Americans overestimate social mobility in their country

[Hydrogen]

But in Europe, climbing the ladder is easier than most people believe

HOW likely is someone to move up the economic ladder? A new study by Alberto Alesina, Stefanie Stantcheva and Edoardo Teso of Harvard University compares perceptions of social mobility in five countries—America, Britain, France, Italy and Sweden—against actual levels. It finds that Americans tend to be optimistic, while Europeans tend to be too pessimistic. An American born to a household in the bottom 20% of earnings, for instance, only has a 7.8% chance of reaching the top 20% when they grow up. Americans surveyed thought the probability was 11.7%.

Politically left-leaning respondents are naturally more doubtful about the scale of social mobility, and are more likely to support redistributive government policies, than conservative ones. But Mr Alesina and his colleagues also find that people of different political stripes also respond differently to new information. When given pessimistic information about social mobility, left-wing respondents became even more likely to support economic redistribution. In contrast, right-wing respondents’ support for redistribution did not change. Perhaps, the authors suggest, right-leaning respondents see government as “the cause of the problem, not the solution”.

https://www.economist.com/graphic-detail/2018/02/14/americans-overestimate-social-mobility-in-their-country

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Here is another perspective on the topic, published a few years ago:

The Number Of Millionaires Has Boomed

Oct 22, 2019

n spite of all the talk about trade wars, conflicts in the Middle East, tariffs and fears of a recession, we’ve witnessed an increase of 1.1 million millionaires from mid-2018 to the middle of 2019. This elite group is collectively worth $158.3 trillion.

The U.S. leads the world in the number of millionaires. America has added 675,000 new millionaires over the past year, bringing its total to 18.6 million people. China added 158,000 new millionaires in this period, raising its total to 4.5 million.

https://www.forbes.com/sites/jackkelly/2019/10/22/the-number-of-millionaires-has-boomedheres-where-your-net-worth-ranks-compared-to-others/?sh=c0b1e9a576fa

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Long story short, we have content claiming its easier to move up the wealth ladder in europe, than it is in the united states.

With the consensus from only a year ago being that the united states had the largest growing demographic of millionaires and super wealthy. Which could suggest that it is, or was, easier to become wealthy in the USA than in any other nation on earth, only a few years ago in 2019, before COVID hit.

I remember a time when many americans were thoroughly convinced that europe did everything better. Americans envied the universal healthcare system of europe, and wished the UBI system employed in some european countries could find its way into the USA. At some point that adoration of european policy appears to have diminished. It has been a very long time since I've seen or heard anyone praise european healthcare.

If an entrepreneur had a goal of becoming a millionaire or billionaire and had the option of being a resident in the USA or europe. Which geographic location would be better suited to earn large quantities of wealth? And why.

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[Lucius]

I may be mistaken, but somehow it doesn't seem logical to generalize on this issue if we consider that the US has federal states that don't have identical rules when it comes to economic opportunities - just as we can't say in Europe that it is the same to succeed in Portugal, Germany or Bulgaria or Greece.

The reason why Americans no longer look at Europe as a continent where some human rights are greater is that the EU is increasingly copying American public systems, including health care. I used to have completely free health insurance, and for many years I have had to pay about the same insurance for about 10 EUR per month in order to be able to use the health system without any problems. There has also been an expansion of the private health sector, which is used by more and more people who can't wait several months to have a medical examination such as magnetic resonance imaging and a simple examination by a specialist.

I think that the US is still a country where people can succeed sooner (in the sense of becoming millionaires), because it seems to me that their system is much more open and dynamic than the European one. If someone asked me to name 5 European millionaires or billionaires, I would have big problems with that, but I would easily list at least three times as many who live in the US.

[fiulpro]

The geographical location definately depends on the career that you are pursuing. For example:
1. If you are a doctor working in the US would be far more profitable than working in the UK. Working for the NHS does not have a lot of (+)'s for the people looking to be a millionaire but it also provides better security and stability.
2. US is capable of many things but certainly they are not capable of handling the new Covid strain and at the same time time, they are not able to provide proper care for the workers thus heading towards the great resignation.
I do think for me it's Europe for sure.
It's easier to find jobs and the diversity in the options available are also good. But US is not far behind, maybe they are just lagging by 1-2 points.

