A large new study offers clues about how lower-income children can rise up the economic ladder.

 

Mari Bowie, a criminal-defense lawyer, is the first person in her family with a postgraduate degree.Marissa Leshnov for The New York Times

‘Friending bias’

Social scientists have made it a priority in recent years to understand upward mobility. They have used tax records and other data to study which factors increase the chances that children who grow up in poverty will be able to escape it as adults.

Education, spanning pre-K through college, seems to play a big role, the research suggests. Money itself is also important: Longer, deeper bouts of poverty can affect children for decades. Other factors — like avoiding eviction, having access to good medical care and growing up in a household with two parents — may also make upward mobility more likely.

Now there is another intriguing factor to add to the list, thanks to a study being published this morning in the academic journal Nature: friendships with people who are not poor.

“Growing up in a community connected across class lines improves kids’ outcome and gives them a better shot at rising out of poverty,” Raj Chetty, an economist at Harvard and one of the study’s four principal authors, told The Times.

The study tries to quantify the effect in several ways. One of the sharpest, I think, compares two otherwise similar children in lower-income households — one who grows up in a community where social contacts mostly come from the lower half of the socioeconomic distribution, and another who grows up in a community where social contacts mostly come from the upper half.

The average difference between the two, in terms of their expected adult outcomes, is significant, the authors report. It’s the same as the gap between a child who grows up in a family that makes $27,000 a year and one who grows up in a family that makes $47,000.

The study is based on a dizzying amount of data, including the Facebook friendships of 72 million people. (You can explore the findings through these charts and maps from The Upshot.)

Robert Putnam — a political scientist who has long studied social interactions, including in his book “Bowling Alone” — said the study was important partly because it hinted at ways to increase upward mobility. “It provides a number of avenues or clues by which we might begin to move this country in a better direction,” he said.

In recent decades, the U.S. has moved in the opposite direction. Rising economic inequality and a shortage of new housing in many communities have helped increase economic segregation. Even within communities, cross-class social interactions seem to have declined.

This chart shows the extent to which Americans segregate themselves by class:

The New York Times

Mari Bowie’s story

There seem to be three main mechanisms by which cross-class friendships can increase a person’s chances of escaping poverty, Chetty told me.

The first is raised ambition: Social familiarity can give people a clearer sense of what’s possible. The second is basic information, such as how to apply to college and for financial aid. The third is networking, such as getting a recommendation for an internship.

My colleague Claire Cain Miller, after speaking with the study’s authors in recent weeks, set out to find some real-life examples of its findings. Claire focused on Angelo Rodriguez High School in Fairfield, Calif., a midsize city between Sacramento and Oakland. The school has an unusually high number of cross-class interactions. One of the people whom Claire interviewed was Mari Bowie, a 24-year-old who grew up in a lower-middle-class family that coped with divorce, layoffs and lost homes — and who made friends with richer girls in high school.

“My mom really instilled working hard in us — being knowledgeable about our family history, you have to be better, you have to do better,” Bowie said. “But I didn’t know anything about the SAT, and my friends’ parents signed up for this class, so I thought I should do that. I had friends’ parents look at my personal statements.”

Today, Bowie is a criminal-defense lawyer. She found her job through the friend of one of her high school friends.

How churches shine

Angelo Rodriguez High School is a telling case study because it is more economically and racially diverse than most schools. That diversity is necessary for a high level of socioeconomic integration. But it is not sufficient, the study’s authors say. In some diverse communities, lower- and upper-income Americans lead relatively segregated lives.

In others, cross-class interactions are more common. The study does not contain a complete explanation for the differences. But Claire discovered that the high school had taken intentional steps to connect people.

The school didn’t draw its students from only one community. It instead had an unusually shaped district, including both poorer and richer neighborhoods, and also accepted some students from outside that district’s boundaries. The school’s open architecture also encouraged serendipitous socializing. “Accidental, unstructured interactions between students was a very high priority,” John Diffenderfer, one of the school’s architects, said.

What might increase cross-class interactions elsewhere?

Among the promising possibilities, the researchers say: more housing, including subsidized housing, in well-off areas; more diverse K-12 schools and colleges; and specific efforts — like public parks that draw a diverse mix of families — to encourage interactions among richer and poorer people.

Churches and other religious organizations may have some lessons to teach other parts of society. Although many churches are socioeconomically homogeneous, those with some diversity tend to foster more cross-class interactions than most other social activities. Churchs have lower levels of what the researchers call socioeconomic “friending bias.”

Youth sports, by contrast, have become more segregated, as affluent families have flocked to so-called travel teams.

A successful effort to increase interactions would probably need to address the particular roles of race, too. More racially diverse places tend to have fewer cross-class friendships, the study found.

