Economic inequality cannot be explained by individual bad choices, study finds
phys.org
phys.org
> "A global study ... finds that economic inequality on a social level cannot be explained by bad choices among the poor nor by good decisions among the rich."
...when their article quotes the first author as saying:
"Our research does not reject the notion that individual behavior and decision-making may directly relate to upward economic mobility... *we narrowly conclude that biased decision-making does not alone explain a significant proportion of population-level economic inequality.*" ??
How do they bring themselves to make the statement:
> "Poor decisions were the same across all income groups, including for people who have overcome poverty."
... when the study didn't look at any real-world decisions whatsoever, but merely at performance on a battery of academic tests, (whose relationship with real-world decision-making we're expected to take on faith)?
Every time I hear this I respond
“Science says nothing. Only scientist.”
What I find amusing is that people arguing for something want to metabolize sweeping generalizations.
If social science teaches you anything, it’s that sweeping generalizations are a poor framework for understanding anything.
That's a great way of putting it. I'm ashamed that I only recently realized it during a discussion about science and religion with my friends. I defined science along the lines of "best-effort iteration on making a hypothesis, collecting data, and evaluating the hypothesis". And that's without considering the human factor, whether it's confirmation bias, thirst for fame, or some other weakness. That's not to say that science is worthless; on the contrary, it embodies our capability to rationalize our universe. It's unfortunate that so many people think that understanding science means listening to the mainstream consensus of scientists, without critically evaluating their own values, assumptions, and the limitations or outright flaws of the studies. Nuance shouldn't be overlooked and mistaken conclusions should be addressed.
People are more driven by belief than anything else. I try not to as much as possible, but I humbly believe I am at least able to detect one thing: when things do not match each other and there are cracks and contradictions.
However, many people do not care to get informed beyond a basic article without any research (not even a paper) and will still fiercely support their positions. That is why I think people have more of belief and emotion than rationality when it is about highly politicized topics.
Here are some sweeping generalizations that seem to be helpful:
E = mc^2
a^2 = b^2 + c^2
F = ma1) Your annual income is determined by making one specific, arbitrary decision
2) It is possible to be observant enough to make the decision intelligently, but most are not able to perceive the clue clearly and must guess; this is reflected in an outcome distribution that skews towards a preponderance of incorrect answers
3) Making the decision correctly nets you $1 mil; incorrectly, $1,000
4) There are no other opportunities to make money
The inequality present in this system is largely a function of the magnitude of the spoils/demerits for being correct/incorrect, not the distribution of correct/incorrect answers.
Does anyone honestly think this? Is this a strawman? I don't think you need a study to make you conclude that individual choices don't explain 100% of differences in income/wealth. Someone born in a worse school district is obviously going to be at a disadvantage compared to someone in a better school district, all else being equal. The same exists for luck or other random factors (eg. meeting the right people).
If a poor person would make good decisions and not be lazy, they wouldn’t be poor.
I'm also aware of a couple of people who appeared to have a reasonable shot at a stable life with some level of wealth, but they seemed determined to squander it, maybe due to mental/emotional trouble and addiction.
I'd like to see society change so that we afford more respect, stability, and comfort to the least fortunate among us, but where this fits into a discussion about personal choices is a contentious issue.
Yes, well, of course. The point of statistical analysis is to account for this variation at the level of the population. If anecdotes were sufficiently explanatory, we wouldn’t need to do the math.
If you want numbers, just look to the numbers of people who attend prosperity gospel churches. That’s just one very specific example of attributing individuals’ circumstances to their specific decisions (in this case, the individual’s piety)
My aunt does. She is a conservative lobbyist. She believes that giving a penny to charity is bad because every single poor person is lazy and made bad choices.
This particular paper is no different. Sure, people are born into different economic conditions. This is obvious. Beyond that, there’s nothing useful to see in the research.
There are countless bad papers. If you lean left, I could show you papers that declare no racial bias in police use of lethal force. If you lean right, I could show you papers that declare no correlation between conservative policy and economic growth.
So much of what passes for "science" today consists of outright logical fallacies like the appeal to authority and the appeal to consensus. And the peer review process is often flawed with self interested reviewers using the process to demand citations to their own work or block papers they disagree with.
On any politically sensitive topic, I don't trust any "peer reviewed research" unless I can plausibly answer yes to the following question: "If this paper found the opposite result, would it be published?" Often, the answer is that a paper finding the opposite result would be career ending for the author. Which means there is no disinterested search for truth on that topic and papers on it are just dogma masquerading as science.
…
It’s possible old philosophy is miserly to the point of silliness.
>there is no disinterested search for truth
In studying the history of science, I've seen that: what the word 'scientist' means has changed a great deal in the past two centuries (since the more generalist 'natural philosophers'). Also that: for most of that time it has never been a disinterested search (let alone 'for truth' ... a word as undefinable as 'god'). Prime example: The existence of rocks falling from the sky was rejected by the faithful simply because Newton said space is -empty-. (There are hundreds more salient examples.)
