Misconceptions in Raj Chetty ’s “Fading American Dream”

Raj Chetty, the head of Stanford ’s “Equality of Opportunity” project, recently released a paper called“The Fading American Dream” co-authored with another economist, a sociologist, and three grad students. It claims that “rates of absolute mobility have fallen from approximately 90% for children born in 1940 to 50% for children born in the 1980s.” [Though the study ends with 2014, when most of those “born in the 1980s” were not yet 30.]The title alone was sure to attract media excitement, particularly because the new study thanksNew York Times columnist David Leonhardt “for posing the question that led to this research.” Leonhardt, in turn, gushed that Chetty ’s research “is among the most eye-opening economics work in recent years.”  He explained that he asked Chetty to “create an index of the American dream” which “shows the percentage of children who earn more money… than their parent earned at the same age.”  The result, he conclude s, is “very alarming. It’s a portrait of an economy that disappoints a huge number of people who have heard that they live in a country where life gets better, only to experience something quite different.”“Another Chetty-bomb just exploded in the mobility debate,” declared aBrookings Institution memo: “Only half of Americans born in 1980 are economically better off than their parents. This compares to 90 percent of those born in 1940.”At Vox.com,  Jim Tankersley proclaimed “The  Amer...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs