More Evidence “the American Dream” is... Well, Just a Dream!

The rhetoric is that the US is a place of unparalleled opportunity, where hard work and determination can take a child out of poverty into the White House, or at least a mansion on a hill, but the reality is different, according to a University of Michigan researcher who is studying inequality across generations around the world. Fabian Pfeffer, a sociologist at the U-M Institute for Social Research, said:

Especially in the United States, people underestimate the extent to which your destiny is linked to your background. Research shows that it’s really a myth that the US is a land of exceptional social mobility.

Pfeffer illustrates this using data on two generations of families in the US to compare with similar data from Germany and Sweden. He found that parental wealth is important in whether children move up or down the socioeconomic ladder in adulthood. Parental wealth has an influence above and beyond the three factors that sociologists and economists have traditionally considered in research on social mobility:

1. parental education
2. income
3. occupation.

Pfeffer said:

Wealth not only fulfills a purchasing function, allowing families to buy homes in good neighborhoods and send their children to costly schools and colleges, for example, but it also has an insurance function, offering a sort of private safety net that gives children a very different set of choices as they enter the adult world. Despite the widespread belief that the US provides exceptional opportunities for upward mobility, these data show that parental wealth has an important role in shielding offspring from downward mobility and sustaining their upward mobility in the US no less than in countries like Germany and Sweden, where parental wealth also serves as a private safety net that not even the more generous European public programs and social services seem to provide.

The US data come from the ISR Panel Study of Income Dynamics, a survey of a nationally representative sample that started with 5,000 US families in 1968. Pfeffer is now expanding the number of countries he is analyzing, and is also examining the influence of grandparents’ wealth.