The rise of specializations is like the rise of Guilds; inevitable for multiple practical reasons. (Recently I tried to read a paper on Paleoneurobiology. Nope, not going there.)
The second statement follows from the first. If you can’t completely determine someones wealth from past decisions alone, then you can’t group the poor or wealthy by the history of their past decisions.
“Wetness of all sidewalks globally can be explained by sprinklers.” <- obviously false.
“Wetness of sidewalks can never be explained by sprinklers.” <- also obviously false
The first applies to all sidewalks as a group, the second applies to subsets of the overall group so it’s false if any subset can be explained by sprinklers. Both quotes are using my first example due to being inclusive and including: “on a social level” and “population-level”
These aren't even decent forms of those academic tests, either. When I read it yesterday, I was very unimpressed: https://www.reddit.com/r/Economics/comments/14nuucw/economic... Every single variable here, whether their self-reported current income as relatively young respondents (who haven't had much career/lifetime to build up large SES differences) or the very brief questions about individual cognitive biases which are then discretized to throw away even more information, is poorly measured, and there's not much of a sample to begin with. So, they predictably find that none of their measurements are correlated with each other (the biases don't even correlate with each other), and report the amazing discovery that "economic inequality cannot be explained by individual choices". They fail to reject the null (perhaps because their data is so bad?) and conclude they have proven the null.
For example, your objection ignores that “performance on a battery of academic tests” is also reasonably described as “real-world decisions”.
Your definitions for “any real-world decisions” is non-existent; it’s not on us to assume for you.
A test is a real world behavior in my opinion. So I’m left feeling your entire comment is “a primate exercising writing skills but failing at establishing any useful logic”.
Must be maddening working on a paper like this. Wealth equality is a necessary feature of our economic system yet very serious people pretend like labor can somehow pull themselves up by their bootstraps.
Or do you mean the political implications of these papers?
How is wealth equality a necessary feature of capitalism when there has never been wealth equality in the history of human existence?
Also, labor has pulled them themselves up by their bootstraps many times. It is possible, just simply not likely or common.
Exhibit A: Andrew Carnegie:
https://en.wikipedia.org/wiki/Andrew_Carnegie
Exhibit B: J.K. Rowling:
I think deep down we all know the truth. Obesity is a capitalist invention to sell more gyms.
It's not a joke, because some students do get "free" entry to Harvard, due to their parents paying for it.
I don't know. I do think the world would be better off if we eliminated homelessness, hunger, student loan debt, medical debt, and political campaign financing. These are some of the worst consequences of economic inequality in society.
> Or are you simply pointing out that life is not fair?
Well, I personally don't think that so-called "meritocracy" is fair or ideal. I was born with some advantages over the majority of people, and my academic talents started to show at a relatively young age (with no "hard work" — it was easy work!), but I don't think I "deserved" to be born that way, nor do I think that I "deserve" more money than other people as a result of my advantages.
I understand capitalistic supply and demand, and that may be a decent economic system. It's not an inherently ethical system, however.
Separate questions:
(1) Should we accept some level of economic inequality in society?
(2) Are the wealthy more "deserving" of their wealth than the non-wealthy?
It's perfectly consistent to answer (1) Yes and (2) No to those questions.
Capitalism is an economic system, not an ethical system. The "invisible hand of the market" is not God handing out rewards and punishment, though some people seem to believe that.
Even if we grant the proposition that a good way for society-wide progress is to harness the desire of some to have superior positions by forcing them to work hard at creating value for others, it doesn't really follow that inheritance is a good idea. Indeed, you could argue that it's just the opposite, if we really want a nation of hard workers, we have to make sure the youth can't get away with being lazy just because of some historic success that they didn't have any part in.
It’s saying “Because this person is a Jones, they deserve a spot at Yale even though others are more academically deserving, and we will pay you for that privilege.”
This is also why grade inflation happens at these institutions: “You can’t fail him, he’s a Jones!”
But this only works if there is true equality of opportunity with completely open universal access to education, health, basic tech and tools, high quality unbiased news, and social opportunities.
The real cause of inequality is privileged parents trying to tilt the scales for their kids and their social class.
You may say "That's only natural" - but so was cannibalism until we worked out that it's a really stupid idea and does a lot more harm than good.
The real costs of unearned "elite" family privilege are almost unimaginable. We're so used to how things are that we can't even see how much this arrangement has blocked progress in every discipline.
Not only does it pollute politics, democracy, and the media, hoard resources uselessly, and cause untold human suffering, it also guarantees that most of the talent in each generation is suppressed and wasted.
I really don’t think this is true in a meaningful way. Despite your appeal to cannibalism (of all things), it certainly is natural for people to want to help their family and friends. Without that instinct, we have neither.
Whatever the solution to inequality, it will need to take into account that people like helping people they like. This is why social programs like free healthcare and education are so important - we need to neutralise the benefit of “tilting the scales”, rather than asking people to change perfectly reasonable behaviour.
My point is that the desire to “tilt the scales for their kids and their social class” seems innate, and any mechanism that we create to improve equality needs to take this into account at a fundamental level, or it will either be rejected or compromised.
