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Wednesday, May 11, 2016

Coming Apart: Multidimensional Affluence

Richard Reeves writes at RealClearMarkets:
Just as certain disadvantages can cluster together, creating multidimensional poverty, so advantages may cluster together, resulting in multidimensional advantage. Is there more clustering of advantages at the top of American society? Yes.
The top fifth of households by income obviously have more money than the 80 percent below them. What about other advantages? Let's take just three: marriage, employment, and education. (See Sean Reardon and Kendra Bischoff's paper on the geographical segregation of affluence). You would expect people in top-quintile households to be more likely to have a graduate or professional degree; to have two earners in the family; and perhaps also to be married. You would be right.
The difference in the proportion of the top fifth with each of these other advantages compared to the bottom four-fifths is around 20 percentage points (we restrict our analysis to those aged 40-50). For example, in 1979 a 40-something in the top income quintile was about 6 percentage points more likely to be married that one in the bottom 80 percent. Now the gap is almost 17 percentage points.
This is hardly surprising. More education and more earners in the home will increase the chances that you make it into the top quintile for your age cohort. But it is noteworthy that the extent to which these different dimensions of advantage overlap has been steadily increasing over time. Along with the increased association between top-quintile income and marriage, the differentials for graduate education and two-earner status have each increased by around 10 percentage points between 1979 and 2014.