“Our society is structured in ways that discourage these kinds of cross-class friendships from happening, and many parents, often white, are making choices about where to live and what extracurriculars to put their kids into that make those connections less likely to happen,” Jessica Calarco, a sociologist at Indiana University said. Claire’s story delves into more detail on the role of race.

The bottom line

The stagnation of living standards for working-class and poor Americans is such a giant problem that no single change will solve it. But the explosion of academic research about upward mobility, including this new study, has at least offered a clearer sense of what might help. Social integration seems to play a crucial role.

Populist leaders linked to reduced inequality.

Populists on left and right have closed gap between rich and poor - but also eroded freedoms

GUARDIAN

INEQUALITY BEGINS AT BIRTH

N.Y. REVIEW OF BOOKS

Seattle Approves $15 Minimum Wage, Setting a New Standard for Big Cities

Mayor Ed Murray of Seattle, right, after the City Council approved a minimum wage that is more than double the federal minimum. The $15 rate is the highest among the nation’s big cities. Credit Ted S. Warren/Associated Press        

N.Y. TIMES

The City Council here went where no big-city lawmakers have gone before on Monday, raising the local minimum wage to $15 an hour, more than double the federal minimum, and pushing Seattle to the forefront of urban efforts to address income inequality.

The unanimous vote of the nine-member Council, after months of discussion by a committee of business and labor leaders convened by Mayor Ed Murray, will give low-wage workers here — in incremental stages, with different tracks for different sizes of business — the highest big-city minimum in the nation.

----

“We’re living in this bubble of Amazon, but that’s not going to go on,” said Tom Douglas, a prominent restaurateur in Seattle, referring to the local boom in jobs and economic growth from hiring at Amazon, the online retailer, which has its headquarters here. Mr. Douglas said the new law will inevitably result in costs being passed on to consumers. “There’s going to be some terrific price inflation,” he said.

----

The vote, economists and labor experts said, accentuates the patchwork in wages around the country, with places like Seattle — and other cities considering sharply higher minimum pay, including San Diego, Chicago and San Francisco — having economic outlooks increasingly distinct from those in other parts of the nation. Through much of the South, especially, the federal minimum of $7.25 holds fast.

Eight states plus the District of Columbia have already increased their minimum wages this year, the most to have done so in a single year since 2006....“In past rounds of minimum wage increases, proposals sought chiefly to restore the value of the minimum wage lost to inflation over the decades,” said Paul Sonn, the general counsel and program director at the National Employment Law Project, a New York-based group that supports raising the minimum wage. The increases in places like Seattle, Mr. Sonn said, go beyond playing catch-up. “The $15 proposals make real gains,” he said.

----

Washington State already has the highest state minimum wage in the nation, $9.32, but more than 24 percent of Seattle residents earn hourly wages of $15 or less, according to the city,

EQUALITY DENIAL CONTINUES

Economist and author Thomas Piketty

PAUL KRUGMAN, N.Y. TIMES

A while back I published an article titled “The Rich, the Right, and the Facts,” in which I described politically motivated efforts to deny the obvious — the sharp rise in U.S. inequality, especially at the very top of the income scale. It probably won’t surprise you to hear that I found a lot of statistical malpractice in high places.

 

Nor will it surprise you to learn that nothing much has changed. Not only do the usual suspects continue to deny the obvious, but they keep rolling out the same discredited arguments: Inequality isn’t really rising; O.K., it’s rising, but it doesn’t matter because we have so much social mobility; anyway, it’s a good thing, and anyone who suggests that it’s a problem is a Marxist.

 

What may surprise you is the year in which I published that article: 1992.

Which brings me to the latest intellectual scuffle, set off by an article by Chris Giles, the economics editor of The Financial Times, attacking the credibility of Thomas Piketty’s best-selling “Capital in the Twenty-First Century.” Mr. Giles claimed that Mr. Piketty’s work made “a series of errors that skew his findings,” and that there is in fact no clear evidence of rising concentration of wealth. And like just about everyone who has followed such controversies over the years, I thought, “Here we go again.”

Sure enough, the subsequent discussion has not gone well for Mr. Giles. The alleged errors were actually the kinds of data adjustments that are normal in any research that relies on a variety of sources. And the crucial assertion that there is no clear trend toward increased concentration of wealth rested on a known fallacy, an apples-to-oranges comparison that experts have long warned about — and that I identified in that 1992 article.

At the risk of giving too much information, here’s the issue. We have two sources of evidence on both income and wealth: surveys, in which people are asked about their finances, and tax data. Survey data, while useful for tracking the poor and the middle class, notoriously understate top incomes and wealth — loosely speaking, because it’s hard to interview enough billionaires. So studies of the 1 percent, the 0.1 percent, and so on rely mainly on tax data. The Financial Times critique, however, compared older estimates of wealth concentration based on tax data with more recent estimates based on surveys; this produced an automatic bias against finding an upward trend.

