Sunday, March 13, 2016

Economic inequality breeds economic despair

Economic inequality is a cancer on the nations of the world. As President Obama put it, it is the defining challenge. The staggering divide between rich and poor is especially noticeable close to home but it is a world-wide problem; see previous posts here and here. There are correlated effects on our society, for example, the stunning difference between life expectancy favoring the rich over the poor; "only the poor die young." Now we learn of the relation between high economic inequality and the high school dropout rate.

Communities with high economic inequality also tend to have lower upward social mobility. The question is whether there is a causal relationship between the two, as a new study endeavors to answer.

The predominant line of reasoning among economists is that hard times give people the incentive to do what they need to do to climb the economic ladder of success. However, a Brookings Institution study suggests that when young people from the low end of the socioeconomic spectrum succumb to hopelessness — and believe that a middle-class existence is unattainable — they might invest less in their own future.

The lesser investment in their future takes the form of less education. The study reported in the Atlanta Blackstar found that the dropout rate among students in low income families in states with high inequality was 2.5 times higher than the rate among students in states with low inequality.

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