our findings suggest that in affluent countries with extensive social safety nets, causal effects of wealth are not a major source of the wealth-mortality gradients, nor of the observed relationships between child developmental outcomes and household income
Pretty much the same as in the 19th century US:
Sons of winners have no better adult outcomes (wealth, income, literacy) than the sons of non-winners, and winners' grandchildren do not have higher literacy or school attendance than non-winners' grandchildren. This suggests only a limited role for family financial resources in the transmission of human capital across generations and a potentially more important role for other factors that persist through family lines.
You know, since lotteries are run by states, could they not somehow require as a stipulation of taking the prize winners must also simultaneously and compulsorily have to take financial planning education courses at an additional 25% penalty for not attending, for winnings over double median household income? Including lessons on rebuffing close and distant relatives.
This really assumes that financial planning is the issue. It's a symptom of the problem. The winners of the lottery are ill equipped to pass on the life skills for success, because generally they don't have them. While tons of people gripe about the accumulated wealth of the upper class, there is some socialization in upper class families that sets the children up to succeed -- it's not just an increased access to connections.
I say this as someone who lived in a four person family that lived on a single welfare check for years. There is a huge cultural difference between those who are systemically poor, situationally poor, and the upper class.
Learning upper class behaviors -- and unlearning my 'poor person' behaviors -- has had an immensely positive effect on my life and the way that I handle situations.
I had a similar experience. I find that culture is continually underappreciated in discussions of wealth and income. If I had to choose between passing either my wealth or my culture to my kids as their inheritance I would pick culture every time.
Sure thing! I won't go too in depth, but I was just talking about this with my wife a few days ago.
My dad came from a family of systemic poverty. Money was something to be spent. Ironically, he was in charge of saving money for our family, which understandably went poorly. He tanked nearly all of our money in the dot com boom.
One of the biggest things that stands out to me in retrospect was how little respect he had for his body, especially as a manual laborer. Rather than trying to preserve the resource that he used to make money, he broke his back (doing absolutely dumb things) twice. At this point he was functionally unable to work, and became a stay at home parent because it was the only option left to him. There was no backup plan. He'd dropped out of high school to go to Vietnam, and hadn't saved money in a safe way in case of a catastrophe -- even after one had already struck. Rather than a safe, well diversified plan, all of our money that was not immediately spent was put into tech stocks. And then the dot com bubble hit.
People who are systemically poor are more likely to be content with a good gig, even if it is not sustainable. They are less likely to hedge against risk in this situation as well.
This showed in other areas as well. For example, he'd lost all of his teeth by 40.
My mother on the other hand was situationally poor -- her father's family had a good bit of money, but he passed away very young leaving her and her two siblings with a single mother, who worked in public schools. My mom pursued a degree in journalism, while her brother went into tech. While in school, she dropped out to become an administrative assistant for a large uranium company that was paying more than she was looking at as a journalism grad.
People who are situationally poor are willing to take low risk opportunities with a good reward (take a job that pays more, leave school -- if it works then that's great, if not then you head back to school with more money as a buffer). They are less likely to make a career out of things that use your body as a resource, as such careers are usually unsustainable.
Upper class people I've met are far more likely to take high risk opportunities, even without a buffer. A decision my wife and I made that I think is a more 'upper class' decision was moving to Seattle without much of a financial buffer and no jobs, because we thought it had a very good chance of being the best payoff for our degrees. It's a decision that has accelerated both of our careers and earnings immensely.
Upper class people network. A lot. While they are born into connections, I'm shocked at how few people (myself included) have not picked up the networking skill.
Upper class people are also more likely to understand that their brain/body is a resource that needs to be taken care of to have personal and economic success. For instance, attitudes towards consumption of media, food, and learning materials is something that is shockingly different.
There's a reason why when you read about the success that upper class people have had, there's usually very little mention of television, and an extreme amount of "i used to read a lot."
I considered myself to be someone who read a lot, and compared to my peers I did, but when I'm hanging out with people who grew up in this culture, I'm simply unable to keep up with the amount of references that they make.
There's more, but this has gone on for longer than I was expecting it to, and of course it's all just my opinions and observations.
A follow-up to this that I thought was profound. I have told this story here before but it really relates. I was once on a train in Europe and lucked into an upgrade to first class. The food car was in the back and I wanted a sandwich, so I walked through business and economy class to get food. In business class, everyone without exception was reading non-fiction, news or working on a laptop. When I walked through economy class, everyone was either watching TV/Netflix, reading magazines or fiction. With one or two exceptions. I thought it was a pretty profound difference that probably alone could explain the inevitable income differences between who was sitting where. I recognize that it makes sense those in business class would work, but... it was Saturday.
