Is there a trade-off between people’s preference for income equality and income mobility? Testing for the existence of such a trade-off is difficult because mobility is a multifaceted concept. We analyse results from a questionnaire experiment based on simple precise concepts of income inequality and income mobility. We find no direct trade-off in preference between mobility and equality, but an indirect trade-off, applying when more income mobility can only be obtained at the expense of some income inequality. Mobility preference—but not equality preference—appears to be driven by personal experience of mobility.
This is a preview of subscription content, log in to check access.
Buy single article
Instant access to the full article PDF.
Tax calculation will be finalised during checkout.
Subscribe to journal
Immediate online access to all issues from 2019. Subscription will auto renew annually.
Tax calculation will be finalised during checkout.
For welfare approaches see Atkinson (1981), Atkinson and Bourguignon (1982), Chakravarty et al. (1985), Dardanoni (1993), Gottschalk and Spolaore (2002), Markandya (1982); for axiomatic approaches see Shorrocks (1978), Cowell (1985), Cowell and Flachaire (2011), Fields and Ok (1996), Mitra and Ok (1998), D’Agostino and Dardanoni (2009).
Underlying the liberal position is the view that identifies income mobility with equality of opportunity (Stokey 1998, p. 161). However “ equality of opportunity” has a variety of interpretations: it is used in the egalitarian literature to describe a situation of procedural equality of opportunity (Rawls 1971) or to represent the ideal of an egalitarianism tempered by responsibility (Dworkin 1981; Roemer 1998).
The term ‘Great Gatsby’ curve was used for the first time by Krueger (2012), in a speech delivered to the Center for American Progress. The evidence is the subject of lively debate: for some, the curve simply rejects on empirical grounds the idea that income inequality is acceptable as long as there is income mobility, since it shows that “more inequality of income in the present is likely to make family background play a stronger role in determining the adult outcome of young people” (Corak 2013); for others, the evidence is “neither particularly surprising nor suggestive of any specific conclusions or policy recommendations” (Mankiw 2013), since it only reflects different degrees of heterogeneity in the ability of people of different countries.
This is consistent with David Hume and Adam Smith who argued that the sympathy and impartiality required to discuss distributive justice can only be obtained by putting some distance between the social decision maker and the persons whose welfare is to be evaluated (Bernasconi 2002; Bosmans and Schokkaert 2004; Amiel et al. 2009; Konow 2009).
Negative association, where \(0.5<m\le 1\), is only of theoretical interest since real world mobility data never show complete reversal between parents and children’s economic positions; see Dardanoni et al. (2012) who show that the hypothesis of nonnegative association cannot be rejected in almost all social mobility tables in 149 different countries and time periods.
For example, Shorrocks (1978) developed an axiomatic approach to mobility measurement where an axiom is explicitly introduced which assigns maximum value to transition matrices (a reduced form of mobility tables which do not give information on the marginal distributions) with “the least amount of predictability”. Dardanoni (1993) presents a model where children coming from parents in lower economic positions receive a higher weight in the social evaluation than those coming from better positioned families: as he restricts attention to tables with non-negative dependence, it follows that welfare is maximised, ceteris paribus, by mobility tables with origin independence. Gottschalk and Spolaore (2002) also develop a framework where a specific form of inequality aversion restricted to the children’s generation is shown to induce a strict preference for independence.
There are views that value neither equality nor mobility: according to Nozick (1974), any inequality that has not been obtained by expropriation or exploitation can be justified.
Gaertner and Schokkaert (2012) argue that in some cases students may also represent a specifically interesting subgroup of the population to focus on since they may be seen as the future economic and political elite of the country and therefore in the position to affect actual economic and social policy.
Even with regards to the role of incentives in experimental economics there is however some debate; see Camerer and Hogarth (1999), for a classical article on the issue.
“Impartial position” means that the individual whose preferences are considered “ is not directly involved in the distributions of income in the society” . This was explained in the introduction to the questionnaire, which also explained other features, including the fact that the questionnaire is about “ social preferences for the distributions of incomes in hypothetical societies of two generations, the generation of the parents and the generation of the children” ; the fact “ there are different dimensions which may be involved in considering income distributions” ; the way in which displays have to be looked at and interpreted. The full questionnaire is available at http://darp.lse.ac.uk/resources/questionnaires/MobilityQuestionnaireWelfare
In general, previous questionnaires conducted to investigate people’s attitude towards income inequality took the form of a test of the classical Pigou-Dalton principle of transfers (Amiel and Cowell 1992, 1998; Harrison and Seidl 1994; Bernasconi 2002; Traub and Schmidt 2009). Support for the principle depends on the range of the income distribution in which income transfers occur, on the type of verbal or numerical test conducted, on the frames adopted to test it (e.g. whether from a external observer viewpoint, under a condition similar to the “veil of ignorance”, or under one of individual risk)—Amiel (1999), Gaertner and Schokkaert (2012).