[kryptqnick]

When given pessimistic information about social mobility, left-wing respondents became even more likely to support economic redistribution. In contrast, right-wing respondents’ support for redistribution did not change.

This, it seems, is merely due to a well-known stubbornness of humans. It's not about this particular evidence being presented to people, but about the way people react in general when presented with evidence that supports or contradicts their opinions. There's a great video showing how it works.
So, to be honest, I don't think there's a reason to explain it based on the particular context of the matter of social mobility.

With the consensus from only a year ago being that the united states had the largest growing demographic of millionaires and super wealthy. Which could suggest that it is, or was, easier to become wealthy in the USA than in any other nation on earth, only a few years ago in 2019, before COVID hit.

I don't think the article from 2018 actually supports the claim that it's easier to become wealthy in the US. In fact, if you look at the charts at the beginning of it, the actual probability of moving from bottom to top is 7.5% in the US, but around 11% in the UK and France, for example. Please correct me if I'm wrong here.

[Sterbens]

I wouldn't be too surprised why this is one of the benchmarks for a more prosperous and rich life if we live there. Based on the experience of several friends who are now living in the US, especially in the Los Angeles area.

Of course, as a person who is very interested in living there, I asked: how much does it cost to live there and how much does it cost in a month (rent, transportation, meals, and entertainment). $1000/month to own a Studio Apartment, only a little extra if we rent One Bedroom Apt $1400/month, Two Bedroom Apt $2400/month and the rest can be calculated (depending on how we choose a strategic place it will definitely be more expensive). Transportation costs (Bus, Train) unless you are a student who has a special card of $40 for 1 full month. Uber $15 to $20 per day. Meals cost $15 to $20 for one meal (depending on how you choose to eat). Entertainment fees which I think sound expensive, about once a week or every 2 weeks $200 per entertainment venue.

Where to live: $1000 (a month)
Transportation : $15 x 2 = $30 (depart and return)
Meals : $15 x 3 = $45 (morning, afternoon, and evening)
Entertainment : $200 x 2 = $400 (in a month)
 
In conclusion, for me living outside the United States the expenses in 1 month are only $200 to $300. So the higher the lifestyle and living conditions also affect our finances in a month. As a result, the place where we are born is the most comfortable place.

[Lucius]

I wouldn't be too surprised why this is one of the benchmarks for a more prosperous and rich life if we live there. Based on the experience of several friends who are now living in the US, especially in the Los Angeles area.

As far as I know LA is one of the most expensive cities in the US (even in the world) when it comes to real estate. I recently watched a documentary that states the reason for this is that very little is being built in that city, and that makes existing real estate even more expensive.

In conclusion, for me living outside the United States the expenses in 1 month are only $200 to $300. So the higher the lifestyle and living conditions also affect our finances in a month. As a result, the place where we are born is the most comfortable place.

Everyone is best able to cope with the environment they are familiar with and the conditions in which they are used to living. However, this does not mean that people cannot adapt and start living in completely different circumstances. When I see the cost of living in LA, from my perspective it's a really expensive city - but if I worked there, then I would have a much higher salary than I have now and it wouldn't be weird to pay $4-5 for a cappuccino or $7 for a beer, which is really too expensive for what I'm paying for right now in the EU.

[Cnut237]

If an entrepreneur had a goal of becoming a millionaire or billionaire and had the option of being a resident in the USA or europe. Which geographic location would be better suited to earn large quantities of wealth? And why.

It depends on your starting position. You need to go to whichever country is set up to favour people in your situation.

If you are very wealthy and dream of becoming outrageously wealthy, then your best bet is probably a tax haven.
If you are quite wealthy  and dream of becoming very wealthy, then go somewhere with a centre or centre-right government that favours the rich. US, UK, etc. Then mover to a tax haven later.
If you are of average wealth, or slightly poorer, go somewhere with a left-leaning government but an open economy, which will vary depending on who has won recent elections, but Scandinavia is often a good bet.
If you are very poor, try to find any country that will give you a chance... in which case the initial suggestion of US or UK would be a bad idea.

[Poker Player]

But in Europe, climbing the ladder is easier than most people believe

...

Long story short, we have content claiming its easier to move up the wealth ladder in europe, than it is in the united states.

