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Rich kids work less than the merely affluent when they grow up

Raj Chetty and a cast of thousands have a new paper out that looks at economic mobility. In a nutshell, it finds that mobility has increased among Black families and decreased among white families. Similarly, it has increased among the rich and declined among the poor. For more details, the New York Times has a long write-up here.

But I was sort of intrigued by this chart:

Children from higher-income families tend to have higher employment rates. This probably doesn't seem too surprising. But at the 90th percentile—that is, household income above $250,000—the trend breaks down. Kids from the very richest households work a little less than those who were merely well off.

The difference is only a few percentage points. Still, what's the cause? The most obvious possibility is that rich kids are more likely to get by on family wealth (or inheritance) and don't have to work. But while that seems plausible at very high income levels, it seems a little unlikely at $250,000.

But what other explanations are there? I'm coming up blank.

33 thoughts on “Rich kids work less than the merely affluent when they grow up

  1. dausuul

    The first thing that comes to mind is higher education. I wouldn't be surprised if a number of those folks were pursuing doctorates or professional degrees. Even so, 27 is a little bit late to be finishing up, but not unheard-of.

    Another possibility is marriage. If your parents are in the top 10%, you're more likely to encounter potential mates who can support a stay-at-home husband or wife, even in an expensive city.

    Or maybe the unemployment is transitory; children of high-income parents might take more time off between jobs, because they can afford to be cavalier about finding new employment.

    1. James B. Shearer

      "Even so, 27 is a little bit late to be finishing up, but not unheard-of."

      I would agree. 4 years of undergrad plus 4 years of grad takes you to 25-26. And many people take more than 4 years to get a PhD in some fields. Throw in a gap year or a change in major and you can easily still be in school at 27. And of course richer parents are in a better position to support children who need time to find themselves.

      I got a PhD at 25 but then had 3 years of post doc fellowships before getting a real job at age 28. I am not sure how fellowships count in employment terms, I don't think I was paying into social security.

      Age 35 might be a better check point.

      1. somebody123

        four years? you must be old. PhDs in sciences take five to seven, in humanities eight to ten. and those are averages so you could easily still be in school in your early 30s.

        1. J. Frank Parnell

          Choose your grad school wisely. Enormous State Universities need the teaching assistants and hang on to their grad students. Through dumb luck I ended up going to a private and got a Ph.D. in physics 4.5 years after my BS. My wife got her Ph.D. in chemistry at the same school in 4 years.

      2. Brian Smith

        This was exactly my thought.

        Aside from PhDs, think about MBAs - traditionally, top business schools want applicants with a few years' work experience post-undergrad. So, BA at age 22, work till 25 or so, then 2 years in BSchool.

        Or MDs - BA at age 22, MD at 26, internship, residency, fellowship, then start "real" work at 30 or so.

        For this income/education level, I doubt that marriage is a major factor, especially at age 27. Maybe at 35 or 40.

        1. SamChevre

          Yes, this. I think maybe especially doctors - take a gap year at any point, or do something like Americorps or TFA for 2 years before Med School, and you're still in Med school at 27. And I'd bet doctors are very over-represented in the "household income between $250k and $1 million" household segment, and their children are somewhat more likely to pursue medicine as a career.

        2. Crissa

          But if it happens, there's definitely room for a stay at home spouse. Even in the modern world, having someone to do the home management exclusively is very handy.

          And you can do that easily once you're over 100k income.

    2. cephalopod

      Many people enter grad school in their mid-to-late 20s, which pushes the completion date later.

      There are also plenty of programs that take far more than 4 years. I don't think anyone in my spouse's program took less than 5.

  2. dilbert dogbert

    OT but the assignation attempt on tDrumpf and the rise of the Supreme Court as the most powerful branch of government, got the peabrain to wondering how the assignation of a Supreme Court Justice would affect our politics.

    1. Anandakos

      To whom is Former President Trump being assigned? And to whom do you propose to assign the Justices of the Supreme Court?

      Proof-reading could be a long-term friend.

      In the meantime it might help you NOT to assassinate your posts.

      1. Joseph Harbin

        I read the "assignation attempt on tDrumpf" to mean that somebody out there tried to have a tryst with the presumptive GOP nominee. Whether it was successful, we don't know. In any case, it raises questions: who? why? Some crazy MAGA (is that redundant?) with the hots for #45? Or some Stormy Daniels-like wannabe hoping for a payoff? More likely it wasn't romantic. Maybe a short, balding dictator looking to get his hands on stolen US national security secrets.

        The assignation of a Supreme Court Justice raises different questions but we can be sure it won't affect the politics or makeup of the Court, our one institution that famously holds to no enforceable ethics.

    2. DButch

      I hope you meant assassination attempt, because somebody desperate enough to attempt an assignation with tDrumpf is truly to be pitied. ????

      On the other hand, whether a malign act of spell check or a proper Freudian slip, well done!