This can be verified comparing the proportions of answers of type (B,A) in (Q2,Q8) and (Q5,Q8), with those of type (A,B) which are consistent with an opposite tendency. While the proportions of the latter patterns are very small, the former are larger, with differences that are statistically significant. In particular, in (Q2,Q8) the proportion of answers (B,A) is 8.5 % (30/355) and those of type (A,B) is 3.7 % (13/355) (\(d=2.76\), one-tailed \(p<1\,\%\)); in (Q5,Q8) the answers (B,A) are 5.9 % (21/355) and those of type (A,B) is 2.3 % (8/355) (\(d=2.6\), one-tailed \(p<1\,\%\)). Instead, there is no significance difference in the frequencies of (A,B) and (B,A) answers in (Q2,Q5).
An alternative hypothesis here is that people do not switch preferences between the three questions, and in particular that they choose in Q3 and Q6 the same scenario A as in Q8. For example, a prediction of “no trade-off ” would hold either for individuals who do not care about mobility, or for those who consider the greater inequality of scenario B in the three questions anyhow too high to be compensated for any amount of mobility (even when mobility is perfect as in B of Q3).
For the aggregate sample the increases in response B are: \(+\)23.2 % (35.4–11.2 % \(=\) 126/353–40/355) between Q6 and Q8 (\(d=6.597\), one-tailed \( p<1\,\%\)); \(+\)39.0 % (49.2–11.2 % \(=\) 159/356–40/355) between Q3 and Q8 (\(d=8.365\), one-tailed \(p<1\,\%\)); \(+\)13.8 % (49.2–35.4 % \(=\) 159/356–126/353) between Q3 and Q6 (\(d=1.896\), one-tailed \(p<5\,\%\));
As above, in order to determinate the statistical significance of patterns (BA), they can be contrasted with the symmetric patterns (A, B). The comparison show that: in (Q3, Q6), category (B, A) corresponds to 15.6 % (55/352) versus 7.7 % (27/352) of (A, B) (\(d=3.20\), one-tailed \(p<1\,\%\)); in (Q3, Q8) answers (BA) are 31.9 % (113/354) and those (A, B) are 3.1 % (8/354) (\(d=9.25\), one-tailed \(p<1\,\%\)); in (Q6, Q8), (BA) count for 22.1 % (78/352) and (A, B) for 3.7 % (13/352) (\(d=6.92\), one-tailed \(p<1\,\%\)).
Indeed, most of the literature on diverse ethnicity and social mobility has focused on the effect of belonging to certain social classes and attitudes toward out-groups and how mobility may affect and may be affected by this relationships, for example for the impact that immigrants may have for the degree of mobility in a society and from here the attitude towards ethnic out-groups between different social classes. There are also studies that have investigated preferences for redistribution between immigrants. An interesting finding here is that the effect of the culture of the country of origin is stronger on attitudes towards redistribution than the effect of the characteristics of the country of destination (Luttmer and Singhal 2011).
It is nevertheless worthwhile to remark that there is no significant correlation between family income (F1) and the nationality of the respondents (A1), see the correlation matrix in the Appendix (not even within the UK sample where the correlation is \(-\)0.069).
Supporting this interpretation note the negative effect of “ prospect on social position” (P2) rather than the “ prospect on income” (P1), which also has a negative effect. Removing P2 from the regression makes P1 not significant.
The regression obviously reports the difference between Israel and the UK; the difference between Italy and the UK remains statistically significant (at \(p\approx 0.02\)).
