Can the American Dream be revived?

Mar 12, 2014

Credit flickr/Matt Elsberry

The American Dream is an idea that has a long history in this country. For immigrants in the 1800s, America was seen as a land of opportunity, a place where anyone could achieve anything. All that was required was hard work.

There has been a lot of discussion among policymakers in the past few years about how to make the American Dream more of a reality. But at the same time, new research shows that opportunity in America hasn’t changed much in a long, long time. 

So, what does that research tell us about the policy of improving opportunity? 

First, consider the problem of trying to measure something like the American Dream. The idea is that a person who comes from a poor family has the same shot at success as a person who comes from a wealthy family. To see if it’s true, you need economic information from at least two generations of people. That kind of information has been hard to come by.

But that’s changing.

"Ten years ago, the number of censuses available for which you could do this was more limited," says Joseph Ferrie, an economist at Northwestern University. He’s used old census forms as a way to gather economic information about families. In recent years, these forms have become searchable online, thanks to the rise of genealogy websites.   

"And, with the passing years, the range of things that you can do expands dramatically," Ferrie says.

Things like comparing economic outcomes across generations at different points in time. These outcomes – which most of us think of as opportunity, or the American Dream – scientists call social mobility.

Ferrie and a coauthor compared the rates of social mobility in the U.S. in the 19th and 20th centuries with Britain at the same time.

"We’ve looked at comparisons between the U.S. and Britain in the 19th century, and the U.S. is vastly more mobile across generations," Ferrie says. "By the 20th century, those differences are completely erased."

One possible explanation why the U.S. might have had more social mobility in, say, 1850, is that it was in the middle of the Industrial Revolution. In Great Britain, the change to an industrial economy happened earlier.

But among many researchers, the surprising part of Ferrie’s finding wasn’t that the U.S. had less opportunity in the 20th century. It’s that there was ever any difference at all.

A growing body of research, published just in the past two years, shows remarkably little change in opportunity across countries and across time.

Gregory Clark just published a book about social mobility, called The Son Also Rises. What Clark found with a different research method than Ferrie is that mobility across generations is pretty much the same in every country.

"And that that underlying rate of mobility in cases where we can measure it over many years, as in Sweden or England or South America, doesn’t seem to change over time," he says.

A team from Harvard and Berkeley reached  a similar conclusion when they looked at tax return data in the U.S. over the past four decades. In a paper published earlier this year, the team said a child born in 1971 had the same chance of moving up the economic ladder in America as a child born in 1986.

Consider how much social change has happened the past half century. The War on Poverty,  the rise of the digital economy. If you consider Ferrie’s research, you can go back as far as the New Deal and not see much change in opportunity across generations.

To Ferrie, that doesn’t mean it’s not worth trying to improve opportunity. 

"It just means that the effort we’ll have to put into it may be a great deal more substantial than anyone imagined," Ferrie says.

For policymakers interested in improving opportunity, the message seems to be: Go big, or go home.