As with all statistically based studies, it is best to take them with a grain of salt because we are comparing long steel ladders with short wooden ladders.

I remember a time when many americans were thoroughly convinced that europe did everything better. Americans envied the universal healthcare system of europe, and wished the UBI system employed in some european countries could find its way into the USA. At some point that adoration of european policy appears to have diminished. It has been a very long time since I've seen or heard anyone praise european healthcare.

I don't know where you get that from, with Biden in power. If you said that when Trump was in charge, I would see sense in it but not now.

As far as I know LA is one of the most expensive cities in the US (even in the world) when it comes to real estate. I recently watched a documentary that states the reason for this is that very little is being built in that city, and that makes existing real estate even more expensive.

This is the result of left-wing policies based on regulations and taxes for the construction of new housing. Where there are fewer regulations and lower taxes on new housing construction, homes are cheaper.

This whole discourse on social mobility, like that of inequality, is based on the fallacy of considering wealth as something static. As if a rich person in 2021 were the same as a rich person in 1921 or in the year 1000. It usually ends up like the California housing example, magnifying the problems one promised to solve (and blaming it on an external factor, capitalism or whatever is convenient at the time).

The quality of life of billions of people has reached heights that were unthinkable centuries ago, when descriptions of hunger were a constant in literature, that's what's important.

[davis196]

I believe that the USA is the right place to grow a business and become rich,if you are in the IT industry or finance industry.You will face a hard time achieving any success in the US,if you are working in another industry.
Anyway,this is just a survey about what people believe and people's perceptions about the economy can be totally different,compared to the actual facts and data.
USA was the land of free entrepreneurship and economic freedom(or it was portrayed that way).
It surprises me that more and more Americans are becoming left-wing and want more wealth redistribution conducted by the government.
Perhaps this is caused by the giant student debt and the generation of young people,who are working in shitty jobs after graduation and can't payoff their student loans.

[Cnut237]

https://www.economist.com/graphic-detail/2018/02/14/americans-overestimate-social-mobility-in-their-country

I think one important consideration with this chart, which isn't covered in the article, it that it relates to someone who is born into the bottom quintile then remaining in the bottom quintile when they grow up, i.e. ~20y later.

When people are asked to estimate social mobility, they will give you their estimate of current mobility, based on current government, current economy etc... whereas the probability of someone moving up from the bottom quintile on that chart is related entirely to the government and economy of the last few decades. I think we need to consider variations in mobility over time in order to get a more informed perspective.

As an example, if the political "centre" has drifted to the right over the last few decades, then you would expect left-wing voters to underestimate mobility (which they believe is better under a left-wing government).

[BernyJB]

Long story short, we have content claiming its easier to move up the wealth ladder in europe, than it is in the united states.

With the consensus from only a year ago being that the united states had the largest growing demographic of millionaires and super wealthy. Which could suggest that it is, or was, easier to become wealthy in the USA than in any other nation on earth, only a few years ago in 2019, before COVID hit.

That's a different animal. One thing is to start off poor and become wealthy, and a very different issue is to start in somewhat of a good position and become a billionaire.
Somehow, people now tend to believe that to have a good life you need to be Jeff Bezos, when in reality it wouldn't hurt at all to have 100 grand in your bank account. Sure, you'll have to keep working, but if something happens (short of a medical emergency, that can drain millions like they're nothing), it's nice to have some cushion.
Of course, I know that's not the point here. But there's a big difference between "climbing up the ladder" and "becoming a billionaire". 

[Reid]

IMO, it depends on each person individually.
Think about having a lifestyle of a third world country spending just above $100 then you will be working in NY, LA or Europe. If you won't change the lifestyle as you did back when you are at home then definitely a millionaire will be born.
That's the problem I see from those who migrate in a different country. They try to be equal to their lifestyle or mimic what they see on people near them and forgets where they came from or what they eat and drink.
Jobs given will try to equal the living expenses in one place to afford everything but if you are used to cheaper lifestyle then you will be saving a lot of money.

[paxmao]

I would not say that most US citizens and Americans in general overestimate the social mobility. There are some very powerful economics behind the idea of the "American Dream" - the idea that there is no limit to what you can achieve if you work hard enough and have talent.