Alesina A, La Ferrara E (2005) Preferences for redistribution in the land of opportunities. J Public Econ 89:897–931
Alesina A, Giuliano P (2011) Preferences for redistribution. In: Benhabib J, Jackson MO, Bisin A (eds) Handbook of social economics, vol 1A. North Holland, Amsterdam, The Netherlands
Alesina A, Giuliano P (2013) Family ties. NBER Working Paper No. 18966
Amiel Y (1999) The subjective approach to the measurement of income inequality. In: Silber J (ed) Handbook on income inequality measurement. Kluwer, Dewenter
Amiel Y, Cowell FA (1992) Measurement of income inequality: experimental test by questionnaire. J Public Econ 47:3–26
Amiel Y, Cowell FA (1998) Distributional orderings and the transfer principle: a re-examination. Res Econ Inequal 8:195–215
Amiel Y, Cowell FA (1999) Thinking about inequality. Cambridge University Press, Cambridge
Amiel Y, Cowell FA, Gaertner W (2009) To be or not to be involved: a questionnaire-experimental view on Harsanyi’s utilitarian ethics. Soc Choice Welf 32:299–316
Atkinson AB (1970) On the measurement of inequality. J Econ Theory 2:244–263
Atkinson AB (1981) The measurement of economic mobility. In Essays in honour of Jan Pen
Atkinson AB, Bourguignon F (1982) The comparison of multidimensional distributions of economic status. Rev Econ Stud 49:183–201
Bartels L (2005) Homer gets a tax cut: inequality and public policy in the American mind. Perspect Polit 3:15–31
Benabou R, Ok E (2001) Social mobility and the demand for redistribution: the POUM hypothesis. Q J Econ 116:447–487
Bernasconi M (2002) How should income be divided? Questionnaire evidence from the theory of impartial. J Econ 9:163–195
Bosmans K, Schokkaert E (2004) Social welfare, the veil of ignorance and purely individual risk: an empirical examination. Res Econ Inequal 11:85–114
Breen R, Luijkx R (2004) Social mobility in Europe between 1970 and 2000. In: Breen R (ed) Social mobility in Europe. Oxford University Press, Oxford
Camerer CF, Hogarth RM (1999) The effects of financial incentives in experiments: a review and capital-labor-production framework. J Risk Uncertain 19:7–42
Cappelen AW, Sorensen EO, Tungodden B (2010) Responsibility for what? Fairness and individual responsibility. Eur Econ Rev 54:429–441
Chakravarty SR, Dutta B, Weymark J (1985) Ethical indices of income mobility. Soc Choice Welf 2:1–21
Checchi D, Ichino A, Rustichini A (1999) More equal but less mobile? J Public Econ 74:351–393
Conlisk J (1990) Monotone mobility matrices. J Math Sociol 15:173–191
Corak M (2013) Income inequality, equality of opportunity, and intergenerational mobility. J Econ Perspect 27:79–102
Corneo G, Grüner H-P (2002) Individual preferences for political redistribution. J Public Econ 83:83–107
Cowell FA (1985) Measures of distributional change: an axiomatic approach. Rev Econ Stud 52:135–151
Cowell FA, Flachaire E (2011) Measuring mobility. Public Economics Discussion Paper 8, STICERD, London School of Economics, London WC2A 2AE
D’Agostino M, Dardanoni V (2009) The measurement of rank mobility. J Econ Theory 144:1783–1803
Dardanoni V (1993) Measuring social mobility. J Econ Theory 61:372–394
Dardanoni V, Fiorini M, Forcina A (2012) Stochastic monotonicity in intergenerational mobility tables. J Appl Econom 27:85–107
Duncan O (1966) Methodological issues in the analysis of economic mobility. In: Smelser N, Lipset S (eds) Social structure and mobility in economic development. Aldine, New York
Dworkin R (1981) What is equality? Part 2: equality of resources. Philos Public Affairs 10:283–345
Erikson R, Goldthorpe JH (1992) The constant flux. Clarendon, Oxford
Esping-Andersen G (1999) Social foundations of postindustrial economies. Oxford University Press, Oxford
Falk A, Heckman JJ (2009) Lab experiments are a major source of knowledge in the social sciences. Science 326:535–538
Fields GS, Ok EA (1996) The meaning and measurement of income mobility. J Econ Theory 71:349–377
Fields GS, Ok EA (1999) The measurement of income mobility: an introduction to the literature. In: Silber J (ed) Handbook on income inequality measurement. Kluwer, Dewenter
Fong C (2001) Social preferences, self-interest and the demand for redistribution. J Public Econ 82:225–246
Formby JP, Smith WJ, Zheng B (2004) Mobility measurement, transition matrices and statistical inference. J Econom 120:181–205
Friedman M (1962) Capitalism and freedom. University of Chicago Press, Chicago
