In The Millionaire Mind I wrote:
. . . key success factors our economy continues to recognize and will continue to reward: hard work, integrity. . . .
It seems that at least once a week during the last ten years, I have read published news stories and editorials claiming that economic opportunity in America is rapidly declining. There are several reasons why critics propose that socioeconomic mobility is on the wane. Some look at data that only supports their hypothesis; others have a purely political agenda. And some are blatantly guilty of not understanding the basic tenets of mathematical statistics.
Recently several imminent scholars conducted the definitive and objective study of the progress of social mobility over the past 20-30 years. Raj Chetty of Harvard and Emmanuel Saez of Cal-Berkeley, both economics professors, studied about 50 million tax returns of parents and their adult children. Quoting from The Wall Street Journal article:
The authors measured the ability of children born to different income strata from 1971 to 1993 to move into different income groups.
The WSJ headline tells it all: New Data Muddles Debate on Mobility: Study Says U.S. ‘Economic Mobility’ Remains Unchanged.
The odds of a child moving up the economic ladder have remained the same for about the past three decades. . . that contradicts the narrative in Washington that economic mobility has declined in recent years.
Likewise The New York Times headline concurs: Upward Mobility Has Not Declined, Study Says.
I suggest that everyone read the above two articles. They should be shared with friends and especially with children. When the economic winners of today look back on their attitudes and beliefs during their salad years, what do they tell me? Much of their success can be attributed to their belief that they could succeed and that economic opportunities abound in America. Their belief and reality are congruent. It is unfortunate that an increasing number of media reports claim that the tide of economic opportunity is increasingly against upward social mobility.
Keep in mind that the study mentioned above deals only with inter generational contrasts in terms of income. Income is a correlate of wealth, aka net worth. However, if given the choice of a measure of economic success I would always select one’s net worth over one’s income. Only a minority of the variation in wealth is explained by income and, of course, vice versa. Studies dating from the late 1800s up to today indicate that 80% or more of those in the high net worth category are self made affluent. And it matters little whether affluent is defined in terms of millionaires, deca millionaires, top 5%, top 2%, top 1%, of wealth holders and so on.