An Interesting Debate?

Greg Mankiw and Paul Krugman are having an important debate about the transmission of income inequality across generations.  Here is a quote from Dr. Mankiw.

“A book I probably should have cited in my article is Judith Harris’s The Nurture Assumption.  The main thesis of this great book is that, beyond genes, parents matter far less than most people think.  Raising three children has made me appreciate Harris’s conclusion.  It is frustrating how little influence we parents have.”

I believe that Jim Heckman would disagree with Dr. Mankiw.  Here is a good quote from a PBS Newshour Segment where Heckman was interviewed.

“You’re a University of Chicago economist, which suggests a certain conservatism with regard to economics, right?

James Heckman: Yes, but what I take from Chicago is not some hard line about minimum wages or anything of the sort, but understanding that incentives really matter. Alfred Marshall is one of the inspiring forces of the Chicago tradition.

And Marshall, in his book, “Principles of Economics,” made this remark:

“The greatest capital that you can invest in is human capital, and, of that, the most important component is the mother.”

So he was talking about early motherhood, maternal interventions, the importance of the family. We know there are a lot of differences genetically; there are a lot of differences that emerge. But what we also know is that we can work with those differences and so we recognize individuality, we supplement individuality and when, in some cases, the individuality looks like it’s heading in a bad direction, we can do something about it.”

For those RBC readers eager to see some advanced material, read through Heckman’s research program.  

 

 

 

Author: Matthew E. Kahn

Professor of Economics at UCLA.

42 thoughts on “An Interesting Debate?”

  1. What strikes me as totally bogus about Mankiw’s point is that he is taking an argument about emotional, psychological, and social development and applying it to economic opportunity. To me it seems obviously true that adolescents take more cues from peer groups than from parents. But they don’t hesitate to take full advantage of parental wealth, and the experiences and doors to opportunity that opens up. Either Mankiw is being totally disingenuous about this point, or else he is incapable of reflecting very deeply about the interplay between human nature and economics.

    Mankiw’s point applies to the futility of parents wishing to control their children’s moral choices, i.e. the futility of moral conservatism as a stable heritable tradition, while it applies not at all to the heritability of wealth, privilege, connections, access, and all the other keys to entry of elite society.

    1. This. Harris argues that peers are more important than parents, but what better way to have more intelligent, less crime-prone peers than living in a “nice neighborhood”? And what gets the child into that neighborhood? Usually the wealth of the parents.

      1. This is why we need a like button in comments…

        My parents are college educated. Their friends are college educated. The children of these college educated friends are also college educated. By crazy random happenstance, I also am college educated.

        1. Yes – I’m reminded of a comment by a LAPD officer, who was a mother. She had just been assigned to either Compton or the Southside. She said that she had spent a decade as a police officer not believing in the overwhelming effects of neighborhood over parenting, until she came there; she admitted that if she was raising her son in that neighborhood, keeping him from crime would probably be beyond her abilities.

          And, of course, Mankiw is – not clueless, but dishonest, about the fact that parents with resources have choices about the the outside-the-house environment for their children.

          1. I’m also amazed to see something worth hearing coming from Matthew Kahn – has he improved while I was gone, or was this just luck?

      2. I think it’s actually a little more complicated than that. What kids don’t get from their parents is their values and interests and habits. My two brothers and I were raised by the same parents, in the same suburbs, with the same amount of money, but one of us turned out a lot differently than the other two, because he fell in with a different group of friends in Junior High and High School. In other words, the idea that some helicopter parent can do a “superior” job of parenting and prevent a kid from having a bad outcome is wrong– any reasonable parenting strategy is fine, and no strategy guarantees success.

        But nobody denies that kids get money and connections from their families. That’s just completely different from what Harris was talking about.

        1. And to be clear, for that reason, Heckman and Kahn are really dead wrong about mothers. Their attitude is part of what fuels the anti-feminist “mommy wars”, where perfectly decent but less trendy parenting styles get criticized as some sort of betrayal of the child.

  2. This is just the standard nature/nurture debate. The better “nurture” is, the more variation is driven by “nature”: Provide the ideal environment to a child, and success is entirely up to his nature. Hit him over the head with a lead pipe, and the very best nature won’t enable him to thrive.

    The wealthy can provide remarkably good environments for their children, but some of those children do remarkably well, and some of them do not. The great fortunes rise AND fall, because nurture isn’t everything.

