Edward Conard

Top Ten New York Times Bestselling Author

  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

AI Summary. Affluent families' education spending has risen nearly 300%, while spending by other families has stayed flat, and differences in family structure account for 32% growth in family income inequality. At the 150 most competitive colleges, 72% of students come from the richest quarter of families and 3% from the poorest.

David Brooks New York Times
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David Brooks @nytimes argues that inequality is driven by parents investing in their children, with affluent families spending nearly 300% more on education since 1996, widening the opportunity gap.

Do affluent families' spending on children widen income inequality?

Core argument: Affluent families have increased spending on their children's education by nearly 300% since 1996 while spending by other families has remained flat, and students from affluent families are four grade levels ahead by eighth grade.

Inequality is increasingly driven by parental investment in children, with affluent families spending nearly 300% more on education since 1996, while others' spending remains flat. This disparity contributes to a 32% growth in family income inequality since 1979 due to differences in family structure. The top 20% of earners, concentrated in talent-rich zones, invest heavily in their children's education, resulting in students from affluent families being four grade levels ahead by eighth grade. At the 150 most competitive colleges, 72% of students come from the richest quarter of families, while only 3% come from the poorest. This geographic concentration of wealth and opportunity exacerbates inequality, creating a caste-like society. To bridge the opportunity gap, resources must be allocated to empower the bottom 80% with access to quality education and community-driven initiatives, as demonstrated by successful models in neighborhoods like Compton.

Takeaways by Macro Roundup® AI

  1. Affluent families have increased spending on their children's education by nearly 300% since 1996 while spending by other families has remained flat, and students from affluent families are four grade levels ahead by eighth grade.
  2. At the 150 most competitive colleges, 72% of students come from the richest quarter of families and only 3% from the poorest.
  3. Differences in family structure account for 32% growth in family income inequality since 1979, with the top 20% of earners concentrated in talent-rich zones and investing heavily in their children's education.

David Brooks, "Who Is Driving Inequality? You Are,"New York Times, April 23, 2020, https://www.nytimes.com/2020/04/23/opinion/income-inequality.html

Who is driving inequality in America? You are. I am. We are.

Did you read to your kids before bed when they were young? If you did, you gave them an advantage over kids whose parents were working the evening shift at 7-Eleven. Did you spend extra on tutoring or music lessons? Since 1996, affluent families have spent almost 300 percent more educating their young while everybody else’s spending has been mostly flat.

Did you marry before having kids and raise your kids in a two-parent home? The children of the well educated are now much more likely to grow up in stable families, and those differences in family structure explain 32 percent of the growth of family income inequality since 1979.

If you did these things, you did nothing wrong. You invested in your children’s flourishing as any decent parent would.

But here’s the situation: The information economy rains money on highly trained professionals — doctors, lawyers, corporate managers, engineers and so on.

Daniel Markovits, author of “The Meritocracy Trap,” estimates there are about one million of these workers in America today. They work really hard, are really productive and earn a lot more. In the mid-1960s, profits per partner at elite law firms were less than five times a secretary’s salary. Now, Markovits notes, they are over 40 times.

These professionals invest heavily in their children’s education. By eighth grade, students from affluent families are four grade levels ahead of students from poor families. Seventy-two percent of students at the 150 most competitive colleges come from the richest quarter of families, and only 3 percent come from the poorest.

Inherited inequality is bad enough. But it’s the geographic concentration that is really turning America into a caste society. Affluent people used to be spread around: owning the local bank or factory, sending their kids to the local schools.

Now those of us in the top 20 percent of earners are concentrated in talent-rich zones around New York, D.C., the Bay Area, etc. The already advantaged build rich communities and multiply one another’s advantages even more. It takes a village to raise a Stanford grad.

You don’t have to drive very far outside these top 20 percent communities to find yourself in a different universe. In February I drove from Manhattan Beach, Calif., to Watts in South Central L.A. and Compton, where I spent a few days interviewing residents.

