Sunday, December 31, 2017

Class and marriage

Britain one of the worst social mobility problems in the world.

 It is exacerbated “assortative mating”—choosing to have kids with someone who has similar traits. 

 A report by independent think tank Resolution Foundation pointed out (pdf) that in the UK “people tend to couple up with those who have similar inheritance expectations to their own.”

 If you’re born into a certain class in Britain, it’s less likely you will move around within society, and therefore be exposed to more potential partners across other groups. But by usually coupling with others of similar social standing, you end up hurting social mobility by strengthening the status quo.

“Assortative mating is likely to amplify these absolute gaps in individuals’ future wealth transfers at the household level,” said the report. “Adults aged under 50 who are in couples and expect to get no inheritance themselves have partners with an average expected future inheritance of £25,000 ($33,759). By contrast, those who themselves expect to inherit more than £500,000 in future have partners with an average expected future inheritance of £190,000.”

The Resolution Foundation also points out that the fortunes passed onto the younger generation mostly come down to home ownership. The poorer the family, the less likely they are to own their home, and even if they do own property, it’s unlikely it will be worth as much as their wealthier counterparts. The think tank says that 46% of 20-35 year olds who don’t own a home have no parental property wealth, meaning they are more likely to not ever inherit one—or pass one on to their own children.

The Resolution Foundation also looked at what the implications are for inheritances and gifts on generational living standards. It found that these types of wealth transfers will significantly help millennials (those born between 1981 and 2000) in years to come, even more so than previous generations. This is because the home-ownership rates of parents of millennials (baby boomers born between 1946 and 1965) are at 75% and “the real value of estates passing on death has more than doubled over the past 20 years.”

However, as the report pointed out, children of rich parents will receive bigger inheritances while the very poor will receive barely anything. If history repeats itself, their children will couple up with others with similar economic backgrounds, and the income equality gap will further widen, as it has for generations.

People falling in love with someone “from the wrong side of the tracks,” are so compelling in Britain precisely because those relationships are so statistically unlikely.

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