Chart of the Day: The Great Gatsby Curve

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Via Counterparties, I see that the White House has released an animated version of a chart created recently by Alan Krueger, Chairman of the Council of Economic Advisers:

The Great Gatsby Curve illustrates the connection between concentration of wealth in one generation and the ability of those in the next generation to move up the economic ladder compared to their parents….The curve shows that children from poor families are less likely to improve their economic status as adults in countries where income inequality was higher — meaning wealth was concentrated in fewer hands — around the time those children were growing up.

In a nutshell, children of poor families have a hard time moving up in the world in countries with lots of income inequality:

So why does this matter for the United States? The U.S. has had a sharp rise in inequality since the 1980s. In fact, on the eve of the Great Recession, income inequality in the U.S. was as sharp as it had been at any period since the time of “The Great Gatsby.”

I know I’ve declared jihad on animated GIFs, but this one is actually sort of useful. It only takes a minute to unfold, and it demonstrates the problem pretty dramatically. Krueger’s full speech from last year is here.

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