Saturday Links: global poverty, inequality, happiness, identities, unemployment benefits, assortative mating

Poverty and global inequality are falling. (and perhaps faster than traditional studies indicate) I’ve made this point a few times. The best summary was on Vox EU. In an article called Parametric estimations of the world distribution of income.

World poverty is falling. Between 1970 and 2006, the global poverty rate has been cut by nearly three quarters. The percentage of the world population living on less than $1 a day (in PPP-adjusted 2000 dollars) went from 26.8% in 1970 to 5.4% in 2006 (Figure 1).

Figure 1. World poverty rates

Although world population has increased by about 80% over this time (World Bank 2009), the number of people below the $1 a day poverty line has shrunk by nearly 64%, from 967 million in 1970 to 350 million in 2006. In the past 36 years, there has never been a moment with more than 1 billion people in poverty, and barring a catastrophe, there will never be such a moment in the future history of the world.

Figure 2. World distribution of income: 1970 and 2006

  • What is North Carolina telling us about unemployment benefits?  These suggest a higher level of work discouragement than I would have expected.
  • Mobility, 1996-2005.

    Bottom Line: The dynamism of the US economy is generally under-appreciated, and the significant income mobility documented above receives almost no attention from those complaining about income inequality and stagnant household incomes. Contrary to prevailing public opinion that Americans get stuck at a given low-income level for decades or generations, the empirical evidence summarized above tells us that there is significant movement up and down the economic ladder over even very short periods of time, like one decade.

  • Reject Telescopic Morality

The people who devote themselves to these causes are not heroes. I’m sorry, but they are not. The crusader on behalf of the greater good who fights their hardest on behalf of policies whose outcomes they cannot hope to actually measure is nothing compared to the everyday citizen who does not hesitate to help pick up the pieces after a disaster. Hell, the activist-crusader is nothing compared to the neighbor who helps clear up the snow after a blizzard.
The modern moralist wants to look down upon mankind from above to determine what moral codes are valid for shaping our choices. Yet the true moralist is not above their community, but of it.

  • End Harvard and end inequality!

    The “typical” married couples today consist of highly educated people marrying highly educated people and lowly educated people (at lower rates) marry people from their same educational and income class. This perpetuates and deepens inequality. Of course, where does most of the high-talent, high-income, high-class sorting happen? At the elite colleges. Ban them and then you fix that “problem.” Ah. Easy peasy lemon squeasy.

    Other reasons to ban Harvard on inequality grounds should be obvious. If you take the view that education is a way to enhance productivity, and you understand that those folks who are already more productive and more privileged are more likely and more prepared for Harvard, then by banning Harvard you would reduce the already large advantage the already productive people have.

  • The demise of the Great Gatsby Curve
  • We think inequality is worse than it is.
  • Inequality and assortative mating.  First in the Atlantic, then the FT:

The sociologist Christine Schwartz showed in 2010 that the incomes of husbands and wives in the US are far more closely correlated than they were in the 1960s, and that this explained about one-third of the increase in income inequality between married couples. John Ermisch and colleagues have shown other consequences: in both the UK and Germany, assortative mating substantially explains low social mobility because the children of prosperous parents marry each other.

We should not place too much emphasis on all this. Assortative mating explains only part of the rise of inequality, and perhaps very little at the top of the income scale. The usual remedies for inequality – unionisation, redistributive taxes, minimum wages – still have the same advantages and limitations as ever, even if they need to reflect the reality of the two-income household. It’s a reminder that the most welcome social trends can have unwelcome side-effects.

Speaking of assortative mating: Yuck, just yuck.

08. February 2014 by Andrew Hofer
Categories: Economics, Inequality, Lifestyles | Tags: , , , , , , , | 1 comment

One Comment

  1. Thanks for your interest, Andrew. Seeing your comment made me realize that I had been lazy. Here is a new post on the North Carolina employment trends, with state-by-state comparisons of Labor Force Participation and Employment-Population Ratios. There is some reduction in labor force participation, but most of the change since July, relative to the other states, has been an increase in employment.

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