Categories: world

The American dream is more achievable in this country (and the weather is also good)

The United States has been taken over in Australia as a country where it does not matter who your parents…

The United States has been taken over in Australia as a country where it does not matter who your parents are, says a new report.

Economic mobility from one generation to the next is higher below below than it is in the US, says a detailed analysis of intergenerational income of a team of Australian math, finance and economics professors.

“We find that Australia is more mobile than the United States, no matter what method used,” they wrote in the latest release of Australia’s economic record, a magazine published by the Economic Society of Australia. The study, direct actions for intergenerational income mobility for Australia, was conducted by math professor Chelsea Murray and economics professor Silvia Mendolia at University of Wollongong, finance professor Robert Graham Clark of Australian National University in Canberra and economics professor Peter Siminski of the University of Technology in Sydney.

The report will make disturbing or alarming reading for Americans who see the United States as a country of pioneers and entrepreneurs, where anyone can “pull up with their own bootstraps” to achieve the American dream. (For some, the American dream means doing something out of nothing, for others, it’s home-owned, and for some, it’s only financial security.)

Instead, the United States is shocking somewhere between 28% and 53% less financially mobile than Australia, depending on what action is being taken. There is one thing to suspect that the possibility is not what it should be: there is another who is proving that another country seems to do better.

Researchers compared children‘s financial situation with their parents based on two major nationwide household surveys: Australia’s household, income and work dynamics or HILDA survey, conducted by the University of Melbourne, Australia since 2001

, and the University of Michigan’s panel diagram of income dynamics that have existed since 1968.

To put a number of “economic mobility” compared the relative income of parents and their children with a variety of measures, including gross income, disposable income and income relative to the rest of the population – with others words how likely you will end in the 20th percentile with income if your parents were in the 20th percentile of their generation. The measures ranged from 0 to 1. A reading of zero would mean a country where there is no correlation between the parents’ financial results and their children: The children of the poor are as likely to be rich as the children in the rich. A country with a reading of one is essentially feudal: You end up in exactly the same situation as your parents – no exceptions.

Bottom line? On the broadest measures, the United States came somewhere between 0.31 and 0.38, which means that we have about two thirds of the road from feudalism to perfect opportunity. Australia, however, is somewhere between 0.22 and 0.28. The researchers suggest that two factors can hold back US mobility: growing economic inequality and the increasing importance of college degrees. Inequality means you have to move on to move meaningfully into the scale. Meanwhile, degrees are so central to professional careers that those who do not attend college are locked out by many, perhaps most, means of progress.

This is not the first survey claiming that America’s status as the primary “opportunity” can be exaggerated. Many political analysts argue that frustration about a lack of opportunity played a role in Donald Trump’s surprise victory.

All economic and social studies like this come with caution. They are subject to measurement errors and assumptions, and involve a certain amount of guesswork.

Get a daily essay of the top reading in personal finance delivered to your inbox. Subscribe to MarketWatch’s free personal daily newsletter. Sign up here.

Published by