This idea was never true an now is less than ever. The success stories are widely promoted by the wealthy to make sure the nation has a can-do attitude and everyone works hard... mostly for them in the end. If you look at the success stories of capitalism and ignore all the bad ones, it looks great of course - you can probably even find these in Turkey, Venezuela or Iran if you look hard enough.

Notice that the conservatives in US are interested in NOT promoting social mobility, so the battle is already half lost if there was ever one.

[odolvlobo]

I think there are two important points that should also be noted:

1. Most of the U.S. in the bottom 20% are wealthier than most of the people in the rest of the world. Furthermore, the U.S. in the bottom 20% continue to gain wealth without moving up out of the bottom 20%.

2. If 7.8% of U.S. in the bottom 20% move into the top 20%, then 7.8% of the U.S. in the top 20% must move down out of the top 20%.

[stompix]

As a European and one that has worked in three countries in the EU, I have a lot of problems trusting those numbers in reflecting the reality.

I see the EU (not Europe!!) as the place where you can easily work your way to middle-income class even from poverty, a good job will make you afford pretty much everything that is needed, enough to raise a kid, travel, proper everything, but at the same time far fewer opportunities going into the next bracket than the US. There are far fewer opportunities to "make it big", the road starts to flatten pretty soon and there is simply nowhere to go up for most cases.

Anyhow, what a surprise:

Politically left-leaning respondents are naturally more doubtful about the scale of social mobility, and are more likely to support redistributive government policies, than conservative ones

In conclusion, for me living outside the United States the expenses in 1 month are only $200 to $300. So the higher the lifestyle and living conditions also affect our finances in a month. As a result, the place where we are born is the most comfortable place.

Poeple who make 300$ in your country would make far over 2000$ there, and poeple who live near the poverty line in LA wouldn't spend money on Uber or 400$ on entertainment, same for your case, do you ride with Uber 20 times a month on those 300$? Those things might sound expensive but the average wage in LA is 30$ an hour, so a worker makes in a day what you spend in a month, start from there when making comparisons.

[paxmao]

As a European and one that has worked in three countries in the EU, I have a lot of problems trusting those numbers in reflecting the reality.

I see the EU (not Europe!!) as the place where you can easily work your way to middle-income class even from poverty, a good job will make you afford pretty much everything that is needed, enough to raise a kid, travel, proper everything, but at the same time far fewer opportunities going into the next bracket than the US. There are far fewer opportunities to "make it big", the road starts to flatten pretty soon and there is simply nowhere to go up for most cases.

...

Your vision of Europe is idealistic, romantic and wrong. You seem to have little practical knowledge of the situation in many of the countries of the European union in which having an average job does not get you much farther than the line of poverty. Opportunities in many countries are limited and the proof is the significant percentage of people that have to leave their hometowns to migrate to either larger cities or directly to other countries. Regions in Eastern Europe, Southern Italy, Andalucia, Galicia and Extremadura in Spain and others are devoid of any opportunity for most people and those who have a chance to stay do so under heavy penalties for their future.

[cabron]

I would consider where the development is going like where the future will be in the next 30-50 years. Today if I'm an American, I would probably go to El Salvador and find my way to be part of a blockchain company that will be developed in the Bitcoin City.

If I have to be a European, I might just go to Africa or somewhere where the Belt and Road Project of China is and the Middle East is part of it. More opportunity there as long as I can follow their rules.

[stompix]

Your vision of Europe is idealistic, romantic and wrong. You seem to have little practical knowledge of the situation in many of the countries of the European union in which having an average job does not get you much farther than the line of poverty.

Statics don't tell the same stories as you do, fortunately! Poverty rates have constantly gone down in Europe despite the EU modifying and raising the brackets for poverty levels to 60% of the median income.
Oh, and btw how much "practical" knowledge do you have about the employment situation in countries all over Europe?
Do you spend each day applying for jobs in different cities across the continent?  

Opportunities in many countries are limited and the proof is the significant percentage of people that have to leave their hometowns to migrate to either larger cities or directly to other countries.

This shows exactly that there are opportunities somewhere and thus poeple migrate to where jobs are enough to satisfy anyone who would want to work, otherwise they wouldn't migrate, right? Besides, unemployment and youth unemployment was going down everywhere in Europe pre covid, just as the number of employed poeple in % has raised by 4% in the last decade.

