US economic mobility data

Written by: Stephen Hsu

Primary Source: Information Processing

A commenter points me to the Pew Trust study on US economic mobility. I excerpt some interesting figures from the report below, but it is worth reading in full. Much of the data comes from NLSY. Note that mobility data over quintiles does not address the increasing concentration of wealth at the top: see US wealth inequality and Inside the 1%.

Americans born in middle income quintile families have roughly equal probability of ending up in any of the other quintiles. Being born in a top quintile family is far from a guarantee of persistence in the top quintile, and similarly for the bottom quintile.

White men have slightly more upward mobilility than other groups.

The outcome distribution for top quintile (family background) black men is most similar to that for median quintile white men.

Superior cognitive ability is strongly indicative of upward mobility from the lowest quintile. This is true for both blacks and whites. Individuals who are cognitively at the median in the overall population have an 80% chance of moving up and out of the bottom quintile. What does that say about those that remain in the bottom quintile?

 

Pew: Individuals with higher test scores in adolescence are more likely to move out of the bottom quintile, and test scores can explain virtually the entire black-white mobility gap. Figure 13 plots the transition rates against percentiles of the AFQT test score distribution. The upward-sloping lines indicate that, as might be expected, individuals with higher test scores are much more likely to leave the bottom income quintile. For example, for whites, moving from the first percentile of the AFQT distribution to the median roughly doubles the likelihood from 42 percent to 81 percent. The comparable increase for blacks is even more dramatic, rising from 33 percent to 78 percent. Perhaps the most stunning finding is that once one accounts for the AFQT score, the entire racial gap in mobility is eliminated for a broad portion of the distribution. At the very bottom and in the top half of the distribution a small gap remains, but it is not statistically significant. The differences in the top half of the AFQT distribution are particularly misleading because there are very few blacks in the NLSY with AFQT scores this high.

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Stephen Hsu
Stephen Hsu is vice president for Research and Graduate Studies at Michigan State University. He also serves as scientific adviser to BGI (formerly Beijing Genomics Institute) and as a member of its Cognitive Genomics Lab. Hsu’s primary work has been in applications of quantum field theory, particularly to problems in quantum chromodynamics, dark energy, black holes, entropy bounds, and particle physics beyond the standard model. He has also made contributions to genomics and bioinformatics, the theory of modern finance, and in encryption and information security. Founder of two Silicon Valley companies—SafeWeb, a pioneer in SSL VPN (Secure Sockets Layer Virtual Private Networks) appliances, which was acquired by Symantec in 2003, and Robot Genius Inc., which developed anti-malware technologies—Hsu has given invited research seminars and colloquia at leading research universities and laboratories around the world.
Stephen Hsu

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