Gaertner W, Schokkaert E (2012) Empirical social choice: questionnaire-experimental studies on distributive justice. Cambridge University Press, Cambridge
Galor O, Moav O (2006) Das human kapital: a theory of the demise of the class structure. Rev Econ Stud 73:85–117
Georgiadis A, Manning A (2012) Spend it like Beckham? Inequality and redistribution in the UK. 1983–204. Public Choice 151:537–563
Goldthorpe J (1980) Social mobility and class structure in modern Britain. Oxford University Press, Oxford
Gottschalk P, Spolaore E (2002) On the evaluation of economic mobility. Rev Econ Stud 69:191–208
Harrison E, Seidl C (1994) Perceptional inequality and preferential judgements: an empirical examinationof distributional judgments. Public Choice 79:61–81
Hirschman AO (1973) The changing tolerance for income inequality in the course of economic development (with a mathematical appendix by Michael Rothschild). Q J Econ 87:544–566
Isaksson AS, Lindskog A (2009) Preferences for redistribution—a cross-country study in fairness. J Econ Behav Organ 72:884–902
Konow J (2003) Which is the fairest one of all? A positive analysis of justice theories. J Econ Lit 41: 1188–1239
Konow J (2009) Is fairness in the eye of the beholder? An impartial spectator analysis of justice. Social Choice Welf 33:101–127
Krawczyk M (2010) A glimpse through the veil of ignorance: equality of opportunity and support for redistribution. J Public Econ 94:131–141
Krueger A (2012) The rise and consequences of inequality in the US. Presentation to the Center for American Progress, January 12th. (http://www.americanprogress.org/events/2012/01/12/17181/the-rise-and-consequences-of-inequality/)
Kuziemko I, Norton MI, Saez E, Stantcheva S (2013) How elastic are preferences for redistribution? Evidence from randomized survey experiment. NBER Working Paper Series, n. 18865
Loury G (1981) Intergenerational transfers and the distribution of earnings. Econometrica 49:843–867
Luttmer EFP, Singhal M (2011) Culture, context, and the taste for redistribution. Am Econ J 3:157–179
Mankiw G (2013) Observations on the great gatsby curve. Article published on Greg Mankiw’s Blog. (http://gregmankiw.blogspot.nl/2013/07/some-observations-on-great-gatsby-curve.html)
Markandya A (1982) Intergenerational exchange mobility and economic welfare. Eur Econ Rev 17:301–324
Mitra T, Ok EA (1998) The measurement of income mobility: a partial ordering approach. Econ Theory 12:77–102
Nozick R (1974) Anarchy, state and utopia. Basic Books, New York
OECD (2011) Divided we stand: why inequality keeps rising. OECD Publishing, Paris
Olivera J (2013) Preferences for redistribution in Europe. GINI Discussion Paper 67
Piketty T (1995) Social mobility and redistributive politics. Q J Econ 110:551–583
Prais S (1955) Measuring social mobility. J R Stat Soc Ser A 118:56–66
Rawls J (1971) A theory of justice. Harvard University Press, Cambridge, Massachusetts
Roemer J (1998) Equality of opportunity. Harvard University Press, Cambridge, MA
Rogoff N (1953) Recent trends in occupational mobility. Free Press, Glencoe
Shorrocks AF (1978) The measurement of mobility. Econometrica 46:1013–1024
Stokey N (1998) Shirtsleeves to shirtsleeves: the economic of social mobility. In: Schwartz NL, Jacobs D, Kalai E (eds) Frontiers of research in economic theory: the Nancy L. Schwartz memorial lectures 1983–1997. Econometric Society Monographs, Cambridge
Traub S, Seidl C, Schmidt U, Levati M (2005) Friedman, Harsanyi, Rawls, Boulding—or somebody else? An experimental investigation of distributive justice. Social Choice Welf 24:283–309
Traub S, Schmidt U (2009) An experimental study on individual choice, social welfare, and social preferences. Eur Econ Rev 53:385–400
Van de gaer D, Schokkaert E, Martinez M (2001) Three meanings of intergenerational mobility. Economica 68:519–537
Yaari M, Bar-Hillel M (1984) On dividing justly. Social Choice Welf 1:1–24
We thank Anat Alexandron, Latika Sharma and Yinfei Dong for research assistance. Michele Bernasconi gratefully acknowledges partial support from the Swiss & Global - Ca’ Foscari Foundation. We especially thank the reviewers and the editor for several comments.
See Table 11.
About this article
Cite this article
Amiel, Y., Bernasconi, M., Cowell, F. et al. Do we value mobility?. Soc Choice Welf 44, 231–255 (2015). https://doi.org/10.1007/s00355-014-0839-2
- Income Inequality
- Marginal Distribution
- Income Equality
- Equality Preference
- Intergenerational Mobility