lower class to upper-middle class lifestyle.
The authors found that some of this effect was due to certain families that tended toward elite professions like doctors and lawyers. I suppose we could make an argument for eliminating legacy preference in university admissions, but I’m sure some families would still bias toward certain professions in the interest of following in their parents’ footsteps.
If I'm reading that right, that's a 5% earnings boost, not a 5% wealth boost.
Reasonable wealth appreciation on a 5% "bonus" check / year is an incredible amount of wealth.
Just for reference, investing 1 <currency>/year for 60 years at 6% returns is 533 <currencies>. A 5% boost might be an extra 10,000 USD for a high earner (like a 90th percentile earner). That's 5,330,000 USD earned in a lifetime just from investing that family name bonus. That kind of money would buy your grand-kids a nice college education.
That wealth has probably enabled a lot, including the increased opportunities that gives every single one of their descendants a 5% boost in income.
The above math indicates that one generation with this 5% income boost gains enough wealth to move them up the wealth ladder. If this appreciation goes on for 6 Centuries then it amounts to wealth that makes working entirely optional.
It also suggests that looking at wages is a misleading statistic, as wages do not typically make up the majority of money that a wealthy individual would gain in a given year.
It's worth pointing out that there is a huge difference between the 90th percentile and the 95th percentile, and an even bigger difference between the 95th and the 99th. This is doubly true if you look at wealth rather than income.
> I suppose we could make an argument for eliminating legacy preference in university admissions, but I’m sure some families would still bias toward certain professions in the interest of following in their parents’ footsteps.
Why would we want to do anything to change it? I'm having trouble expressing this idea so maybe it's not clear but you want to change who ends up wealthy from one random person to another random person? Whoever it is is still just human like the other one. It's already a complete lottery which family somebody will be born into. As long as you accept that some individuals will end up advantaged over others, why does it matter which ones they are? The result will still be "high income earners earn higher income than low income earners".
I think that instead of framing it as fairness--which seems to agitate those who were born with monetary advantages, this conversation should be re-framed to focus on societal efficiency.
It is inefficient to shoehorn people to the top because their parents were at the top. The people at the top should be our highest achievers and not our decent achievers who were born with rich parents.
The way our society is structured we will find ourselves much better off in a few generations if we can devise a system where each persons potential is given a proper environment to flourish and where each high potential person is given a carrot to chase that isn't unachievable.
Edit:
Speaking of carrots to chase. It's looking more and more like the wealth of millennials(and I suppose zoomers?) long term will be very very determined by their inheritance(if they are so lucky to have one lol) and less so by their hard work in life.
This is likely the cause of the number of people under 40 who seem to be "opting out". It's very difficult to get to the supposed goal unless you are a high achiever. The carrot is very much too far away and this is another societal inefficiency. We would have a much more dedicated workforce if we made it possible to get "carrots".
Beyond that, if you just put it down to pure randomness you end up killing the incentive to try to advance your situation by playing by the rules.
If the people at the top try to just promote defeatism to talk people out of challenging their place, they risk something quite different: if you believe putting more effort towards playing the game won't change your situation, you start looking at alternatives like crime or revolution. The random people who were born rich don't deserve it any more than you, so let's replace them with us. A system that isn't based on violence or the threat of violence can only work if people believe it actually does give them opportunity.
I agree. Long term it is advantageous for everyone if our society is more fair, because if you keep pushing the lower class down a little further each generation eventually they will indeed have enough of it.
You're just moving the privilege from born rich to born talented. It's still going to exclude all the people without that, so it's still going to be unfair.
It's not necessarily better either. Kids of wealthy parents have a lot of work put into developing their capabilities. A lot of their success comes from that investment in their development. You would need to somehow do the same with these poor talented people too. How? Their parents aren't capable. Maybe forced adoption like Australia's "stolen generation"?
I think that from an efficiency point of view, the way it is is best. It takes advantage of the natural desire people have to give their own children an advantage over others. That's a strong incentive. We'll miss some poor talented kids but I don't see any practical way to actually get such a pure meritocracy beyond human rights violations like some kind of Communist Olympic swimmers.
I agree with you about carrots though. They seem to be getting further out of reach.
