In recent years, some economists convey drawn attending to a correlation that has been dubbed the Great Gatsby curve. In particular, countries that convey to a greater extent than inequality inwards income every bit good convey less economical mobility. (By the way, the curve seems misnamed: Jay Gatsby lived inwards a fourth dimension a corking inequality too managed to motion from existence really pathetic to existence really rich. But never demand heed that.)
My ain persuasion is that this correlation is non especially surprising. Let me ambit you lot an analogy to explicate why.
Suppose we collected information on diverse chess clubs (nations). In every club, nosotros convey information on each member's win-loss tape over the twelvemonth (income). We tin then measure the variance of individuals' win-loss records (inequality). We tin every bit good measure how a person's win-loss tape inwards 1 twelvemonth predicts his win-loss tape inwards the subsequent twelvemonth (mobility).
Some clubs convey a bunch of players amongst like levels of science at chess. In this case, everyone would convey a win-lose tape that is but about each other, too a person's club ranking one twelvemonth would non convey a lot of predictive value for his ranking the next. That is, nosotros would convey modest inequality too substantial mobility.
Other clubs are to a greater extent than heterogeneous. They convey some masters too some novices. The masters convey much ameliorate records than the novices, too their ameliorate records tend to persist twelvemonth to year. That is, nosotros would convey substantial inequality too fiddling mobility.
If nosotros lay all these clubs together inwards a scatterplot, nosotros would choke something but about the Great Gatsby curve.
Notice a corollary: Suppose nosotros combined 2 clubs, 1 that amongst generally masters too 1 amongst generally novices. The novel combined guild would last to a greater extent than heterogeneous and, therefore, would demonstrate to a greater extent than inequality too less mobility than either of the clubs separately.
The application of this corollary to the Great Gatsby bend is that if nosotros looked at Europe every bit a whole, rather than each acre separately, nosotros would honor that Europe every bit a whole has to a greater extent than inequality too less mobility than the private countries. That is, Germans are richer on average than Greeks, too that divergence inwards income tends to persist from generation to generation. When people expect at the Great Gatsby curve, they omit this fact, because the acre is the unit of measurement of analysis. But it is non obvious that the political divisions that split people are the correct ones for economical analysis. We combine the persistently rich Connecticut amongst the persistently poor Mississippi, so why non combine Deutschland amongst Greece?
The bottom business for me that the Great Gatsby bend is a chip interesting, but neither especially surprising nor suggestive of any specific conclusions or policy recommendations. Sumber https://gregmankiw.blogspot.com/
My ain persuasion is that this correlation is non especially surprising. Let me ambit you lot an analogy to explicate why.
Suppose we collected information on diverse chess clubs (nations). In every club, nosotros convey information on each member's win-loss tape over the twelvemonth (income). We tin then measure the variance of individuals' win-loss records (inequality). We tin every bit good measure how a person's win-loss tape inwards 1 twelvemonth predicts his win-loss tape inwards the subsequent twelvemonth (mobility).
Some clubs convey a bunch of players amongst like levels of science at chess. In this case, everyone would convey a win-lose tape that is but about each other, too a person's club ranking one twelvemonth would non convey a lot of predictive value for his ranking the next. That is, nosotros would convey modest inequality too substantial mobility.
Other clubs are to a greater extent than heterogeneous. They convey some masters too some novices. The masters convey much ameliorate records than the novices, too their ameliorate records tend to persist twelvemonth to year. That is, nosotros would convey substantial inequality too fiddling mobility.
If nosotros lay all these clubs together inwards a scatterplot, nosotros would choke something but about the Great Gatsby curve.
Notice a corollary: Suppose nosotros combined 2 clubs, 1 that amongst generally masters too 1 amongst generally novices. The novel combined guild would last to a greater extent than heterogeneous and, therefore, would demonstrate to a greater extent than inequality too less mobility than either of the clubs separately.
The application of this corollary to the Great Gatsby bend is that if nosotros looked at Europe every bit a whole, rather than each acre separately, nosotros would honor that Europe every bit a whole has to a greater extent than inequality too less mobility than the private countries. That is, Germans are richer on average than Greeks, too that divergence inwards income tends to persist from generation to generation. When people expect at the Great Gatsby curve, they omit this fact, because the acre is the unit of measurement of analysis. But it is non obvious that the political divisions that split people are the correct ones for economical analysis. We combine the persistently rich Connecticut amongst the persistently poor Mississippi, so why non combine Deutschland amongst Greece?
The bottom business for me that the Great Gatsby bend is a chip interesting, but neither especially surprising nor suggestive of any specific conclusions or policy recommendations. Sumber https://gregmankiw.blogspot.com/