    But the poor don’t self-perpetuate because they’re too poor to provide a good enough environment. We have too many counter-examples, people who, in the depths of poverty, manage to raise their children well enough to do better than themselves. The very advance of civilization is proof that poverty is not inescapable.

    The poor self-perpetuate because they aren’t culturally inclined to do what they could do for their children. They are the victims, not of an oppressive society, but of a self-perpetuating culture of failure. Their children grow up ignorant, not from lack of schools and libraries, but from lack of being taught that learning is important. They grow up impoverished because their parents can not pass on the values they themselves lack, of thrift, learning, and industry.

    There will always be, at the margins, people who rise and fall from sheer luck. But we shouldn’t fool ourselves that it’s just bad luck or external circumstances that are responsible for poverty in the midst of plenty. It’s not poverty of money that’s being transmitted from generation to generation, it’s a poverty of values, of culture.

    Unfortunately, you can’t fix that by giving people stuff.

    1. Apparently airbrushed anecdotes and camouflaged racism still trump data.

      As if we needed a reminder.

    2. Brett, Brett, Brett: occasionally you make a cogent point, but this isn’t one of those times. Put yourself in the position of a woman who changes the sheets in a couple of dozen hotel rooms every day, wrestling the overstuffed mattresses and cleaning the bathrooms up after a bunch of culturally superior financial wizards have left. And perhaps having a second job because the first doesn’t pay enough to raise a family. And you expect her to read “The Little Engine that Could” to her kids? It’s not the poverty of *her* values, but yours.

        1. No doubt true but also irrelevant to the questions of whether there is greater social mobility here rather than in, say, Europe or whether the advantages of upper middle class levels or greater levels of wealth convey extreme advantages that placing the poor at a greater disadvantage than previously thereby explaining why we are now experiencing reduce social mobility and other detrimental effects of radical increases in income inequality.

          Everything is better with money.

        2. Harris, who Mankiw cites as the basis of his argument, would emphatically disagree with this.

      1. Yeah, I actually do expect that of her, though, as Charles remarks, just by working that hard she’s won half the battle, setting a good example of hard work.

        Are you so blind you don’t understand that a lot of the poor perpetuate their poverty in the next generation, by not passing on the values that lead people to improve their lives? You don’t understand that it IS a matter of values? Teaching your children to value learning and hard work?

        God, I wish it was just a matter of their being financially poor. THAT would be easy to fix, compared to a poverty of values.

        1. Values are good but money is better. Everything is better with money.

          As an aside, however, I’m curious how you would give all increasing number of improvised people enough money to compensate for the vastly increased difference in spending on “enrichment expenditures” (defined as “the amount of money families spend per child on books, computers, high-quality child care, summer camps, private schooling, and other things that promote the capabilities of their children”)that Krugman mentions without increasing taxes or the size and reach of state power? I know how I’d do it, namely, I would raise taxes significantly on the rich and I would also tamp down as much of the rent seeking, corruption and crony capitalism that’s developed in this country, particularly within the financial sector. Then, the government would have plenty of money to spend on the poor and middle classes, while income inequality would be rolled back. That’s my plan. What’s yours?

        2. I’m going to partially agree with you. Yes, absolutely, the example that parents set is important. So in the environment in which they place their children. Prioritizing a good neighborhood over a nicer house in a worse neighborhood makes a difference, in a lot of ways.

          BUT. One major reason most poor cannot elevate themselves and their kids is that coping with poverty forces people to find ways to accept their conditions. You learn to see your life as normal; the alternative is intense depression which you cannot afford to treat. But those coping skills, in which you see your life as normal, make it harder to imagine improving your life through your own efforts. Chances are, if you know anybody who did succeed, it was because of a stroke of luck, not hard work. If you cannot imagine a path out, finding one is very tough.

          And the government isn’t going to help. Receiving money just keeps your from starving and maybe allows you to have some ways to feel good about yourself – but it doesn’t provide skills at budgeting and planning and valuing education and training.

          1. Government’s ability to help is constrained only by the values of our society. If we wanted everybody to have a decent life as a basic line, that would actually be fairly easy to arrange. As Katja pointed out, there are a lot of societies that have organized themselves around that exact principle or something close to it. So government could help and it would if we better people with better values.

