How Closely Do Our Beliefs About Social Mobility Match Reality?
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Economics Nov 6, 2018

How Closely Do Our Beliefs About Social Mobility Match Reality?

The answer differs between Americans and Europeans, and between liberals and conservatives.

Socioeconomic divide on the same street.

Riley Mann

Based on the research of

Alberto Alesina

Stefanie Stantcheva

Edoardo Teso

Americans love a good rags-to-riches story. Take Oprah Winfrey, who rose from a poor childhood in the rural South to her current status as a multibillionaire media powerhouse. Or Howard Schultz, the son of a blue-collar worker in a Brooklyn housing project, who then catapulted to success as the CEO of Starbucks.

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Peo­ple fre­quent­ly cite cas­es like these to argue that, with hard work, any­one can make a for­tune in the Unit­ed States, no mat­ter how poor they start out.

But how well do per­cep­tions of the Amer­i­can Dream match real­i­ty? And are Amer­i­cans sim­i­lar or dif­fer­ent from peo­ple in oth­er coun­tries when it comes to their beliefs about how eas­i­ly peo­ple can move between socioe­co­nom­ic class­es?

Edoar­do Teso, an assis­tant pro­fes­sor of man­age­r­i­al eco­nom­ics and deci­sion sci­ences at Kel­logg, and col­leagues explored these ques­tions by sur­vey­ing peo­ple in the Unit­ed States and four Euro­pean coun­tries. They found that Amer­i­cans over­es­ti­mat­ed people’s chances of climb­ing from the bot­tom to the top of the eco­nom­ic lad­der. Mean­while, Euro­peans under­es­ti­mat­ed the prob­a­bil­i­ty of ris­ing out of pover­ty. And this hap­pened despite the Unit­ed States’ rel­a­tive­ly lim­it­ed gov­ern­ment pro­grams, as com­pared to Euro­pean nations’ more gen­er­ous safe­ty-net poli­cies in areas such as edu­ca­tion and health care.

Amer­i­can respon­dents are, on aver­age, much more opti­mistic about the chances that a kid born in a poor fam­i­ly can become rich,” says Teso, who col­lab­o­rat­ed with Alber­to Alesina and Ste­fanie Stantche­va of Har­vard Uni­ver­si­ty on the study. And the oppo­site is true in Euro­pean coun­tries.”

The researchers also iden­ti­fied key dif­fer­ences between polit­i­cal­ly lib­er­al and con­ser­v­a­tive par­tic­i­pants, both in the U.S. and Europe.

Lib­er­als believed that social mobil­i­ty was more dif­fi­cult and were more like­ly to sup­port gov­ern­ment poli­cies aimed at fix­ing inequal­i­ty; con­ser­v­a­tives tend­ed to lean the oppo­site way. But among con­ser­v­a­tives, those who con­sid­ered it hard for poor peo­ple to rise into the mid­dle or upper class did not favor gov­ern­ment inter­ven­tion any more strong­ly than did con­ser­v­a­tives who felt dif­fer­ent­ly — per­haps because they believed that pol­i­cy­mak­ers would botch the job. Com­pared to lib­er­als, the con­ser­v­a­tives sur­veyed don’t trust the gov­ern­ment to have the tools to solve the prob­lem,” Teso says.

Those results point to a way to change some people’s minds about gov­ern­ment poli­cies tar­get­ing inequal­i­ty. Sim­ply giv­ing con­ser­v­a­tives more infor­ma­tion about low social mobil­i­ty in the Unit­ed States is not like­ly to work. Instead, politi­cians would need to show these vot­ers that the gov­ern­ment can be trust­ed to car­ry out effec­tive solu­tions, Teso says.

Land of Opportunity?

