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Column: What kids learn at home affects income mobility

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The big lesson on research and data about poverty is the limited effectiveness of public policy.

To begin with, we measure poverty poorly in the U.S. and, because of that, are forever stuck with something like 12 to 15 percent, no matter how good or ill the economy performs.

Fortunately, even with this silly measure, most of poverty is temporary, with more than 75 percent moving out of the poverty ranks in less than 36 months.

For those healthy folks in long-term poverty, nearly all have made one of the big three mistakes: quitting high school, using drugs and having kids without a partner. I have already mentioned this.

Of these, choosing to have a child without a spouse is the most pervasive.

New experimental research tells us that poverty can reduce the quality of decision making, with poorer households focusing less on the long term. But, as I have noted, the problem is with the quality of decision making, not the options available to them.

Becoming affluent requires good choices repeated throughout life. It is no doubt harder for poor people to make these affirmative choices, given the relative absence of good example and the lack of resources to support them. But it is also true that making these choices is also hard for children in affluent families, simply because these are tough, demanding choices.

Becoming poor requires poor choices repeated throughout life. It is no doubt easier for poor people to make these negative choices, given the relative absence of good example; but it is also true that making these poor choices befall many in all economic classes.

Given this, there should therefore be a convergence toward average or middle income by children of both rich and poor parents alike.

Notice of course, that the language is all about choice, for that is what it is, and is what serious research on poverty has been focusing on for a generation. Moreover, it is dehumanizing and amoral to pronounce if otherwise. Poor teenagers know as well as rich ones what causes babies. They are simply more likely to make a bad choice and less likely to rebound from the mistake. This has a long impact.

New research from the inequality project at Harvard finds that income mobility across generations is unchanged in half a century. Moreover, this study finds that parental income explains less than

10 percent of their adult child’s earnings. Education and single parenting are much larger factors. It is what kids learn at home, not how much their parents make, that affects income mobility.

So the problem is the limits to policy. We spend upward of $150,000 per child on a high school education, but about one in seven kids fails to graduate.

We spend enormous sums on public contraception and abortion as well as sex education. There are hundreds of programs, still the share of births to single moms grew from 5 percent to more than 40 percent during 50 years of our war on poverty.

If we wish to intervene with policy, it is going to have to aim directly at the parent-child interaction, and it is going to have to be all about choices.

Michael J. Hicks is the director of the Center for Business and Economic Research and an associate professor of economics in the Miller College of Business at Ball State University. Send comments to letters@dailyjournal.net.

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