People in Compton and Watts — almost exclusively Latino and black — talked about all the things that have been stripped away from their communities: good schools, public amenities, school choirs, music festivals. Fear was a constant subject of conversation. Most of the people I spoke with had lost a family member to gun violence.

People spoke about intense levels of social distrust; the locals had been betrayed again and again by outsiders and now are very skeptical of people promising to make improvements. They talked about trauma. “There are Compton riots on the inside now,” one resident told me.

I chose to go to Compton and Watts for a specific reason, which offers a way forward. Harvard economist Raj Chetty recently led a study that showed that though these two neighborhoods are demographically similar and only 2.3 miles apart, 44 percent of the black men who grew up in Watts were incarcerated on April 1, 2010, compared with only 6.2 percent of the black men who grew up in families with similar incomes in Central Compton. Similarly, social mobility was much lower in Watts than in Compton.

Why are some neighborhoods, including some in Compton, able to give their kids better chances in life despite so many disadvantages? Chetty points to several factors: better schools, more fathers present in the neighborhoods and more cohesive community organizations.

I found all those things in my reporting in Compton — and something else. Watts is part of Los Angeles. Compton is its own city with its own mayor. I met a lot of great people in Watts, but Compton has more civic infrastructure — community groups and locally controlled government agencies. Compton has a lot of homegrown civic reformers, like Rafer Owens, who is a deputy Los Angeles County sheriff and pastor at a Baptist church. There’s also a mentality: We have faith in our ability to take care of ourselves; only people in the neighborhood really know what’s going on.

Some people who talk about inequality focus on the top 1 percent, and if you want to go after the hedge fund billionaires feel free. But as inequality is actually lived out, it’s the 20/80 gap that is most glaring and most unjust.

But we can reduce the opportunity gap if we follow the lessons of Compton: First, the neighborhood is the unit of change. Social mobility rises village by village. Second, the people in the community have to be in charge. They need resources from outside, but only local control does the trick. Third, spending money on preschool, apprenticeship and other human capital programs really works.

The top 20 percent is not going to stop spending heavily on their kids. We have to give the bottom 80 percent the resources to do the same.

Ed Comment:I don't buy the invest more in the low scorers argument because it mistakenly assumes the returns would be the same as investing in the high scores, which of course is pablum/BS. I suspect we don't invest more, not because we wouldn't if the payback was high, but because it's not high. My kid barely accepts the investment.

Additional Ed Comment:I remember when the book came out. Even though I disagree, I would be interested to see all his data. After all, I'm in the business of facts communicated as factoids. While I don't have time to disagree with all the misguided thinking in the world, I think it would be good to have the best ones in the file tag with "Ed disagrees," especially the data intensive ones, whee the data can be used to support the truth. Here's what the author misses is: 1) the growing value of talent in our increasingly technical world relative to the supply of talent has sucked the talented into its vaccum via growing incentives rather than talent merely pushing their way into a niche that hasn't changed. 2) We largely serve our fellow man as customers. Society doesn't need it's talent to goof off. It needs them to work hard. Mission a accomplished. Let's celebrate instead of bemoaning the fact they are working hard. People can always goof off if the want to. That's the problem, not the solution. I ought to debate this guy (at IQ2).

"...The information economy rains money on highly trained professionals — doctors, lawyers, corporate managers, engineers and so on. Daniel Markovits, author of “The Meritocracy Trap,” estimates there are about one million of these workers in America today. They work really hard, are really productive and earn a lot more. In the mid-1960s, profits per partner at elite law firms were less than five times a secretary’s salary. Now, Markovits notes, they are over 40 times. These professionals invest heavily in their children’s education. By eighth grade, students from affluent families are four grade levels ahead of students from poor families. Seventy-two percent of students at the 150 most competitive colleges come from the richest quarter of families, and only 3 percent come from the poorest...."

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