Teso’s inter­est in the top­ic was piqued by recent research that assessed rates of mobil­i­ty between social class­es in var­i­ous coun­tries. Stud­ies sug­gest­ed that, despite the com­mon Amer­i­can Dream nar­ra­tive, peo­ple in the Unit­ed States were less like­ly to rise from the bot­tom to the top of the eco­nom­ic hier­ar­chy than those in oth­er nations such as Den­mark and Canada.

If any­thing, it’s the oppo­site. It doesn’t look like the U.S. is real­ly this land of opportunity.”

— Edoardo Teso

Those data made him won­der how people’s per­cep­tions com­pared to real­i­ty. A dis­con­nect might explain why the Unit­ed States often resists income redis­tri­b­u­tion poli­cies such as high­er tax­es for the wealthy, while many Euro­pean nations embrace them.

For instance, if Amer­i­cans believe that any­one can rise to the top with enough effort, they might think there is no need for the gov­ern­ment to spend tax­pay­er dol­lars smooth­ing this path. In con­trast, if you think that you’re stuck in pover­ty if you’re born in a poor fam­i­ly, then you may be more like­ly to think that it’s fair for the gov­ern­ment to step in and redis­trib­ute income,” Teso says.

To test these ideas, Teso’s team worked with sur­vey com­pa­nies to col­lect online respons­es in 2016 from more than 12,000 peo­ple in the Unit­ed States, France, Italy, Swe­den, and the Unit­ed King­dom, cov­er­ing rep­re­sen­ta­tive sam­ples of ages, gen­ders, and income lev­els. The ques­tions probed par­tic­i­pants’ beliefs about issues such as social mobil­i­ty, gov­ern­ment inter­ven­tion, and whether work­ing hard could improve one’s chances of mov­ing up in life.

Ris­ing to the Top

In one set of ques­tions, peo­ple were asked to imag­ine 500 fam­i­lies in their coun­try spread even­ly across five eco­nom­ic tiers. Then par­tic­i­pants esti­mat­ed how many kids from the 100 poor­est fam­i­lies would reach each of the oth­er four tiers once they grow up. The researchers com­pared those respons­es to data on actu­al mobil­i­ty rates in each coun­try.

For the most part, the respon­dents’ guess­es weren’t too far off. Peo­ple were not giv­ing crazy num­bers,” Teso says. But there are sys­tem­at­ic bias­es.”

For instance, Amer­i­cans esti­mat­ed that 12% of the poor­est kids would move to the top tier, but in real­i­ty, about 8% do. And French par­tic­i­pants esti­mat­ed that 35% of the poor­est chil­dren would be stuck in their cur­rent posi­tion; the actu­al num­ber in France is 29%.

Teso believes that the coun­tries’ his­to­ries might explain these pat­terns. Amer­i­ca is famous­ly a land of immi­grants where many peo­ple did in fact build their own for­tunes. In con­trast, Europe prac­ticed feu­dal­ism for cen­turies, dur­ing which a person’s fate was large­ly gov­erned by their fam­i­ly cir­cum­stances.

Giv­en that Euro­peans have since insti­tut­ed many social-wel­fare poli­cies and improved eco­nom­ic mobil­i­ty, shouldn’t they have become more opti­mistic by now? Appar­ent­ly not. These per­cep­tions are real­ly deeply root­ed,” Teso says.

Despite these dif­fer­ing ideas about social mobil­i­ty, respon­dents in Europe and the U.S. nonethe­less agreed that indi­vid­u­als have some pow­er over their cir­cum­stances. When Amer­i­can and Euro­pean par­tic­i­pants were told that kids from the 100 poor­est fam­i­lies were very hard-work­ing, both groups gave high­er esti­mates for the children’s chances of reach­ing the mid­dle class. Even in Europe, peo­ple believe that effort mat­ters,” Teso says.

The Role of Gov­ern­ment in Social Mobility

Next, the team inves­ti­gat­ed how these views were tied to people’s beliefs about the role of gov­ern­ment. Par­tic­i­pants were asked about their sup­port for poli­cies such as spend­ing on edu­ca­tion, social secu­ri­ty, and health care, as well as their over­all views on gov­ern­ment inter­ven­tion and tax­es, and how lib­er­al or con­ser­v­a­tive they con­sid­ered them­selves.