It doesn't work the other way, though. As with any complex dynamic system, the relationship between opportunity and inequality is neither unidirectional nor linear. Consider that there are two well known systems where opportunity is very low. The one you obviously had in mind is perfect enforced equality, often associated with communism[1]. The other is most commonly referred to as feudalism[2]. In other words, both very low and very high levels of inequality result in near-zero opportunity. The interesting range is in the middle - another hallmark of complex systems BTW. When most people refer to wealth inequality they mean a level beyond which opportunity is driven back down, and argument should proceed on that basis. Presenting this as "zero inequality with zero opportunity vs. non-zero amounts of both" is both counterfactual and non-constructive, to say the least.
[1] No actual communist system at significant scale ever had equality as a feature. More often, the medium of exchange shifted from hard currency to some form of reputation, standing, etc. but the inequality most definitely still existed.
[2] Apparently historians consider "feudal" to be a hopelessly ambiguous term. In this context "manorial" might be more accurate but nobody would recognize it.
This is really tautological if you define opportunity as advantage over others.
A more appropriate hypothesis would be that economic inequality cannot be explained by individual bad choices *alone*.
Plenty of examples of poor decision making can lead to catastrophic permanent poverty. Drug/alcohol abuse, having children without the right finances, skipping school etc. are just some of the decisions that can directly explain economic inequality.
Tons of rich and famous people are or were notorious drug/alcohol abusers.
> skipping school
College dropouts: Bill Gates, Steve Jobs, Mark Zuckerberg, Larry Ellison...
Having to spend $100k on drug rehab is objectively more financially harmful to someone than not having to. It's probably more accurate to say it's not financially ruinous.
What's $100K to someone like (randomly chosen) Eric Clapton? That's like 10 minutes of work for him. ;-)
1- https://www.aplu.org/our-work/4-policy-and-advocacy/publicuv...
I personally made some absolutely terrible decisions when I was younger that could have put me in jail or in the grave, but I managed to avoid both of those outcomes. ;-)
Plenty of people survive accidents when not wearing seatbelts. That does not prove that not wearing seatbelts is okay.
There's a ridiculous double standard where we blame poor people for making bad decisions but give rich people a break for making the same damn decisions.
You already admitted that there's a large element of randomness to life: "Plenty of people survive accidents when not wearing seatbelts." And by the way, is there any evidence that the seatbelt wearing rate varies across economic classes?
People of economic means have a lot more opportunities than other people. And that's certainly no guarantee of success, but a certain % of opportunities will randomly work out, whether they involved "good" or "bad" decisions. This means it's much easier to succeed if you grow up with economic advantages, even if the level of talent is evenly distributed among all economic classes.
Let me put it this way: the reason to go to Harvard or Stanford isn't the "education". Calculus for example is the same anywhere. The actual classes at a state university are comparable to the classes at an "elite" university. The reason people desperately want to go to the elite universities is to meet the elite. It's about social networking. You get more opportunities if you know the right people. That should be obvious.
The poor people I personally know (relatives) are definitely there by bad choices.
Perhaps there are too many contexts to apply a simple answer to explain all?
The rich kids on the other hand, just ask mom or dad what to do and they are well informed by their own family financial planner.
This is true on both sides of my family. Somehow my parents both are hard workers and have thrived, relatively speaking.
Isolated laziness is an individual foible, but wide-spread laziness is a market failure.
It's no different than taking two dogs of the same breed, and raising one as a farm working dog, and the other as a family pet. The outcomes will seem different, but that's not because one or the other specimen is inherently special or superior.
Inherent, individual qualities do exist, sure, and do play a part in the nuance - but ultimately, as individuals, existence has a lot more effect upon us than we do upon it. How could it possibly be otherwise??
If you went to the gym you would find that 90%+ of people are not trying to deadlift 510kg for a world record and accept that as fact.
But somehow when it comes to money it's assumed that everyone's #1 priority above all else is to stack cash, and it's just not, and that cannot be characterised as a "bad decision".
- Arthur Schopenhauer
Interesting. It's not cognitive biases of some innate sort.
It seems important to me that society should apply boosts to people who can demonstrate ability through some trainable measure that is advantaged by intelligence until they hit some threshold.
Huh, wonder what we could call it?
In theory, this is what merit-based college scholarships are for. In practice, arguably not so much.
Specifically, "inclusive" institutions where everyone can become part of the economic system. Anyone can be a government supplier under the same terms, everyone can start their own business under the same terms, everyone can get financing under the same terms, and everyone get the same protection to their own private property.
There's a nice Economic effect called "Hume-Cantillon Effect":
> Furthermore, he posited that the original recipients of new money enjoy higher standards of living at the expense of later recipients. The concept of relative inflation, or a disproportionate rise in prices among different goods in an economy, is now known as the Cantillon Effect. > ... the rate of interest was determined by the supply and demand on the loanable funds market—an insight usually attributed to Scottish philosopher David Hume.
https://en.m.wikipedia.org/wiki/Richard_Cantillon#Monetary_t...
So how does the study address that?