            What’s more, as with everything else, money matters. You say that money doesn’t provide skills but that’s plainly wrong. If you have enough money, you can hire people with those skills—which is what the rich actually do. Similarly, a properly organized and financed educational system could easily teach the poor many of those same life-skills, if not of the rich then certainly those of the middle classes.

            Which, I think, highlights the point that Krugman and others have made that one consequence of the extraordinary economic and social inequality that has come to define contemporary American society is that the richer you are, the more you can spend on “enriching” your children. Now, obviously government programs and good public education can’t put everybody on an equal footing or eliminate distributional conflicts. But there’s no reason why we can’t reduce the gap and use some of that money to enrich the lives of poor and middle class children.

      1. No, you aren’t. If there’s one thing we’ve learned over the past few weeks it’s that nobody’s anonymous anymore. If you don’t believe me, just pick up your phone and talk loudly into the microphone. The NSA will probably call you back in a few minutes to let you know that if you’ve got nothing you hide, you shouldn’t mind them listening.

    3. To the contrary, since the problem actually identified by the study Krugman cites is either caused or greatly exacerbated by the rising levels of income inequality and the resulting ability of the rich to spend vast sums for “enrichment,” it seems obvious that the most obvious and sensible way to fix the problem he’s identified is indeed by giving people “stuff,” and specifically by giving them money.

      1. No, not really. As the problem is a self-perpetuating lack of the values which cause people to become self-supporting and rise through the income distribution, simply giving them money is rather like hooking somebody who’s lost their kidneys to a dialysis machine. Worse, it’s like hooking up somebody with a mutation that causes you to lack kidneys up to a dialysis machine, because the dependence won’t just be perpetual, it will continue generation after generation.

        Of course, if you’re the party of dialysis machines, maybe you don’t want people to have kidneys. Not in your interest that they stop being dependent on you.

        1. Brett, you seem to be greatly simplifying things. Your larger point, that it isn’t about money, I completely agree with. But what it *is* about is more complex than “values”, which implies something one has deliberately chosen. I prefer the term human capital, because it describes the dynamic in which resources are learned and then leveraged. Implicit in this description is the notion that these resources do not appear out of thin air, but are acquired in a larger system. Hence, things like generational poverty are explained as a lack of human capital in one generation producing a lack of capital in the next. Or at the other end, generational wealth producing more wealth.

          The resources of human capital are of course complex and dynamic themselves. Of course we still don’t understand the human mind very well, but at a broad level we know that basic things like parenting (itself correlated with education and income), peer groups, access to enriching activities, good schools, low stress, nutrition, etc. are all factors. I haven’t found a name for it, but there ought to be a word to describe the resources in a society that inhibit or promote human capital resources (I’ve taken to calling them societal capital). But human capital is highly dependent on them. Things like impulse control, cognition, vocabulary, emotional regulation can vary widely, and are not only dependent on one’s learning over a lifetime, but so too their current environment at any given moment. For instance, the human capital of a woman in an abusive relationship is going to be dramatically lowered. If she can escape to a shelter and recoup, her capital will greatly increase.

          1. Eli, you’re missing the point. “Values” are things that nice people (i.e. whoever is arguing this) have and others don’t. Do you love your children? Well, then, by definition, people who are different do not love their children. This way any isolated population can be treated with contempt, denied access to the larger society, and used to bind the larger society together in hatred of them.

            Republican politics 101.

        2. “Of course, if you’re the party of dialysis machines, maybe you don’t want people to have kidneys. Not in your interest that they stop being dependent on you.”

          Yeah, that’s exactly what we’re doing here, Brett. And we would have gotten away with it too, if it wasn’t for you meddling kids!

          (Yes, I’m comparing your worldview to the Scooby-Doo Show. It’s roughly as realistic.)

    4. So wealthy people by definition have good values, which they pass on to their children, who thereby retain the wealth, while poor people have lousy have lousy values? Is that it?

      You know, lots of wealthy people have lousy values. And they pass those on. That doesn’t mean they don’t pay for things like tutoring, private schools, and so on, and manage to get their kids into top schools in various ways. It also doesn’t mean their kids descend into poverty because they are greedy or dishonest or lazy. Ever hear the phrase “trust-fund kids?” It just means that lots of non-value things get passed on – connections, money, family ties, and so on.

    5. Brett: The poor self-perpetuate because they aren’t culturally inclined to do what they could do for their children. They are the victims, not of an oppressive society, but of a self-perpetuating culture of failure.