In short, this latest attempt to debunk the notion that we’ve become a vastly more unequal society has itself been debunked. And you should have expected that. There are so many independent indicators pointing to sharply rising inequality, from the soaring prices of high-end real estate to the booming markets for luxury goods, that any claim that inequality isn’t rising almost has to be based on faulty data analysis.

 

Yet inequality denial persists, for pretty much the same reasons that climate change denial persists: there are powerful groups with a strong interest in rejecting the facts, or at least creating a fog of doubt. Indeed, you can be sure that the claim “The Piketty numbers are all wrong” will be endlessly repeated even though that claim quickly collapsed under scrutiny.

By the way, I’m not accusing Mr. Giles of being a hired gun for the plutocracy, although there are some self-proclaimed experts who fit that description. And nobody’s work should be considered above criticism. But on politically charged issues, critics of the consensus need to be self-aware; they need to ask whether they’re really seeking intellectual honesty, or are effectively acting as concern trolls, professional debunkers of liberal pieties. (Strange to say, there are no trolls on the right debunking conservative pieties. Funny how that works.)

 

So here’s what you need to know: Yes, the concentration of both income and wealth in the hands of a few people has increased greatly over the past few decades. No, the people receiving that income and owning that wealth aren’t an ever-shifting group: People move fairly often from the bottom of the 1 percent to the top of the next percentile and vice versa, but both rags to riches and riches to rags stories are rare — inequality in average incomes over multiple years isn’t much less than inequality in a given year. No, taxes and benefits don’t greatly change the picture — in fact, since the 1970s big tax cuts at the top have caused after-tax inequality to rise faster than inequality before taxes.

 

This picture makes some people uncomfortable, because it plays into populist demands for higher taxes on the rich. But good ideas don’t need to be sold on false pretenses. If the argument against populism rests on bogus claims about inequality, you should consider the possibility that the populists are right.

 

We’re Not No. 1! We’re Not No. 1!



A cricket game in New Zealand.

NICHOLAS KRISTOF, N.Y. TIMES

We in the United States grow up celebrating ourselves as the world’s most powerful nation, the world’s richest nation, the world’s freest and most blessed nation.

Sure, technically Norwegians may be wealthier per capita, and the Japanese may live longer, but the world watches the N.B.A., melts at Katy Perry, uses iPhones to post on Facebook, trembles at our aircraft carriers, and blames the C.I.A. for everything. We’re No. 1!

In some ways we indisputably are, but a major new ranking of livability in 132 countries puts the United States in a sobering 16th place. We underperform because our economic and military strengths don’t translate into well-being for the average citizen.

 

In the Social Progress Index, the United States excels in access to advanced education but ranks 70th in health, 69th in ecosystem sustainability, 39th in basic education, 34th in access to water and sanitation and 31st in personal safety. Even in access to cellphones and the Internet, the United States ranks a disappointing 23rd, partly because one American in five lacks Internet access.

“It’s astonishing that for a country that has Silicon Valley, lack of access to information is a red flag,” notes Michael Green, executive director of the Social Progress Imperative, which oversees the index. The United States has done better at investing in drones than in children, and cuts in social services could fray the social fabric further.

 

This Social Progress Index ranks New Zealand No. 1, followed by Switzerland, Iceland and the Netherlands. All are somewhat poorer than America per capita, yet they appear to do a better job of meeting the needs of their people.

 

The Social Progress Index is a brainchild of Michael E. Porter, the eminent Harvard business professor who earlier helped develop the Global Competitiveness Report. Porter is a Republican whose work, until now, has focused on economic metrics.

“This is kind of a journey for me,” Porter told me. He said that he became increasingly aware that social factors support economic growth: tax policy and regulations affect economic prospects, but so do schooling, health and a society’s inclusiveness.

 

So Porter and a team of experts spent two years developing this index, based on a vast amount of data reflecting suicide, property rights, school attendance, attitudes toward immigrants and minorities, opportunity for women, religious freedom, nutrition, electrification and much more.

Many who back proposed Republican cuts in Medicaid, food stamps and public services believe that such trims would boost America’s competitiveness. Looking at this report, it seems that the opposite is true.

Ireland, from which so many people fled in the 19th century to find opportunity in the United States, now ranks 15th. That’s a notch ahead of the United States, and Ireland is also ahead of America in the category of “opportunity.”

 

Canada came in seventh, the best among the nations in the G-7. Germany is 12th, Britain 13th and Japan 14th.

The bottom spot on the ranking was filled by Chad. Just above it were Central African Republic, Burundi, Guinea, Sudan and Angola.

 

...some countries punch well above their weight. Costa Rica performs better than much richer countries, and so do the Philippines, Estonia and Jamaica. In Africa, Malawi, Ghana and Liberia shine. Bangladesh (no. 99) ranks ahead of wealthier India (no. 102). Likewise, Ukraine (no. 62) outperforms Russia (no. 80).

