People born in the 1980s stand a 50-50 chance of faring better economically than their parents, in what renowned economist Raj Chetty calls essentially a coin flip. This statistic shows a dramatic drop from the 92% of people born in the 1940s who have gone on to earn more than their parents and illustrates how the traditional American Dream is increasingly slipping from people’s grasp.
The sobering statistic is just one of the data points that Chetty shared in a UNC Charlotte campus conversation moderated by Belk College of Business researcher Kelly Vosters. University students, faculty, staff, alumni and community members attended the chat at the Popp Martin Student Union.
The event preceded a Chancellor’s Speaker Series event featuring Chetty, who is the William A. Ackman Professor of Economics at Harvard University and Director of Opportunity Insights, which uses big data to study the science of economic opportunity.
“Dr. Chetty and a few coauthors were the first to estimate intergenerational economic mobility for different metropolitan areas within the U.S,” Vosters said, framing the afternoon discussion. “They found dramatic differences across cities. In some places, parents' socioeconomic status was highly predictive of their children’s economic status as adults, directly contradicting this idyllic notion that the U.S. is the Land of Opportunity.”
While that research found that Charlotte ranked last out of the 50 metropolitan areas considered, the actions taken in Charlotte and the resulting improvements over the past decade are inspiring, Chetty said. UNC Charlotte and other community partners have worked with Opportunity Insights to identify specific drivers of mobility and better understand how we can improve economic mobility locally, with specific investments and interventions.
The discussion delved into the impact of social connectedness, the role that UNC Charlotte and other universities play in economic mobility and an assessment of what has changed in the past decade in this work.
Vosters, an assistant professor of economics and a Gambrell Fellow, researches issues that include intergenerational mobility, where she is examining the extent to which economic status is passed on from one generation to the next. Her other current research is focused in the economics of education.
Here are just a few points from the conversion:
- Cross-class Interaction is the strongest single predictor of economic mobility that Chetty and other researchers have found. This might be because interaction leads to access to opportunities or even because it changes kids’ aspirations. “If you’ve never met anyone who’s gone to college or thought about applying to college, that’s just not on your radar screen,” Chetty said.
- Half of the disconnection in America is due to lack of exposure, as the rich and the poor go to different schools, live in different neighborhoods and otherwise don’t find themselves in the same places. The other half is due to friending bias.
- “You can’t be friends with people you never meet,” Chetty said. If someone is not exposed to people from different socioeconomic backgrounds at school, in college or in their neighborhood, the social segregation leads to economic disconnectedness.
- Looking across a school cafeteria and seeing how people are clustered at lunch tables can highlight the roots of economic disconnection. Even if a place is well-integrated and people are exposed to each other, they still tend to split up across racial or class lines in “friending bias.”
- Communities need to think about how to tackle friending bias, as well as exposure. Policy work has focused mostly on exposure, such as through zoning changes, busing and other changes, with much less focus on tackling friending bias.
- Settings and the size of groups matter. In religious settings, sports clubs and similar gatherings, people tend to make many more cross-class friendships. Similarly, in smaller group settings, such as in smaller schools, people form more friendships across class lines.
- The data shows significant differences in children’s chances, with one meaningful difference existing between Black boys and white boys. “Race matters enormously, but it matters in a way that intersects with gender,” Chetty said.
- UNC Charlotte is making headway in steps to improve economic mobility, with its focus on access and positive outcomes for students and their families. “Places like UNC Charlotte are precisely the type of institutions that can be engines of economic mobility in the U.S.,” Chetty said.
- The Charlotte community, with leadership from UNC Charlotte and others, has made strides in improving economic mobility over the past decade by taking the data seriously and focusing on what Chetty called a tremendous number of things to improve people’s lives.