The ‘Great Gatsby’ Curve: Perceptions of Economic Mobility are Caused by Perceptions of Inequality
In 1931, James Truslow Adams defined the American dream as the idea that “each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.” At present, however, social mobility is remarkably stagnant, with one’s circumstances of birth having a large effect on later social class. Despite this fact, many people overestimate social mobility. Shai Davidai, of the New School for Social Research, suggests that beliefs about social mobility are tied directly to perceptions, or misperceptions, of the level of income inequality in society. Davidai’s research has demonstrated an inflated sense of economic mobility among Americans. Participants overestimate both an individual’s chance of upward mobility, and America’s level of societal mobility compared to those of other nations.
New work by Davidai shows that not only are perceptions of inequality negatively related to perceptions of mobility, but that perceptions of inequality may be causing perceptions of mobility. In two studies, participants who believed their state had low levels of inequality believed that both they and others had a greater ability to move from a lower social standing to a higher one; those who saw evidence of more extreme inequality thought that social mobility was far less likely.
The ‘Great Gatsby curve’ is a term coined to refer to the phenomenon of nations with higher economic inequality also having social immobility between generations. Davidai argues that this research demonstrates that people do have an intuitive grasp of this relationship - but that they underestimate levels of inequality, and thus overestimate levels of mobility.
What might be the consequences of people holding more accurate social mobility beliefs? The overestimation of mobility can lead to higher meritocracy beliefs, and a greater tolerance for inequality. Perceiving high (and accurate) levels of inequality can also lead people to make more external, and fewer internal, attributions for both wealth and poverty, versus those who believe in lower levels of inequality. This may be psychologically important for those who cannot improve their lot in life.
But accuracy may be a double-edged sword. Those who are accurate about low levels of mobility may also shift to a more present-focused mindset, which could lead to greater impulsivity and risk-taking. Davidai and Martino Ongis have found that indeed, when looking at State of the Union addresses, the use of future-focused language decreases when America’s level of inequality increases. Furthermore, when examining addresses by zip code, an increase in local inequality was related to a higher proportion of local accounts on the extramarital affair website Ashley Madison. It seems that while recognizing the difficulty of upward mobility is important, it may come at a price.
Written by: Sarah L. Williams, Wilfrid Laurier University, Waterloo, Ontario, Canada
Presentation: "Why Do Americans Overestimate Economic Mobility?" was part of the symposium Inequality, Perceived Mobility, and Economic Growth: Advances and Future Directions held Saturday, March 3, 2018.
Speaker: Shai Davidai, New School for Social Research