      Just because you firmly believe that doesn’t make it true.

      The inverse correlation between inequality and social mobility is well-documented. Oddly enough, the poor “self-perpetuate” far less in Scandinavia or Germany, where by your theory their welfare states should not only encourage a life on the dole, but to pass on that preference to one’s children. In fact, Germany even guarantees every citizen a life in human dignity through its constitution.

      No, it’s not because the people in these countries have innately more “thrift” and “industry”, either. In fact, contrary to popular belief, Germans work less than any other country in the OECD.

      So, what are actual contributing factors?

      First of all, it’s much easier to be a parent in one of these countries. Sweden, for example, has 16 months of parental leave. The first two years of a child’s life are particularly crucial for his or her development. The high abortion rate in the US? In 2004, “can’t afford a baby now” was the reason for 73% of all women to have an abortion, sadly enough, with a shocking 23% saying that they “can’t afford the basic needs of life”.

      Second, not staring down the barrel of a dysfunctional welfare system helps. If you can’t afford a place to live, welcome to multi-year section 8 waiting lists in the USA. Affordable or free universal healthcare also is important. Breaking out of poverty is a whole lot easier if poverty isn’t a quagmire that’s difficult to escape from in the first place. Not being confined to, say, a Cleveland slum will also expose your children to a more stimulating environment (the peer mechanism discussed above).

      Third, there is good education that is accessible for everyone, especially tertiary education as a precursor for getting a job. Not only doesn’t a middle class life all but require a college degree (because you can get one with a vocational education that has its own career tracks), but college is generally tuition-free.

      Fourth, there is less income volatility. The often staggering costs of having children are better contained in particular; the costs of illness are less (not just healthcare; a Swede or German will also struggle to understand, say, the concept of sick days), etc. Better public transit systems mean that it’s easier to make do without a car, and public transit is not just being used by the poor (a side effect of the high taxes on gas).

      Fifth, not having to work multiple jobs or working sixty hour weeks to make ends meet helps. This would in fact be flat out illegal in the EU. Less time at work means more time for your family, of course. Or, to use a modern term, an improved work-life balance.

      To make a long story short, in these countries poverty is not a trap (or at least less of one) because these countries have largely avoided making it one. SES still matters, in some countries more than others (Germany and Japan in particular come to mind as having century-old structures that perpetuate inequality). But being a good parent and earning a living is not mutually exclusive there even when you’re poor, and finding an education that gives you a good career outlook even though you were born into the bottom income bracket is much easier.

      1. Moreover the responsible middle class here isn’t having children because we’re trapped paying for the first third of our adult lives (student loans) and the last third (old age), while those with both improvident nature and improvident ability to provide nurture (*pace* both Brett the progressives on this thread) are reproducing like dandelions.

        As trashculture beings to thoroughly dominate by virtue of rapid multiplication, hello end of civilization in U.S. and goodbye international competitiveness. Get to Germany or swedenwhile you still can.

          1. Ditto Katya and Betsy. And since I am cranky today, I’m going to go ahead and say the unthinkable — I’m not even sure I give a rat’s patoot about meritocracy anymore. I think if you’re dumb as dirt, but you’re an honest person and you do conscientious work, at whatever, you shouldn’t be poor. Period.

            Meritocracy is nice, but people have turned in into a religion, and I for one am over it. Most creative and innovative people I know behave that way because they enjoy it. It’s not for the money. And if someone’s intelligent, they were mostly born that way. Why the heck should anyone admire them for it?

            I don’t care if some people are very rich, and I don’t dislike rich people, but we *clearly* need to be redistributing wealth in the US — anybody not hear me? want me to say it again? — and we probably need to raise taxes. If rich people don’t like it, they can move away, I’m fine with that too. We have plenty of talent and energy without them. And most of them wouldn’t leave.

        1. Betsy: Get to Germany or Sweden while you still can.

          I would be a bit more cautious here; these countries have problems of their own (demographics come immediately to mind, as well as the Eurozone problems in Germany).

          What they do show, however, is that poverty is in principle a solvable problem. You may not be able to eliminate it completely, but you can greatly limit it and its effects provided the political will is there. More importantly, contrary to what some American conservatives believe, it does not bankrupt them; net social spending in Europe is not higher than in the United States. The difference is that a huge percentage of US social spending is out of pocket. And this is hardly a boon.

