One very common metric for evaluating social mobility is called intergenerational elasticity, or IGE. It’s a measure of the extent to which a parent’s economic status affects the economic status of their children—or more bluntly, the likelihood that the children of affluent parents will also be well-off and kids from poor families will be similarly disadvantaged.
To be precise, IGE measures how much a 1% rise in a parent’s income affects their child’s income. The scale runs from 0 to 1. A score of 0.4, for instance, means that if one parent earns $10,000 more than the average person makes in a particular country, their children, as adults, will earn $4000 more than the average. The lower the IGE score, the higher the social mobility.
Researchers have computed IGEs for numerous nations, usually by comparing fathers and sons (see graph, above). Some 28 IGE studies in the United States came up with values ranging from 0.1 to 0.6. (Experts think the right number is likely to be between 0.4 and 0.5.) In contrast, a single study of Denmark found an IGE of slightly less than 0.1 for that Scandinavian country. By comparing such studies, researchers have posited that parental influence on a child’s eventual economic status is stronger in the United States than in Canada and several European countries.
But IGE is a subtle tool, researchers warn, and must be wielded carefully to provide any insights into mobility. To fully interpret the data, for instance, researchers also need to examine a family’s relative economic status. “Say your parents are 50% above the average income for their generation,” says economist Gary Solon of Michigan State University in East Lansing, who did a seminal study of IGE in the 1990s. If the IGE is 0.5, he explains, “to figure out the average position of their children, you multiply 50% by 0.5. The answer is 25% above the average for their generation. And that’s actually a pretty big leg up for kids from better-off families.”
In isolation, however, such insights are of limited use to policymakers and others interesting in figuring out how to increase mobility. That’s because IGE alone says nothing about how those children earned a leg up, or down, the economic ladder.