Not sur­pris­ing­ly, Amer­i­cans looked less favor­ably upon gov­ern­ment inter­ven­tions than Euro­peans did. But among par­tic­i­pants from all coun­tries, respons­es were split by polit­i­cal ori­en­ta­tion. Con­ser­v­a­tives expressed less trust in gov­ern­ment and were less like­ly to agree that the gov­ern­ment had the tools to solve inequal­i­ty. About 60 per­cent of con­ser­v­a­tives agreed that inequal­i­ty should be addressed by reduc­ing gov­ern­ment pro­grams and free­ing” the econ­o­my; only about 20 per­cent of lib­er­als did.

The more pes­simistic Amer­i­can or Euro­pean lib­er­als were about mobil­i­ty, the more like­ly they were to sup­port poli­cies of income redis­tri­b­u­tion. But, sur­pris­ing­ly, this con­nec­tion was absent among con­ser­v­a­tives.

It seems that right-wing respon­dents sim­ply do not want much redis­tri­b­u­tion, regard­less of their views on mobil­i­ty,” the authors write. 

Chang­ing Minds

Final­ly, the researchers want­ed to exam­ine causal­i­ty. The results so far sug­gest­ed that beliefs about mobil­i­ty were linked to pol­i­cy pref­er­ences, but they didn’t show that one led to the oth­er.

So the team con­duct­ed a test with two groups of online par­tic­i­pants in the U.S. and Europe. Before ask­ing them about their beliefs, the researchers pro­vid­ed one group with gen­er­al state­ments about mobil­i­ty based on real research stud­ies. Those par­tic­i­pants read that the chances of a poor kid becom­ing rich were very low, and the chances of a wealthy kid stay­ing rich were very high.

Peo­ple who read these state­ments — both lib­er­als and con­ser­v­a­tives — tend­ed to be more pes­simistic about social mobil­i­ty than par­tic­i­pants who were not shown the state­ments. But while, among lib­er­al par­tic­i­pants, those who read these state­ments also showed high­er sup­port for gov­ern­ment pro­grams that reduce inequal­i­ty, this was not true among the con­ser­v­a­tives. The infor­ma­tion has an effect only on left-wing respon­dents,” Teso says.

Per­haps some con­ser­v­a­tives pre­fer that pri­vate char­i­ties step in instead of gov­ern­ment, Teso spec­u­lates. Or they might believe that any effort to address the prob­lem is point­less because there is no way to solve it,” he says.

The results sug­gest that if politi­cians cites data demon­strat­ing inequal­i­ty, they may con­vince con­ser­v­a­tives that mobil­i­ty is low­er than they thought. But that does not mean those vot­ers will sup­port income redis­tri­b­u­tion poli­cies. For that to hap­pen, pol­i­cy­mak­ers would need to increase the right’s trust of gov­ern­ment, per­haps by becom­ing more trans­par­ent about their actions or giv­ing evi­dence of past suc­cess­ful pro­grams.

If peo­ple were ful­ly informed about the real degree of mobil­i­ty in their coun­try, lib­er­al Amer­i­cans might sup­port more gov­ern­ment inter­ven­tion — and Euro­peans might sup­port less.

It does seem to be the case that there are con­sis­tent and sys­tem­at­ic mis­per­cep­tions across coun­tries,” Teso says.

Featured Faculty

Edoardo Teso

Assistant Professor of Managerial Economics & Decision Sciences

About the Writer

Roberta Kwok is a freelance science writer based near Seattle.

About the Research

Alesina, Alberto, Stefanie Stantcheva, and Edoardo Teso. 2018. “Intergenerational Mobility and Preferences for Redistribution.” American Economic Review. 108(2): 521–54.

Read the original

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