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Do we value mobility?

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Abstract

Is there a trade-off between people’s preference for income equality and income mobility? Testing for the existence of such a trade-off is difficult because mobility is a multifaceted concept. We analyse results from a questionnaire experiment based on simple precise concepts of income inequality and income mobility. We find no direct trade-off in preference between mobility and equality, but an indirect trade-off, applying when more income mobility can only be obtained at the expense of some income inequality. Mobility preference—but not equality preference—appears to be driven by personal experience of mobility.

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Notes

  1. Prais (1955), Rogoff (1953), Duncan (1966), Goldthorpe (1980), Conlisk (1990).

  2. For welfare approaches see Atkinson (1981), Atkinson and Bourguignon (1982), Chakravarty et al. (1985), Dardanoni (1993), Gottschalk and Spolaore (2002), Markandya (1982); for axiomatic approaches see Shorrocks (1978), Cowell (1985), Cowell and Flachaire (2011), Fields and Ok (1996), Mitra and Ok (1998), D’Agostino and Dardanoni (2009).

  3. See Gaertner and Schokkaert (2012), the seminal articles by Yaari and Bar-Hillel (1984), Amiel and Cowell (1992) and the overviews in Amiel (1999) and Konow (2003). For complementary studies using the experimental method see e.g., Traub et al. (2005), Krawczyk (2010), and Cappelen et al. (2010).

  4. Underlying the liberal position is the view that identifies income mobility with equality of opportunity (Stokey 1998, p. 161). However “ equality of opportunity” has a variety of interpretations: it is used in the egalitarian literature to describe a situation of procedural equality of opportunity (Rawls 1971) or to represent the ideal of an egalitarianism tempered by responsibility (Dworkin 1981; Roemer 1998).

  5. The term ‘Great Gatsby’ curve was used for the first time by Krueger (2012), in a speech delivered to the Center for American Progress. The evidence is the subject of lively debate: for some, the curve simply rejects on empirical grounds the idea that income inequality is acceptable as long as there is income mobility, since it shows that “more inequality of income in the present is likely to make family background play a stronger role in determining the adult outcome of young people” (Corak 2013); for others, the evidence is “neither particularly surprising nor suggestive of any specific conclusions or policy recommendations” (Mankiw 2013), since it only reflects different degrees of heterogeneity in the ability of people of different countries.

  6. This is consistent with David Hume and Adam Smith who argued that the sympathy and impartiality required to discuss distributive justice can only be obtained by putting some distance between the social decision maker and the persons whose welfare is to be evaluated (Bernasconi 2002; Bosmans and Schokkaert 2004; Amiel et al. 2009; Konow 2009).

  7. Negative association, where \(0.5<m\le 1\), is only of theoretical interest since real world mobility data never show complete reversal between parents and children’s economic positions; see Dardanoni et al. (2012) who show that the hypothesis of nonnegative association cannot be rejected in almost all social mobility tables in 149 different countries and time periods.

  8. For example, Shorrocks (1978) developed an axiomatic approach to mobility measurement where an axiom is explicitly introduced which assigns maximum value to transition matrices (a reduced form of mobility tables which do not give information on the marginal distributions) with “the least amount of predictability”. Dardanoni (1993) presents a model where children coming from parents in lower economic positions receive a higher weight in the social evaluation than those coming from better positioned families: as he restricts attention to tables with non-negative dependence, it follows that welfare is maximised, ceteris paribus, by mobility tables with origin independence. Gottschalk and Spolaore (2002) also develop a framework where a specific form of inequality aversion restricted to the children’s generation is shown to induce a strict preference for independence.

  9. See Field and Ok’s (1999) remark about Friedman (1962).

  10. There are views that value neither equality nor mobility: according to Nozick (1974), any inequality that has not been obtained by expropriation or exploitation can be justified.

  11. Gaertner and Schokkaert (2012) argue that in some cases students may also represent a specifically interesting subgroup of the population to focus on since they may be seen as the future economic and political elite of the country and therefore in the position to affect actual economic and social policy.

  12. Even with regards to the role of incentives in experimental economics there is however some debate; see Camerer and Hogarth (1999), for a classical article on the issue.

  13. “Impartial position” means that the individual whose preferences are considered “ is not directly involved in the distributions of income in the society” . This was explained in the introduction to the questionnaire, which also explained other features, including the fact that the questionnaire is about “ social preferences for the distributions of incomes in hypothetical societies of two generations, the generation of the parents and the generation of the children” ; the fact “ there are different dimensions which may be involved in considering income distributions” ; the way in which displays have to be looked at and interpreted. The full questionnaire is available at http://darp.lse.ac.uk/resources/questionnaires/MobilityQuestionnaireWelfare

  14. In general, previous questionnaires conducted to investigate people’s attitude towards income inequality took the form of a test of the classical Pigou-Dalton principle of transfers (Amiel and Cowell 1992, 1998; Harrison and Seidl 1994; Bernasconi 2002; Traub and Schmidt 2009). Support for the principle depends on the range of the income distribution in which income transfers occur, on the type of verbal or numerical test conducted, on the frames adopted to test it (e.g. whether from a external observer viewpoint, under a condition similar to the “veil of ignorance”, or under one of individual risk)—Amiel (1999), Gaertner and Schokkaert (2012).

