Tuesday, July 28, 2015


This is Joseph

I am a big fan of the idea of meritocracy -- the idea that personal qualities should sort people out into professions such that the "best" at a task (and who want to do a task) get to do it.  It seems to be a very efficient way of jointly selecting on ability and inclination. 

Then I read articles like this one and it becomes clear that we are certainly not living in this world now.  Nor are we likely to get there soon under any modest tweak to the current economic system:
Then there is the group that the Zillow study dubs “double lucky.” These are the select few whose families had enough money to not only help them with college, but to then also assist them with a down payment on a home. This group accounts for more than half of the Millennial homeowners in the Zillow’s data, though they account for only 3 percent of the total Millennial population.
Sure, there are small tweaks that we could do to reduce this level of intergenerational subsidy.  Very high taxes on above median outcome sure could not hurt.

But for this system to be a meritocracy, you would have to assume a very high level of correlation between parents and children in terms of ability.  And that ability was some sort of general thing, that could persist even as the nature or type of employment evolves over time.  I suppose a very strong heritability model of something utterly general (like "IQ") might do*, if there were good research here showing massive effects**. 

Absent that rather strong assumption, these types of associations suggest that, whatever social structure might cause meritocracy, the current culture does not qualify. 

* Recent research (e.g. Maciej Trzaskowski, Nicole Harlaar, Rosalind Arden, Eva Krapohl, Kaili Rimfeld, Andrew McMillan, Philip S. Dale, Robert Plomin, Genetic influence on family socioeconomic status and children's intelligence, Intelligence, Volume 42, January–February 2014, Pages 83-88.) suggests that genes are associated with both SES and IQ (creating some real issues with effect separation).  Also note that the proportion of variance explained is small.  One needs huge effects to presume inherited wealth isn't an issue and we're not seeing this at all. 

**Also see this NBER paper (abstract below):
Wealth is highly correlated between parents and their children; however, little is known about the extent to which these relationships are genetic or determined by environmental factors. We use administrative data on the net wealth of a large sample of Swedish adoptees merged with similar information for their biological and adoptive parents. Comparing the relationship between the wealth of adopted and biological parents and that of the adopted child, we find that, even prior to any inheritance, there is a substantial role for environment and a much smaller role for genetics. We also examine the role played by bequests and find that, when they are taken into account, the role of adoptive parental wealth becomes much stronger. Our findings suggest that wealth transmission is not primarily because children from wealthier families are inherently more talented or more able but that, even in relatively egalitarian Sweden, wealth begets wealth.

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