Nobel-Prize Winning Economist Dr. James Heckman on Social Mobility, the American Dream, and how COVID-19 Could Affect Inequality

On April 14, 2020 Gonzalo Schwarz, President and CEO of the Archbridge Institute, conducted the following interview with Dr. James J. Heckman. Dr. Heckman is the Henry Schultz Distinguished Service Professor in Economics and the Director of the Center for the Economics of Human Development at the University of Chicago. In 2000, Heckman shared the Nobel Prize in Economics for his work on the microeconometrics of diversity and heterogeneity and for establishing a sound causal basis for public policy evaluation. For more on the work of Dr. Heckman, click here.

Gonzalo Schwarz: Many commentators have said that it is not possible to achieve the American Dream any more in the United States. Do you think the American Dream is alive and well?

Dr. James Heckman: Ask any immigrant. They are grateful for the chances that America has given them. Many came with nothing. They live in decent neighborhoods and their families have better lives than they could have before coming here. Their children go to college and integrate into American society. The progress of African Americans over the past century is staggering. Many have shaken off the legacies of poverty and discrimination. Those who deny that the American Dream is achievable ignore the myriad success stories and the mindset for personal growth that America offers.

S: When people talk about the American Dream they do so in the context of the current academic and policy discussion on income mobility and inequality. How would you characterize the current research in this field? What are some of the key issues with the literature and public discussions around these issues?

H: The current research in the field is shoddy. It has gained traction because it appeals to the negative image of American society held by leading opinion makers like the New York Times and the Atlantic. In truth, the evidence based on the IRS data is deeply flawed and has been incorrectly analyzed. Take “The Opportunity Atlas” promoted by the New York Times. It claims that “zip code is destiny.” Careful statistical analysis of the data shows otherwise. The same can be said of the academics who write about the growth of the Top 1%. Careful studies show much less growth in disparity than what is picked up in the popular press and by populist politicians. A new “wisdom” has emerged: large samples more than compensate for faulty or missing data. The wisdom of this crowd is that sample size trumps careful data analysis.

S:Without going into detail, what do you think are the main barriers to income or social mobility? (Could be micro level such as agency and family structure or on a bigger scale in terms of labor markets, entrepreneurship, etc.)

H: The main barriers to developing effective policies for income and social mobility is fear of honest engagement in the changes in the American family and the consequences it has wrought. It is politically incorrect to express the truth and go to the source of problems. Public discourse, such as it is, cannot speak honestly about matters of culture, race, and gender. Powerful censorship is at play across the entire society.

S: In your research you discuss the key importance of family structure for social mobility. Why do you feel so strongly about this issue?

H: The family is the source of life and growth. Families build values, encourage (or discourage) their children in school and out. Families — far more than schools — create or inhibit life opportunities. A huge body of evidence shows the powerful role of families in shaping the lives of their children. Dysfunctional families produce dysfunctional children. Schools can only partially compensate for the damage done to the children by dysfunctional families.

S: Your work on early childhood education is constantly cited as a justification for universal preschool education. Is that a policy you have recommended or what is your main focus and potential solution when you promote the importance of early childhood education?

H: I have never supported universal pre-school. The benefits of public preschool programs are the greatest for the most disadvantaged children. More advantaged children generally have encouraging early family lives. The “intervention” that a loving, resourceful family gives to its children has huge benefits that, unfortunately, have never been measured well. Public preschool programs can potentially compensate for the home environments of disadvantaged children. No public preschool program can provide the environments and the parental love and care of a functioning family and the lifetime benefits that ensue.

S: Do you have any thoughts overall on how this current crisis could impact social mobility and inequality?

H: Inequality in health and earnings will be exacerbated by it. Poverty and disadvantage foster disease. Inequality in access to health care fosters inequality in health and poor health inhibits the ability to contribute to society. With so many people now out of work — and out of health benefits — short-run inequality generated by poor health will increase in addition to the inequality created by the loss of jobs. We know this is true because those in poor health before COVID-19 struck are the primary victims of the new pandemic.

S: In your work a key component to childhood development and human capital is parental engagement. Because of the school closures and stay at home mandates in many states, children and their parents are staying at home which should increase the level of parental engagement. Do you think that this will be helpful for childhood development as it pertains to that specific issue or because of the heterogeneity of the quality of parental engagement and capacity of some parents to develop quality engagement, the end result could be more inequality as some kids will have a higher quality of parental engagement than others?

H: To those who have more will be given. For stressed families where the single parent is still working, the early childhood environment will likely worsen.