China does poorly, ranking 90th, behind its poorer neighbor Mongolia (no. 89). China performs well in basic education but lags in areas such as personal rights and access to information.

All this goes to what kind of a nation we want to be, and whether we put too much faith in G.D.P. as a metric.

Over all, the United States’ economy outperformed France’s between 1975 and 2006. But 99 percent of the French population actually enjoyed more gains in that period than 99 percent of the American population. Exclude the top 1 percent, and the average French citizen did better than the average American. This lack of shared prosperity and opportunity has stunted our social progress.

 

There are no quick fixes, but basic education and health care are obvious places to begin, especially in the first few years of life, when returns are the highest.

The arguments for boosting opportunity or social services usually revolve around social justice and fairness. The Social Progress Index offers a reminder that what’s at stake is also the health of our society — and our competitiveness around the globe.

THE POPULIST CAUSE: REDUCE INEQUALITY & STAGNATING INCOMES

 
 
 
 
PAUL KRUGMAN, N.Y. TIMES

“The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.”

John Maynard Keynes wrote that in 1936, but it applies to our own time, too. And, in a better world, our leaders would be doing all they could to address both faults.

Unfortunately, the world we actually live in falls far short of that ideal. In fact, we should count ourselves lucky when leaders confront even one of our two great economic failures. If, as has been widely reported, President Obama devotes much of his State of the Union address to inequality, everyone should be cheering him on.

 

They won’t, of course. Instead, he will face two kinds of sniping. The usual suspects on the right will, as always when questions of income distribution comes up, shriek “Class warfare!” But there will also be seemingly more sober voices arguing that he has picked the wrong target, that jobs, not inequality, should be at the top of his agenda.

Here’s why they’re wrong.

First of all, jobs and inequality are closely linked if not identical issues. There’s a pretty good although not ironclad case that soaring inequality helped set the stage for our economic crisis, and that the highly unequal distribution of income since the crisis has perpetuated the slump, especially by making it hard for families in debt to work their way out.

 

Moreover, there’s an even stronger case to be made that high unemployment — by destroying workers’ bargaining power — has become a major source of rising inequality and stagnating incomes even for those lucky enough to have jobs.

Beyond that, as a political matter, inequality and macroeconomic policy are already inseparably linked. It has been obvious for a long time that the deficit obsession that has exerted such a destructive effect on policy these past few years isn’t really driven by worries about the federal debt. It is, instead, mainly an effort to use debt fears to scare and bully the nation into slashing social programs — especially programs that help the poor. For example, two-thirds of the spending cuts proposed last year by Representative Paul Ryan, the chairman of the House Budget Committee, would have come at the expense of lower-income families.

The flip side of this attempt to use fiscal scare tactics to worsen inequality is that highlighting concerns about inequality can translate into pushback against job-destroying austerity, too.

But the most important reason for Mr. Obama to focus on inequality is political realism. Like it or not, the simple fact is that Americans “get” inequality; macroeconomics, not so much.

 

There’s an enduring myth among the punditocracy that populism doesn’t sell, that Americans don’t care about the gap between the rich and everyone else. It’s not true. Yes, we’re a nation that admires rather than resents success, but most people are nonetheless disturbed by the extreme disparities of our Second Gilded Age. A new Pew poll finds an overwhelming majority of Americans — and 45 percent of Republicans! — supporting government action to reduce inequality, with a smaller but still substantial majority favoring taxing the rich to aid the poor. And this is true even though most Americans don’t realize just how unequally wealth really is distributed.

 

By contrast, it’s very hard to communicate even the most basic truths of macroeconomics, like the need to run deficits to support employment in bad times. You can argue that Mr. Obama should have tried harder to get these ideas across; many economists cringed when he began echoing Republican rhetoric about the need for the federal government to tighten its belt along with America’s families. But, even if he had tried, it’s doubtful that he would have succeeded.

 

Consider what happened in 1936. F.D.R. had just won a smashing re-election victory, largely because of the success of his deficit-spending policies. It’s often forgotten now, but his first term was marked by rapid economic recovery and sharply falling unemployment. But the public remained wedded to economic orthodoxy: by a more than 2-to-1 majority, voters surveyed by Gallup just after the election called for a balanced budget. And F.D.R., unfortunately, listened; his attempt to balance the budget soon plunged America back into recession.

The point is that of the two great problems facing the U.S. economy, inequality is the one on which Mr. Obama is most likely to connect with voters. And he should seek that connection with a clear conscience: There’s no shame is acknowledging political reality, as long as you’re trying to do the right thing.

 

So I hope we’ll hear something about jobs Tuesday night, and some pushback against deficit hysteria. But if we mainly hear about inequality and social justice, that’s O.K.