Your story doesn't surprise me. One particularly interesting trend in recent genetics is moving beyond univariate twin studies for examining social outcomes like education, income, or SES in general: GCTA means that we have heritability estimates which can no longer be seriously doubted, bivariate GCTA and twin study genetic correlations are showing that all of these outcomes are related on the genetic level, the large GWASes of education provide polygenic genetic scores which predict life outcomes and can be used in Mendelian randomization to figure out whether family income causes intelligence or vice versa (it's the latter), LD score regression is an even newer technique than GCTA which lets researchers do all of this with just publicly available data (it's tragic how many of the latest studies could've been done back in like 2012, except all the necessary data was siloed in places like 23andMe), and the UK Biobank is providing an enormous cohort which is genotyped and phenotyped along several dimensions and makes it possible to demonstrate how genetic intelligence causes lower BMI, better health, higher income, education, etc. Some interesting links:
They could. I doubt it would have much effect. It is very hard to get someone to learn something that they aren't interested in, don't care about, or don't agree with.
What would most likely happen is people would take the penalty, or memorize the data in the class long enough to pass the test, then forget it all then and spend it how they were going to anyway.
BI is almost exactly the opposite of a lottery. It isn't a sudden mass windfall, but instead, a steady trickle which, if spent appropriately, enables a secure existance.
There's the question of whether or not it will be spent appropriately, which raises the prospect of whether or not there are a class of people whose economic decisions ought be made for them. Or rather, what additional classes of people exist meeting that criterion, as we already hold that children, the senile, and various handicapped individuals cannot see after their own affairs.
I think you're on to something here, maybe accidentally in your comment. A "steady trickle" is a great idea. Rather than giving people say, $1500 on the 1st of the month, if it could be spread out to $30 per day after some initial lump sum, then it would require saving in order to buy anything significant. Someone inclined to blow all $1500 on the first day just couldn't.
I guess another solution would be to earmark some amount of the funds for rent or provide vouchers for housing or other services.
My brother would work a job for two weeks, get a check, then quit. He'd spend the money on stupid, useless stuff. Then, he'd sleep on someone's couch until they had enough of him eating their food and kick him out. He'd "bum" 2 dollars for a gallon of gas to get to the next couch.
I'm not making this up. This was his existence for most of his life. He would see his weekly/monthly/whatever BI check as a lottery.
There are many people like him. They would not, in any way, spend the money appropriately. I firmly believe that anyone pushing for BI has never met anyone like my brother.
I read it; I'm not so cynical. When kids get erratic money, they spend it instantly. When they get regular money, they can learn to save/invest/spend on regular expenses.
Force people into a classroom, and they will learn nothing.
I see similar things all the time, like various schemes to force parents to go to PTA meetings, laws to force people to vote, etc. Utopia cannot be created this way.
It is however a strawman since no one is claiming that the money in themselves are the issue.
It's not the actual wealth that matters but how long the family have had it. When you raise children you build their character and their ability to deal with a bunch of different complex choices in life.
You can't really be using lottery winners to say anything that what happens to lottery winners.
> It is however a strawman since no one is claiming that the money in themselves are the issue.
I am, uh, pretty sure that people do claim all the time that money is a pretty big issue and this is why we need more income equality and welfare and jobs.
Right away it said it was testing "wealth shocks" going from something to everything in a day. Take a person who has a habit of gambling (the lottery) and they win millions, could be great or a disaster. Someone who has had money from birth, say Donald Trump, gets all sorts of perks like the best schools and a dad that gets him influence and early good deals.
This seems to be arguing that since sudden windfalls don't make people better off, money is not the deciding factor in various markers of high quality outcomes in life.
Yet there is a huge difference between someone who was born to "wealth" and someone who won, our whose parents won, a lottery. And many of those differences specifically relate to safeguards that protect and grow a wealthy-person's wealth.
Various differences between the "wealthy"and those who just happened to come upon a large windfall of money:
* The wealthy usually have an (often inherited) network of financial advisors, people investing their money, and lawyers, all of whom stand between them and bad decisions
* The wealthy are typically surrounded by a culture that has always been rich, so has always been able to afford universities and good health, and so can afford to value these highly
* The wealthy are usually surrounded by other wealthy people, who are not usually expecting (justly or not) financial favors (e.g. a brother who needs medical debt paid off)
* The psychological difference between growing up rich or working for a high salary, versus a sudden unexpected windfall our of the blue, must be immense.
