• Chart of the Week
  • February 7, 2018

Moving up in the world

People who are pessimistic about social mobility tend to prefer more generous redistribution policies.

digitalista/Bigstock

What percentage of people born into the bottom income quintile will eventually reach the top? If you are an American, your answer was probably too optimistic, says a paper in the February American Economic Review.

Authors Alberto Alesina, Stefanie Stantcheva, and Edoardo Teso survey people across five countries — France, Italy, Sweden, the United Kingdom, and the United States — and document their beliefs. Americans overestimate the likelihood of being extremely mobile and underestimate the likelihood of remaining stuck in the bottom quintile.

Europeans tend to believe the opposite, as shown in the figure below. The gray line represents the points where perceptions align with reality. Points not on the line represent over-optimism or over-pessimism relative to the actual probabilities in each country.

 

Figure 2 from Alesina et al. (2018)

Note: Q1 is the lowest quintile and Q5 is the highest.

 

Pessimistic respondents generally favor more generous redistributive policies than optimistic respondents. This is especially true for equality of opportunity policies, such as public education. Equality of outcome policies, such as progressive taxation, are less popular.  

In all countries, politics also informs these beliefs. Left-leaning respondents who are pessimistic about mobility are more supportive of government intervention and redistribution than their right-leaning counterparts. So, even when people agree that social mobility is an issue, the solution is not necessarily clear cut.