July 24, 2013

Breakthrough study: Poor blacks tend to stay poor, black

Much attention has been given to this new map of income mobility by economist Raj Chetty showing average change in national income percentile from low income parents to their children over the last 15 years. 

Red areas -- such as the Southeast, the Rust Belt, and large Indian reservations -- are where few poor children have become prosperous younger adults. And white areas are where more children whose parents were well below average in income in 1996 have become well above average income younger adults. In other words, white areas, such as North Dakota, have had more income mobility.

No doubt, that has something to do with the energy boom in North Dakota, but also with the earlier tendency of young people with something on the ball in North Dakota to move to higher paying cities like Minneapolis and Denver. Until recently, North Dakota had one of the oldest populations in the country due to outflow of young career-seekers. (In Chetty's study, the younger generation are assigned to where they lived in 1996, not where they live now).

Chetty downplays the role of race for vague reasons, but in general his data suggests that income mobility is higher among white populations, as we see in Europe. Regression toward the mean can explain much of the above map of income mobility, with mostly white areas regressing toward a higher mean than heavily black areas.

There are some curious results in this analysis, such as that Charlotte, NC, a major destination for economic migrants over this period due to strong job growth and reasonable housing costs, is shown as having below average economic mobility. One reason is that, all else being equal, an increase in the labor supply keeps down wages of natives, although that's typically hard to see on maps of the U.S. because labor flows to prosperous areas.

A sizable methodological problem has to do with Chetty using national income percentiles, which are massively influenced by the cost of living, especially the cost of buying a home. If you grew up in New York City and stayed there, for example, you'd better be upwardly mobile relative to national average income if you want to continue to live indoors. Thus, more than a few people have left higher paying jobs in NYC for lower paying jobs (but a better standard of living) in Charlotte.

Conversely, the Eastern state with the strongest chance of a poor child getting well-to-do is West Virginia. Let me guess that most of them didn't do it by continuing to live in West Virginia, but by moving to somewhere like suburban Washington DC. Or Charlotte.

Interestingly, a graph of downward mobility shows that Los Angeles children who were at the 80th percentile nationally in 1996 are shown as being among the most downwardly mobile in income percentile in the country's big cities, but this probably has a lot to do with the huge outflow over the last 15 years from Los Angeles to lower cost of living (and lower income) areas.

Still, bearing all that in mind, here is Chetty's table of correlations by urban area ("commuting zone"), with the five worst correlations associated with the poor staying poor in red and the five biggest correlations associated with upward income mobility in blue:
Tax and other Correlations with Intergenerational Mobility 
Local Expenditure 0.215 (0.076)
State Tax 0.199 (0.141)
State EITC Rate 0.231 (0.109)
Student Expenditure 0.251 (0.094)
High-school Dropout Rate -0.639 (0.064)
Score 0.557 (0.086)
College Return -0.276 (0.137)
College Tuition -0.003 (0.060)
Colleges per capita 0.102 (0.042)
Inc. at p75 - Inc. at p25 -0.475 (0.089)
Share of Income of Top 1% 0.178 (0.068)
Share Black -0.605 (0.065)
Black Isolation -0.513 (0.065)
Segregation of Poverty -0.405 (0.063)
Migration Inflow -0.184 (0.075)
Share Foreign Born -0.016 (0.060)
Migration Outflow -0.098 (0.069)
Mean Household Income 0.109 (0.075)
Income Growth Rate 0.561 (0.066)
Share Manufacturing -0.260 (0.081)
Trade Shock -0.274 (0.124)
Social Capital Index 0.617 (0.091)
Religiosity 0.510 (0.087)
Crime Rate -0.326 (0.101)
Share Single Moms -0.763 (0.078)
Share Single Moms (kids of married) -0.652 (0.094)
Divorce Rate -0.688 (0.108)
Teen birth Rate -0.550 (0.091)

The correlations fit in well with Charles Murray's recent book Coming Apart (not to mention The Bell Curve): social capital first, then the nearly tautological income growth rate, then test scores, then religiosity, then a big drop down to school expenditures in fifth place. The highest correlation with a region's poor staying poor is share of single moms.

38 comments:

Anonymous said...

The decline in job opportunities has a lot to do with the flow out of Los Angeles, second only to the high cost. Downward mobility there not only reflects the exodus leaving but also conditions for those still there.

Anonymous said...

Can someone explain how social capital works here? What does it look like?

Puggg said...

This is about mobility, so a white county may not be mobile in terms of going from poor to rich, but the other way around, going from rich to poor. And a red county might be already rich but stagnant instead of poor but stagnant.

Art Deco said...

I cannot figure how they set this up. A panel study with samples of adequate size in each county would be an immense undertaking.

Anonymous said...

Pump them with truth gene.

Anonymous said...

The Federal Department of Social Capital Enforcement should get right on that with a new program.

carol said...

Check out the stagnation on the Indian reservations..did the Navajos and Blackfeet miss out on the casino boom?

We in Indian country are regularly bombarded with long, anguished thumbsuckers in the media about how can we get NA's to stay in school, stop drinking, do right and not do wrong etc. These the subjects of Sovereing Nations! lol.

And everyone pretends to care.

Anonymous said...

I wish I could see the correlations for African Americans among different income levels. One would expect blacks with a median income would be more downwardly mobile vs. whites with a similar income and the same location.

Anonymous said...

"What does it look like?" - A double helix.

Anonymous said...

What the media did to George Zimmerman. They scrubbed him 'white'.

Anonymous said...

Why is economic mobility a good thing?

From a conservative perspective, isn't economic mobility a bad thing?

Anonymous said...

I say legalize drug dens in black areas like gambling was legalized in Indian reservations.

Let blacks have a monopoly on some businesses so no one could out-compete them. Legalize, regulate, and institutionalize narcotic-dealing for the Negroes.

Of course, whites and Jews can aid the blacks as managers and advisers, as in casinos in Indian reservations.

If we legalize pot and just let Negroes deal in it, Negroes could make some serious cash off white folks.

James Thompson said...

These geographic studies hide more than they reveal: they lose all the data on job related migration, for example. They also lack sensible causal models. Looking at the trends in wealth generally, and trends in inter-generational wealth is required, as well as having some SEM or simple path analysis, with basic assumptions well spelled out.

Anonymous said...

"From a conservative perspective, isn't economic mobility a bad thing?" - Well they'll have to stop supporting labor scarcity and enforcement of the law if that is the case.

Eric Rasmusen said...

"There are some curious results in this analysis, such as that Charlotte, NC, a major destination for economic migrants over this period due to strong job growth and reasonable housing costs, is shown as having below average economic mobility."
The income rise there is for people from OUTSIDE Charlotte who move there and get good jobs. So if Charlotte is good at making people richer, it's the county people are escaping from that get the credit, in this map.

Matthew said...

Yes, those high mobility counties in the West/Midwest are there because of the energy boom - from that one county in Utah all the way up to Williston, North Dakota. These counties are producing lots of energy jobs and don't have large populations, so a relatively small number of high paying jobs can move a large fraction of their populations from the top to the bottom. And the locals were there first, so they got in on the boom at the very beginning.

Anonymous said...

http://www.miamiherald.com/2013/07/24/3519160/murder-charge-dropped-in-case.html

Okay... prosecute Zimmerman for SECOND DEGREE MURDER but no murder rap for this dude.

Sam Haysom said...

I want to make a tv shirt of George Zimmerman with a caption "Hey Putman this is what social capital looks like."

Racket Mensch said...

That map looks almost an exact copy of the "clap map" Rod Dreher put up on AmCon today. Low social mobility leads to VD? or vice (no pun intended)-versa?

Anonymous said...

Any other Charlotteans here? Where does the local branch of the iSteve club meet?

Anonymous said...

Any other Charlotteans here? Where does the local branch of the iSteve club meet?

Anonymous said...

Ah, I hoped Steve would get around to the Chetty study. The moment I read Chetty's summary I smelled another PISA fiasco, where Steve or his disciples dissolve a Very Important Result using the universal solvent of HBD. So I eagerly tried to quantify how much of these findings could be explained by regression to the mean. I found that we expect a three-fold difference in Black/White social mobility based on nothing more than RTTM under modest heritability.

Disciple #384

Anonymous said...