For a long time, people also had a "natural desire" to eat their enemies.
We stopped doing that because it was harmful. In fact now we think it's just gross.
At some point some of these practices stop being "natural" and start to seem barbarous.
In the case of inherited wealth, it's usually around the point where it becomes obvious that extreme inherited wealth/privilege + narcissism and/or sociopathy are incredibly toxic and damaging to democracy, economic stability, general well-being, and potentially even species survivability.
Of course you can still get bad actors in a meritocracy. But you don't get highly privileged and powerful bad actors born into situations where they can avoid accountability.
As for poor parents being "incapable" - that's a wholly circular argument. Who knows how capable they would be with more resources?
I'm talking about more common levels of income, not just the odd Bill Gates or King of Bazerbaijar.
Advantaging your own reproductive success is a stronger feeling than eating enemies. You could even say it's the ultimate purpose of life for an organism or genome. It would be hard to suppress it, and destructive if people suppress it too much.
Maybe culture could change so that it becomes normal but obviously we can't have everyone doing that or we'd be in a race to the bottom. I don't see how a culture that supports the biologically superior people at the expense of the inferior would be stable. Even if you have popular support for eugenics, surely people who realize they're at the bottom of the heap and being pushed further down will rebel against it.
> As for poor parents being "incapable" - that's a wholly circular argument. Who knows how capable they would be with more resources?
It's you being circular. Obviously, any incapable person would be capable if they had capability, by definition. I'm talking about people who are incapable with what they've got.
On the contrary I believe. If you really factor in social momentum a name and association with the city can carry, it may be neutral. Perhaps some intelligence in inheritable and you got your answer.
But even over such long times wealth can be transfered. Don't know how many can trace back their lineage to the Medici, but it is entirely possible even with devastating wars rolling the dices anew.
> Societies characterised by a high transmission of socioeconomic status across generations are not only more likely to be perceived as ‘unfair’, they may also be less efficient as they waste the skills of those coming from disadvantaged backgrounds. Existing evidence suggests that the related earnings advantages disappear after several generations. This column challenges this view by comparing tax records for family dynasties (identified by surname) in Florence, Italy in 1427 and 2011. The top earners among the current taxpayers were found to have already been at the top of the socioeconomic ladder six centuries ago. This persistence is identified despite the huge political, demographic, and economic upheavals that occurred between the two dates.
Note that these numbers are from Italy, which is known to have extremely low intergenerational income mobility. See https://voxeu.org/article/intergenerational-mobility-across-...
One key characteristic of high mobility countries is the availability of high quality public education (primary, secondary and tertiary). High mobility countries (eg Denmark, Canada, Australia) tend to have a large, low cost tertiary education sector where admission is strictly determined by independent measures of academic achievement. The old school tie counts for little or nothing in these societies.
Surprised there's no mention of the book "The Son Also Rises" by Gregory Clark that dives into the same topic and compares multi-generational earnings and achievement across multiple societies, drawing similar conclusions.
https://www.goodreads.com/book/show/18730716-the-son-also-ri...
You just not working hard enough, otherwise your dad would have left you an inheritance, or at the very minimum given you access to his professional network of other hard working dad's who's dad's left them inheritances.
To state the obvious, this is entirely consistent with the hypothesis that people earn more because they inherited something from their parents, but that what they inherited is cultural or genetic, rather than their parents' money.
I wouldn't be surprised if white supremacists started using studies like these to "prove" that since Jews stayed wealthy over multiple generations, they must be conspiring to cheat the gentiles.
> Stated differently, being the descendants of the Bernardi family (at the 90th percentile of earnings distribution in 1427) instead of the Grasso family (10th percentile of the same distribution) would entail a 5% increase in earnings among current taxpayers (after adjusting for age and gender).
A 5% difference in earnings between descendants of a 90th percentile family and a 10th percentile family may be statistically significant, but it’s still only 5%. A 5% difference in earnings isn’t going to move someone from lower class to upper-middle class lifestyle.
The authors found that some of this effect was due to certain families that tended toward elite professions like doctors and lawyers. I suppose we could make an argument for eliminating legacy preference in university admissions, but I’m sure some families would still bias toward certain professions in the interest of following in their parents’ footsteps.