  3. John Smith

    My parents’ wealth (probably equivalent to ~$250k income today) allowed me to dawdle for a bit in unpaid education circa 27 years old - in a way that a poorer family would’ve obligated me to be properly employed earning money at that point.

    That dawdling allowed me to achieve an (eventually) high-paying career, and marry a similarly-barely-employed-but-with-lots-of-earning-potential ~27-yo partner. Once our incomes were high enough, I was then able to return to unemployment/full-time parenting. And now we are quite comfortable living on my wife’s a-little-more-than-$250,000/year income.

    In short: It’s pretty easy to live easily and choose to not overwork at an income of $250,000. In small-city middle America, at least.

    1. Anandakos

      Good for you for being the full time parent. Takes guts and high self-esteem for a guy to do it. Congratulations.

    2. John Smith

      I dunno about “guts.”

      I’m just a weirdo (good kind, I hope) who rejected conservative expectations decades ago, and found a wonderful,` actually-equal partner to marry.

  4. cmayo

    I see more of a plateau around the 90th percentile - where it really falls off is as you go higher, somewhere around the 95-96 percentile from eyeballing the chart.

    And then the tail is really only formed from those at the very top, which fucking duh, man. These are your trust fund/Succession kids.

    1. jdubs

      i think this is correct. This both makes sense and appears to more accurately capture what the chart is actually showing.

      The top 2% are doing all the heavy lifting/loafing here.

  5. jvoe

    This jives with my experience. Rich kids have no incentive to work so why would they? They stay in school, volunteer, or do drugs--Runs the gamut. I've watched super talented rich peers squander talents that I would die to have.

    What is a sadder is the fact that poor kids are not working. Also from my experience, this is because they don't have transportation. One of the biggest anchors around the neck of America's poor is that you need a car to select better paying jobs.

    1. jte21

      Very true. One of our kids can't drive due to a medical issue and it's killing her job-wise to be dependent on our local, very shitty, bus system.

  6. middleoftheroaddem

    As mentioned above higher ed.

    Further, some likely are in career advancing un paid internships (film, fashion, docent, etc) , struggling to start a career (writing, the arts) or volunteer work (building wells in Africa).

    Oh and yes, some are just lazy.

  7. Joseph Harbin

    Kids from the very richest households work a little less than those who were merely well off.

    Kids from the richest households don't grow up to value work. They grow up to value money. Work is for workers, not people at the top.

    I grew up middle class. Both my parents worked. My sibs and I are all college-educated and have worked our lives in two-income families while raising kids.

    My wife didn't grow up rich but grew up in a higher-income family than I did. Her dad worked, her mom raised the kids. My wife is the only one of six to have a career. When we got married, her five sibs were all supported by their spouse or partner, even her brothers. Over the years, four have gone through divorces and have come late in life to appreciate the value of work.

    For what it's worth, my wife and I both grew up with Republican parents. Now, my sibs and I are all Democrats (one a D-leaning indie). My wife's sibs are all Republicans.

  8. FrankM

    Looking at the graph, the effect is only a few percent. That's going to be hard to identify and could be a combination of a number of things. Many graduate programs offer a stipend, which would be counted as income. If your parents are rich enough you can skip that.

  9. name99

    First they don't "work less" (how would this be measured?) they EARN less.

    As for why, obvious possibilities include
    - more of them are taking vanity classes (eg journalism or art history) on the theory that they will magically find a job regardless.
    And perhaps they will, but not a $250K/year job.

    - the optimistic assessment is that they have seen what can (and can't) be bought with $250K a year, and realize that while it's nice, it's not worth defining your life around. Better to do something you like and earn less. (IMHO the same reason gifted kids are considered to be a "disappointment" as adults because they mostly structure their lives to optimize life satisfaction, not income.)

    But the criticisms of this data are very valid.
    What's the histogram of employment vs not? Of income if employed? Especially among the wealthy, there's the option to spend 20s and 30s building social/network capital rather than financial capital, in a way that pays off in the 40s and above. (From journalist to VP of Ad Sales, that sort of thing.)

    I am less enthusiastic about the many claims above that this represents laziness/incompetence/indolence. These sorts of claims are what people desperately want to be true, and study after study shows them to be BS. Of course there are idiots among the kids of the wealthy, along with junkies, and the unambitious. But study after study shows that there are fewer of these than amongst the poor. I know I won't convince anyone – this crowd has shown over and over again that for them "Trust Science" is a slogan you scream at Republicans, not an actual life principle. But that's simply the way the world IS.

    For the two or three interested in the facts, Gregory Clark's book is probably the easiest place to start:
    https://en.wikipedia.org/wiki/The_Son_Also_Rises_(book)

  10. Ian

    The very richest kids have the luxury/ability to wait for the *right* job, rather than *any* job. They're not living a life of leisure, but they do have more flexibility to extend a job search. That's probably all there is to it.

  11. jeffreycmcmahon

    If I have a guaranteed income of $250,000/year whether I work or not, I am never lifting a finger for the rest of my life (also true at much lower income levels).

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