Graph depicting Equality of Outcomes vs. Equality of Opportunity
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Description: This graph correlates the equality of outcomes in a country with the equality of opportunity. The equality of outcomes are measured by the GINI coefficient, which is inverted here so that higher numbers indicate a more equal society. The equality of opportunity is the level of intergenerational income mobility in a country. Specifically, it is one minus the degree to which people's incomes today are driven by the income of their father.

Sources: OECD   World Bank

Data: Excel

Last updated: March 16, 2016

 

Equality of Opportunity is Largely a Product of Less Unequal Outcomes



Discussion: The more economic equality a country has, the more people there have access to opportunity. In the United States, 47% of your income level is determined by the income of your father, where in Denmark, only 15% of your income is determined by the income of your father. The United States is the most unequal of the countries examined in terms of outcomes and the third-most unequal in terms of opportunity.

Many people believe that America is the land of opportunity. That was once true. Back in the 1960s, the U.S. led the world in terms of income mobility. The European counties were still tied down by vast differences in wealth and land still held by families from the times of the aristocracy while the United States's historical backdrop was of self-made immigrants.

But, that has changed drastically over the past 35 years as the United States has become the least economically equal of the developed countries. We have in effect created our own aristocracy here, and the wider the gap gets between the classes, the harder it becomes to cross those lines.

The right frequently distinguishes itself from the left by arguing that the left favors equality of outcome where the right favors equality of opportunity. That is not a very accurate description of either, but in any case, they're effectively the same thing. There are few measures that improve the equality of opportunity that do not improve the equality of outcomes or vice versa. If you spread opportunity more broadly, you tend to get more equal outcomes than if you clump opportunity up narrowly. Likewise, if you have less unequal outcomes, the children of the more equal people have more equal opportunity. The right often uses the position about equality of opportunity as a justification for doing nothing about equality of outcomes, but as the data shows, we need to make tremendous improvements on both. So, whether you want to think about it in terms of opportunity or outcomes, the policy is pretty clear- we need to move towards more equality.

One important limitation of this data should be noted. Income mobility is used as the indicator of the equality of opportunity. Specifically, the statistic looks at the extent to which a son's income is driven by their father's income (and then for presentation purposes, I inverted the number so that a higher number indicates that the son's income is less driven by the income of their father). This is a fairly good measure of the equality of opportunity. It directly addresses inequality of opportunity that is caused by the inequality of our parents' wealth, which is likely the biggest hurdle to the equality of opportunity. It also reflects any inequalities that transmit from father to son. For example, if a particular racial or ethnic group is stuck in a particular income bracket, that would be reflected by this statistic. However, it does not measure inequality of opportunity that is driven by factors that are not passed from father to son. Most notably, it does not reflect gender inequality, which is a major cause of inequality of opportunity. The actual level of equality of opportunity is therefore lower than indicated on the chart for all countries.


See more graphs about: Income   Inequality