DETAILS
OK, this is really rough, but it's a start. Let IQ proxy for income, and look only at rags-to-riches transitions: children born into the bottom quintile who grow up to be in the top quintile. The quintile boundaries are
Q1: (-∞,-0.842SD]
Q2: [-0.842,-0.253]
Q3: [-0.253, +0.253]
Q4: [+0.253, +0.842]
Q5: [+0.842,+∞)

% of all whites in each quintile, parent-generation
20.00, 20.00, 20.00, 20.00, 20.00
% of all blacks in each quintile, parent-generation
56.29, 20.94, 12.26, 7.23, 3.28

Now approximate each quintile as a normal distribution with its mean at the 10th/30th/50th/70th/90th %ile. (a labor-saving shortcut to avoid having to find the actual mean)
Then assuming only modest heritability (0.5), for Q1 parents the mean of the child generation will shift
from -1.282SD to -1.141 (Blacks)
from -1.282SD to -0.641 (Whites)
and the (stipulated) normal distribution of the child generation would find 2.37% of Q1 Black children joining Q5 (cutoff=+0.842SD) and 6.91% of Q1 White children.

Thus we expect a three-fold difference between Black & White children, based on nothing more than RTTM under modest heritability (0.5).
If h is stronger (0.7) then we expect a two-fold difference (2.07% vs. 4.10%).
If h is weaker (0.3) then we expect a four-fold difference (2.70% vs. 11.01%).

Irony for liberals: Closing The Gap actually requires cheering for stronger heritability!

Disciple #384

Anonymous said...

The better than average results for West Virginia and elsewhere in Appalachia might be similar to those in North Dakota. After decades of sluggishness, the Appalachian coal industry saw a massive resurgence in the late 2000s lasting until late last year. I think it would be hard to explain that regions uniform difference to other Eastern areas through migration to the cities alone.

Anonymous said...

"Can someone explain how social capital works here? What does it look like?"

Boy scouts
Church groups
Little leagues
Book clubs
Quiz teams

Think of it like a spider's web of social connections that link individuals to other individuals which are separate to (and supplementary to) family connections.

It's the root of the white devil's success and prosperity imo and is destroyed by diversity (or at least the wrong kind of diversity).

.

"That map looks almost an exact copy of the "clap map" Rod Dreher put up on AmCon today. Low social mobility leads to VD? or vice (no pun intended)-versa?"

Destruction of the family unit leads to more of most bad things including low social mobility and VD.

Anonymous said...

Take it from me: Charlotte blows. Terrible, terrible city.

carol said...

western oregon and humboldt county...that must be the death of logging turning them red.

David Davenport said...

Steve, did you see this in the Daily Mail?

How adding iodine to salt made America smarter

The U.S. introduced iodized salt in 1924

A new study compares IQ results of people in iodine deficient areas before and after iodized salt

Americans born in iodine deficient areas showed an IQ increase of 15 points after 1924
...

By ALEX GREIG
PUBLISHED: 17:15 EST, 24 July 2013 | UPDATED: 17:15 EST, 24 July 2013

A new study indicates that Americans gained up to 15 IQ points after the addition of iodine to salt became mandatory.

In an effort to prevent goiter related to iodine deficiency, authorities ruled that iodine be added to U.S. salt products in 1924.

The iodine, in addition to eliminating goiter, appears to have had an unexpected result: smarter Americans.

Worth its salt: Iodized salt has had an unexpected impact the IQ of Americans since it was introduced in 1924

In a report published in the National Bureau of Economic Research, James Freyer, David Weil and Dimitra Politi examined data from about two million enlistees for World War II born between 1921 and 1927, comparing the intelligence levels of those born just before 1924 and those born just after. ...


There's a twist the Daily Mail didn't mention: the Immigration Act of 1924.

David Davenport said...

The income rise there is for people from OUTSIDE Charlotte who move there and get good jobs. So if Charlotte is good at making people richer, it's the county people are escaping from that get the credit, in this map.

Bank of America's global HQ is in Charlotte. Before that, Wachovia Bank,the Southeastern USA's biggest bank, was headquartered in Charlotte. Wells Fargo took over Wachovia in 2009.

Big banks -> "economic" migrants from up the East Coast. North Carolina trending more Democrat ...

From the sometimes-reliable Wikipedia:

Bank of America Corporate Center
From Wikipedia, the free encyclopedia

Bank of America Corporate Center is located in the center of Uptown Charlotte
...

Completed 1992
Height
Roof 871 ft (265 m)
Technical details
Floor count 60
Design and construction
Owner Lincoln Harris
Architect Cesar Pelli and HKS Architects

The Bank of America Corporate Center is an 871 ft (265 m) skyscraper in Uptown Charlotte, North Carolina. When completed in 1992, it became and still is the tallest building in North Carolina as well as the tallest building between Philadelphia and Atlanta, Georgia; it is 60 stories high. It is the 90th tallest building in the world. Designed by Argentine architect C├ęsar Pelli and HKS Architects, it is the 26th tallest building in the United States and is the most widely known building in the Charlotte skyline.