Regions in Eastern Europe, Southern Italy, Andalucia, Galicia and Extremadura in Spain and others are devoid of any opportunity for most people and those who have a chance to stay do so under heavy penalties for their future.

You seem to cling to those beliefs that every single region every single town should be prosperous forever, and in reality, it doesn't work like that, regions that heavenly rely on agriculture like Andalusia have simply no way to go up this way, same for every other single region in the world, no country, no matter how economically solid will be able to keep all it's region equal. There are poorer regions than the rest in Germany, in France everywhere, things change and poeple need to adapt, just like some ports have adapted after whaling was banned some didn't and died out.
You can't live on olives and fish and not be poor, not in this century.

Look for the employment numbers for Spain overall and as you can see the things were going in the good direction, 2 million extra jobs filled in 5 years before 2019.
Numbers don't lie, it's feelings that make you see a different picture, usually the one you want to see, not reality.

 

[Gozie51]

I would consider where the development is going like where the future will be in the next 30-50 years. Today if I'm an American, I would probably go to El Salvador and find my way to be part of a blockchain company that will be developed in the Bitcoin City.

If I have to be a European, I might just go to Africa or somewhere where the Belt and Road Project of China is and the Middle East is part of it. More opportunity there as long as I can follow their rules.

Exactly the same thing in my mind. Of course the career pursuit should determine where and where you could get it, comfort and progress in it. For example , countries with rigid laws on cryptocurrency won't attract people with career pursuit in blockchain and cryptocurrency likewise other fields. El Salvador has become an instant example as reference for youths who want to embrace the blockchain technology and bitcoin.

[paxmao]

Your vision of Europe is idealistic, romantic and wrong. You seem to have little practical knowledge of the situation in many of the countries of the European union in which having an average job does not get you much farther than the line of poverty.

Statics don't tell the same stories as you do, fortunately! Poverty rates have constantly gone down in Europe despite the EU modifying and raising the brackets for poverty levels to 60% of the median income.
Oh, and btw how much "practical" knowledge do you have about the employment situation in countries all over Europe?
Do you spend each day applying for jobs in different cities across the continent?  

Opportunities in many countries are limited and the proof is the significant percentage of people that have to leave their hometowns to migrate to either larger cities or directly to other countries.

This shows exactly that there are opportunities somewhere and thus poeple migrate to where jobs are enough to satisfy anyone who would want to work, otherwise they wouldn't migrate, right? Besides, unemployment and youth unemployment was going down everywhere in Europe pre covid, just as the number of employed poeple in % has raised by 4% in the last decade.

Regions in Eastern Europe, Southern Italy, Andalucia, Galicia and Extremadura in Spain and others are devoid of any opportunity for most people and those who have a chance to stay do so under heavy penalties for their future.

You seem to cling to those beliefs that every single region every single town should be prosperous forever, and in reality, it doesn't work like that, regions that heavenly rely on agriculture like Andalusia have simply no way to go up this way, same for every other single region in the world, no country, no matter how economically solid will be able to keep all it's region equal. There are poorer regions than the rest in Germany, in France everywhere, things change and poeple need to adapt, just like some ports have adapted after whaling was banned some didn't and died out.
You can't live on olives and fish and not be poor, not in this century.

Look for the employment numbers for Spain overall and as you can see the things were going in the good direction, 2 million extra jobs filled in 5 years before 2019.
Numbers don't lie, it's feelings that make you see a different picture, usually the one you want to see, not reality.

 

The statistics you provide perfectly prove my point. They compare 2008, a year of crisis, with 2018, a year of expansion and they have a 2% difference. Also, you are speaking about poverty, not about social mobility. These are different things. On top of that, statistics may not be the right tool. e.g. the average wealth between Elon Musk and I are around 2.5 Billion.

You can get a practical grasp of the markets in Europe (I happen to know four from my own experience) not only by your direct experience but also by having contacts and speaking with people who live in them. Again, I have reasonably frequent contact with nationals from several EU countries.

I am not "clinging to a belief in prosperity in every region", what I am stating is the simple fact that many areas of Europe are far away from your depiction, which is true.