Clearly there are differences between lottery winners and those who are wealth by other means, so you can't take the former, see that their life outcomes don't improve, and conclude that money over all doesn't have an effect on these measures. Just that lottery money doesn't.
I think you've badly misunderstood the paper and its results and are taking some sort of Occupy Wall Street mindset... The 'gradients' the paper is talking about are not exotic gradients which apply only to the general population vs the 1% of the 1% who get into an accident in their Lamborghini and call their dad in the Bahamas who deploys a crack team of white-shoe lawyers to ensure he never appears in court; it's talking about the health gradients you see when you compare the first decile of income nationally to the second decile, the second decile to the third, the fourth decile to the fifth, and so on. (AFAIK, the Swedish administrative data doesn't even give access to the 1% as they topcode or withhold access to their data.)
You see health differences no matter who you define as 'richer' or 'poorer', throughout the general population, in ordinary people. Yes, in the normal people you pass on the street, who have no 'financial advisors' other than their uncle who has some hot stock tips (although I suppose he would count as 'inherited'), who have no 'people investing their money' unless they are unusually prudent and have some Vanguard savings, who are not 'able to afford universities and good health', and so on. The person making $5k a year is less healthy than the person making $20k a year is less healthy than the person making $50k a year, and so on. Where are the monocles and secret cultural rituals there? None of these people 'grew up rich', so you should still see benefits when the $20k person wins a few thousand bucks in the lottery, if the causal effect here is through the money. But you don't.
You think there's a wizard behind the curtain but there isn't. Some counterpoints from my own experiences as a once broke, now financially successful entrepreneur:
<< The wealthy usually have an (often inherited) network of financial advisors, people investing their money, and lawyers, all of whom stand between them and bad decisions >>
More often than not these advisors and lawyers are experts at extracting outrageous annual fees in return for mediocre advice. All you need is a Fidelity account and a few index funds. If you read this book (https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Lar...) then you will be a more successful investor than the majority of wealthy white collar professionals.
<< The wealthy are typically surrounded by a culture that has always been rich, so has always been able to afford universities and good health, and so can afford to value these highly >>
Thanks to the point above, wealth (with rare exceptions) doesn't survive more than one or two generations, which would present some headwind to this second argument. I spent my childhood split between Manhattan and San Diego. Most of my friends from Manhattan are the descedants of Jews who emigated either immediately before or immediately after the holocaust, very few with any substantial assets. If by rich culture you mean a focus on education, ambition, and professional achievement, then yes, I agree with you. Most of my friends who lived in California had parents who moved there from the midwest in the 60s and 70s and struck it rich as the state was developing, and so much money was made over the next few decades that it didn't seem to matter how much you started with.
<< The wealthy are usually surrounded by other wealthy people, who are not usually expecting (justly or not) financial favors (e.g. a brother who needs medical debt paid off) >>
A wealthy social circle can trap you into a lifestyle that is extremely expensive to maintain. Only my wealthy friends call and invite me on trips that cost $10k+ per person or to fundraising dinners at several thousand dollars a plate. My ''median income'' friends are ecstatic if I pick up a couple hundred dollar bar tab. Assuming you don't allow your family to blatantly take advantage of your wealth to fuel their unnecessary consuming spending, I actually think blue collar millionaires have it ''easier'' here.
<< The psychological difference between growing up rich or working for a high salary, versus a sudden unexpected windfall our of the blue, must be immense. >>
Here I agree with you 100%. Easy come, easy go. It's hard to appreciate what you didn't work really hard for. I see this attitude among lottery winners and heirs alike.
I would expect this exact same outcome being Sweden. Being a country with a very good social safety net and low income inequality it stands to reason that a big increase in wealth wouldn't affect the health care and education of children since that role is already well taken care of by society.
It would be more interesting to see this study in a county with low social net and great income inequality like the USA or in a poor county.
It's in the abstract of the paper, but essentially this is a study of Swedish lottery winners which finds that winning the lottery doesn’t make them or their children any healthier, better educated, or more pro-social.
Pretty much the same as in the 19th century US:
Sons of winners have no better adult outcomes (wealth, income, literacy) than the sons of non-winners, and winners' grandchildren do not have higher literacy or school attendance than non-winners' grandchildren. This suggests only a limited role for family financial resources in the transmission of human capital across generations and a potentially more important role for other factors that persist through family lines.
https://www.nber.org/papers/w19348