It is the among the tallest buildings on the East Coast behind buildings in New York City and Philadelphia.

Sometimes locally referred to as the Taj McColl after then North Carolina National Bank (NCNB) chairman Hugh McColl who was responsible for the tower's construction,[1] on a clear day the tower is visible to the naked eye from 35 miles (56 km) away.[2] ...


An 871 foot stack of mortgages.

Galactic Overlord said...

Steve,

Commenting on your quote:

"Conversely, the Eastern state with the strongest chance of a poor child getting well-to-do is West Virginia. Let me guess that most of them didn't do it by continuing to live in West Virginia, but by moving to somewhere like suburban Washington DC. Or Charlotte."

Right on the money. (Full disclosure: I lived for more than a decade in the Charleston area.) This has been going on for the last several generations, not just the last couple of decades.

An anecdotal, but not atypical example: My best friend (I think of her more as my kid sister) is the daughter of native West Virginians. Her dad is from a rural area near Huntington, and her mom is from a little coal town in the southwest of the state. They met at Marshall University (in Huntington) in the early 60s. Did they stay in WV? Nope. He got a job with a company in the Philadelphia area, where their first daughter was born. From there, they moved to Western Michigan, where my "kid sis" was born. The family finally settled in Kentucky, not far from Louisville. Her dad eventually became a top-level manager for one of the company's subsidiaries before he retired; her mom was a full-time homemaker.

I remember my friend telling me that for many years, her mom's HS classes held their reunions in Columbus, Ohio—so many of her classmates went north that Columbus was a more central location for everyone involved than their old WV home.

Anonymous said...

Watch HBO’s Report on Chivas USA That Alleges Racial Discrimination at MLS Club [VIDEO]

http://worldsoccertalk.com/2013/07/24/watch-hbos-report-on-chivas-usa-that-alleges-racial-discrimination-at-mls-club-video/

...The report claims that several former and current club players were discriminated against because they were not Mexican or Mexican-American descent. That included the story of an African-American youth player who was allegedly told by Chivas USA officials that he should play for the LA Galaxy youth team if he didn’t speak Spanish...

Erik said...

Not sure what to make of this.

Anonymous said...

Steve, I notice that you sometimes post comments to NYT articles, and when you do I make a point of "recommending" them. Since registration on the NYT website is free, you might want to suggest to your readers that they register, and recommend your comments when they see them. If you got even 50 or 60 of your readers doing this regularly it would help your comments a lot in the "Reader's Pick" rankings.

Of course your readers could also post their own comments on the NYT site. It's really not much more of a bother than posting comments here (especially since you can post anonymously). And although the NYT site is behind a paywall, articles that are linked from other sites are exempt from the monthly quota, so I think that means they could post comments to as many articles as they liked without paying, provided they linked to those articles from here.

stari_momak said...

Interesting that share foreign has zero effect on downward mobility, at least according to this study. This could be for a lot of reasons, and the data for the Los Angeles born show that there may be something going on -- a statistical artifact, or that the study deals with cohorts before the real immigration explosion had its effects.

OTOH, the result -- to the extent it is real -- shows that the Perini (the Davis open borders guy) theory is wrong, that immigration doesn't propel US workers up the social ladder, with immigrants taking that bottom rung.

Anonymous said...

From a conservative perspective, isn't economic mobility a bad thing?

Economic mobility expands the middle class, which means that it expands the lower middle class, a famous and notorious bastion of conservatism. Calvinist, Puritan, Victorian, 1950s, Archie Bunker, Richard Nixon values are nothing more than LMC values. (Prussian values, somewhat. Prussia was a top-down engineered society much more so than its Anglo equivalents.)

ben tillman said...

Poor Blacks don't always stay Black. If they serve on George Zimmerman's jury, they become "Hispanic". See juror B29.

Anonymous said...

http://lareviewofbooks.org/interview/science-fiction-and-prophecy-talking-to-arthur-c-clarke

Anonymous said...

Alas, we continue to pretend that blacks lagging behind other racial and ethnic groups is a mystery. The reason (a 15-20 point IQ deficit against most other groups) is known to everybody, however great the penalties for uttering this dismal truth. This should be neither here nor there - blacks could still be contributing members of our society in any number of trades or occupations, just as they were before the passage of the Civil Rights legislation of the Sixties.