  15. This can be verified comparing the proportions of answers of type (B,A) in (Q2,Q8) and (Q5,Q8), with those of type (A,B) which are consistent with an opposite tendency. While the proportions of the latter patterns are very small, the former are larger, with differences that are statistically significant. In particular, in (Q2,Q8) the proportion of answers (B,A) is 8.5 % (30/355) and those of type (A,B) is 3.7 % (13/355) (\(d=2.76\), one-tailed \(p<1\,\%\)); in (Q5,Q8) the answers (B,A) are 5.9 % (21/355) and those of type (A,B) is 2.3 % (8/355) (\(d=2.6\), one-tailed \(p<1\,\%\)). Instead, there is no significance difference in the frequencies of (A,B) and (B,A) answers in (Q2,Q5).

  16. An alternative hypothesis here is that people do not switch preferences between the three questions, and in particular that they choose in Q3 and Q6 the same scenario A as in Q8. For example, a prediction of “no trade-off ” would hold either for individuals who do not care about mobility, or for those who consider the greater inequality of scenario B in the three questions anyhow too high to be compensated for any amount of mobility (even when mobility is perfect as in B of Q3).

  17. For the aggregate sample the increases in response B are: \(+\)23.2 % (35.4–11.2 % \(=\) 126/353–40/355) between Q6 and Q8 (\(d=6.597\), one-tailed \( p<1\,\%\)); \(+\)39.0 % (49.2–11.2 % \(=\) 159/356–40/355) between Q3 and Q8 (\(d=8.365\), one-tailed \(p<1\,\%\)); \(+\)13.8 % (49.2–35.4 % \(=\) 159/356–126/353) between Q3 and Q6 (\(d=1.896\), one-tailed \(p<5\,\%\));

  18. As above, in order to determinate the statistical significance of patterns (BA), they can be contrasted with the symmetric patterns (A, B). The comparison show that: in (Q3, Q6), category (B, A) corresponds to 15.6 % (55/352) versus 7.7 % (27/352) of (A, B) (\(d=3.20\), one-tailed \(p<1\,\%\)); in (Q3, Q8) answers (BA) are 31.9 % (113/354) and those (A, B) are 3.1 % (8/354) (\(d=9.25\), one-tailed \(p<1\,\%\)); in (Q6, Q8), (BA) count for 22.1 % (78/352) and (A, B) for 3.7 % (13/352) (\(d=6.92\), one-tailed \(p<1\,\%\)).

    Table 7 Distributions of answers in (Q3,Q6), (Q3,Q8), (Q6,Q8)
    Full size table

  19. As is well known, an even stronger attitude for mobility associated with lower preferences for income equality has been especially found in non-European Anglo-Saxon countries like the US, Australia and New Zealand (Alesina and Ferrara 2005; Alesina and Giuliano 2011).

  20. Indeed, most of the literature on diverse ethnicity and social mobility has focused on the effect of belonging to certain social classes and attitudes toward out-groups and how mobility may affect and may be affected by this relationships, for example for the impact that immigrants may have for the degree of mobility in a society and from here the attitude towards ethnic out-groups between different social classes. There are also studies that have investigated preferences for redistribution between immigrants. An interesting finding here is that the effect of the culture of the country of origin is stronger on attitudes towards redistribution than the effect of the characteristics of the country of destination (Luttmer and Singhal 2011).

  21. It is nevertheless worthwhile to remark that there is no significant correlation between family income (F1) and the nationality of the respondents (A1), see the correlation matrix in the Appendix (not even within the UK sample where the correlation is \(-\)0.069).

  22. Supporting this interpretation note the negative effect of “ prospect on social position” (P2) rather than the “ prospect on income” (P1), which also has a negative effect. Removing P2 from the regression makes P1 not significant.

  23. The regression obviously reports the difference between Israel and the UK; the difference between Italy and the UK remains statistically significant (at \(p\approx 0.02\)).

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Acknowledgments

We thank Anat Alexandron, Latika Sharma and Yinfei Dong for research assistance. Michele Bernasconi gratefully acknowledges partial support from the Swiss & Global - Ca’ Foscari Foundation. We especially thank the reviewers and the editor for several comments.

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Authors and Affiliations

  1. Department of Economics and Management, Ruppin Academic Center, 40250, Emek Hefer, Israel

    Yoram Amiel

  2. Dipartimento di Economia, Università Ca’ Foscari Venezia, Cannaregio 873, 30121, Venezia, Italy

    Michele Bernasconi

  3. London School of Economics and Political Science (LSE), Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD), Houghton Street, London, WC2A 2AE, UK

    Frank Cowell

  4. Dipartimento di Scienze Economiche, Aziendali e Statistiche, Università di Palermo, Edificio 13, Viale delle Scienze, 90128, Palermo, Italy

    Valentino Dardanoni

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  1. Yoram Amiel
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  2. Michele Bernasconi
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  4. Valentino Dardanoni
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Correspondence to Valentino Dardanoni.

Appendix

Appendix

See Table 11.

Table 11 Correlation matrix for controls
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Amiel, Y., Bernasconi, M., Cowell, F. et al. Do we value mobility?. Soc Choice Welf 44, 231–255 (2015). https://doi.org/10.1007/s00355-014-0839-2

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