Edward Conard

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Upside of Inequality Unintended Consequences Oxford
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Edward Conard

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Mankiw shows rich parental resources have almost no impact on income inequality

Greg Mankiw reports that Chetty/Saez’s recent study on income mobility finds that “91 percent of the variance [in a person’s income] is unexplained by [their] parents’ income.” “Based on adoption studies,” Mankiw speculates that “conservatively…half…of that 9 percent… [stems from] genetics rather than environment… [which] leaves only 4.5 percent of the variance attributed directly to parents’ income.” He notes that even if universal preschool could “completely neutralized the [non-genetic] effect of parent’s income… the standard deviation [i.e. the variation] of income would [only] fall to 0.977 [i.e. 98%] of what it now is.”

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