    6. Brett: “The better “nurture” is, the more variation is driven by “nature””. No. The more equal nurture is, the more variation is driven by nature. This awould hold in an ideal kibbutz that provided all children with anidentical collective environment. Actual good parents don’t offer identical stimuli to their children; they foster some innate talents and crimp others, depending on their own proclivities. The sportwoman’s son will be encouraged to be good at sport, the musician’s daughter to be good at music. There is nothing wrong with thia variation, as none of us can possibily develop all our different potentials. The ides of a single ideal parenting does not make sense to me.

      1. James, on the reasonable assumption that nurture is subject to diminishing returns, better nurture does imply a greater share of variation will be due to nature. A billionaire can’t give his child a million times more effectively better upbringing than I can; There aren’t enough hours in the day for a million times the tutoring, the best tutor in the world not being a million times better than college educated parents homeschooling, perfectly optimal nutrition not being a million times better than pretty decent nutrition… I think the argument for diminishing returns is quite strong.

        Now, the billionaire can give his kid a million times as much money as I can mine, but history shows kids are pretty good at squandering it, which is why there’s considerable turnover among the ultra wealthy.

        But you can’t give your child what you don’t have, and values are indeed the most important thing you can give your child, because they dictate what he will do with all the rest.

        1. A man with good values but no money will soon starve to death, along with his family. Actually, the best things you can give your kids are lots of money and great connections. Also, the research refuting Mankiw is very clear that in addition to there now being limited upward social mobility, there’s also very little downward social mobility and, in fact, the richer you are the less likely that your family is going to go broke. For example, bankers on Wall Street didn’t go broke because their connections insulated them from the market downturns.

          Paris Hilton isn’t going broke because her family has an excellent family office that carefully manages their money, keeps Paris out of jail and makes sure that she doesn’t go broke. What’s more, while it’s pretty easy to burn through a couple of million, Paris represents the third generation of Hilton who, by virtue of hiring good people and favorable tax laws, has enjoyed the benefit of hundreds of millions of dollars that she didn’t nothing to earn. But she doesn’t look to be going broke anytime soon.

          Since everything is better with money, I’m just proposing that we have some limits and start allowing the CEOs and financiers to start making a fair contribution to a more just society.

        2. I’m glad to hear that Mr. Bellmore has no objection to instituting a 100% inheritance tax, with perhaps a small allowance for an educational trust fund should the malefactor of wealth pass away before their youngest child’s 21st birthday. After that it is nothing but values all the way baby, so no need for mommy & daddy’s bonds.

          Cranky

  3. Mankiw is a known lickspittle as regards income inequality. To even be having these discussions about what should essentially be settled doctrine is deeply annoying.

  4. I’ve read Judith Rich Harris’ work and Mr. Mankiw seems to have totally missed the implications. It is indeed a myth that mothers matter so much. Study after study has failed to show this. However, the biggest influence after age 5 is the peer group and the environment. While a bottom 10% mother may be just as loving and attentive as a top 10% mother, peer group and environment are certainly quite different – and generally inferior. The lesson from Harris is that your neighbor’s kids matter a lot – more than the mother – after age 5.

    1. “Mothering” is a pretty broad category. What exactly are you claiming has been found to be a myth? Because everything I’ve read and experienced (as a kindergarten teacher) says the opposite, that a child’s early years (starting even before birth, hormonally) are tremendously important, at almost every level – language, cognition, emotion, and the mother is the primary catalyst for early development.

  5. One of the things that Mankiw must have taken from his parents and his peers was the notion that hard work and ability will get you somewhere good. But in a low-mobility society like the current US, adults in lower quintiles will have been taking the opposite lesson from the example of their parents and peers. Hard work and ability don’t protect you from getting laid off because some manager made a stupid mistake about product mix or decided that outsourcing would boost their bonus. Working three jobs to give your kid a better chance doesn’t protect you from getting mugged or crashing your car or coming down with uncompensated work-related injuries.

    Meanwhile, Mankiw has racked up a record that would long ago have left him terminally unemployed if he worked in a less-forgiving bracket. He’s made wrong predictions that cost his employers power, prestige and money; he’s repeatedly hitched himself to losing managers, but thanks to tenure he just keeps on going.

  6. You’re trying to settle the nature/nurture debate by quoting a quote which quotes a 19th century economist who didn’t even study nature vs nurture? Fail.

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