University of Wisconsin–Madison
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Leveraging big data to help restore the American Dream

None of us got where we are solely by pulling ourselves up by our bootstraps. We got here because somebody—a parent, a teacher, an Ivy League crony or a few nuns—bent down and helped us pick up our boots.
—Thurgood Marshall
The “American Dream” means different things to different people, and there are many different ways to measure whether people have achieved it. Raj Chetty suggests a simple statistic that can be measured empirically: the probability that a child born to parents in the bottom fifth of the income distribution reaches the top fifth of the income distribution as an adult. Since by definition only 20 percent of the population can be in the top fifth of the income distribution, the upper bound on this statistic is 20 percent. That is, if the economic circumstances an individual is born into had no effect on economic mobility, then 20 percent of those born into the bottom fifth would reach the top fifth. In the United States, 7.5 percent of those who start out in the bottom fifth of the income distribution reach the top fifth. This rate is low compared to other developed countries around the world; for example, the equivalent statistic in the United Kingdom is 9 percent, in Denmark 11.7 percent, and in Canada 13.5 percent. This means that the chances of achieving the “American” Dream are almost twice as high if you grow up in Canada.

Categories

Inequality & Mobility, Intergenerational Poverty, Place, Spatial Mismatch

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