Mankiw on the Chetty Paper

He writes,

Chetty et al. finds that the regression of kids’ income rank on parents’ income rank has a coefficient of 0.3. (See Figure 1.) That implies an R2 for the regression of 0.09. In other words, 91 percent of the variance is unexplained by parents’ income.

I would be willing venture a guess, based on adoption studies, that a lot of that 9 percent is genetics rather than environment. That is, talented parents have talented kids partly because of good genes. Conservatively, let’s say half is genetics. That leaves only 4.5 percent of the variance attributed directly to parents’ income.

Read the whole post. In fact, if the correlation between kids’ income and parents’ income is only 0.3, then this is considerably lower than the heritability of many other traits.

5 thoughts on “Mankiw on the Chetty Paper

  1. 3 2 1 cue the argument that if meritocracy isn’t heritable then that indicates a problem requiring a rube goldbergian intervention. The policy satisficing margin is like dancing on a razor blade.

  2. One has to rule out granparents and great granparents before one says genetics is only .3. This is a bit of interpreting R Squared, and Jim Hamilton discussed it. The rest of the dependency (1.0 – .3) is not found and may mostly be still be genetics that combine over generations.

    • Good point. The political argument mainly concerns material economic endowments which also involves your point but seems intuitively small.

      This genetic lottery trope is just a marketing gimmick. My genes are mine.

  3. What do people want the answer to be? For conservatives, .3 is challenging because they seem to want culture and good parenting in particular to matter. Ask my mom, and she wants to take some credit (nurture not nature credit at that) for my success. For progressives, .3 is challenging because they want the poor to have a chance at the American Dream not constrained by parental short comings. For libertarians, the challenge is partly both of the others’ concerns. Seems we have another three axes/language of politics problem.

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