In this excellent must-read article ‘The Economist Who Would Fix the American Dream‘, the work of economist Raj Chetty is described. His recent works focuses on equal opportunity. And shows that since a few decades, the possibility of social mobility has dramatically diminished in the US. But not only is he a scholar providing insights from Big Data, he is also taking action.
Raj Chetty’s family story itself is an example of social mobility: his parents had a humble and poor origin in India and they rose in society through academic excellence, then emigrated to the US where Raj was educated. Excelling in academics, he became quickly part of the elite of economists in the USA.
“He has pioneered an approach that uses newly available sources of government data to show how American families fare across generations, revealing striking patterns of upward mobility and stagnation. In one early study, he showed that children born in 1940 had a 90 percent chance of earning more than their parents, but for children born four decades later, that chance had fallen to 50 percent, a toss of a coin” And he has shown that to a “surprising degree, people’s financial prospects depend on where they happen to grow up“.
Some of his most interesting research about a town in the US that had a dramatic positive growth showed that “All the data-scientist and business-development-analyst jobs in the thriving banking sector are a boon for out-of-towners and the progeny of the well-to-do, but to grow up poor in Charlotte is largely to remain poor.”: nomads and well-to-do benefit from opportunities, not the local poor.
And he went on further to show that social limits in place many years ago at the time of slavery and segregation continue to influence heavily the level of opportunity for children.
It is probable that the same issue of a harder social mobility is at play in most developed countries, and this also explains the disarray of a new generation that does not believe it will have better opportunities than their parents. At the same time, the work of people like Raj Chetty shows ways to understand and fix those issues.
