Gatsby Definition, And Here Are Some Examples As Well: The Great Gatsby Curve shows the link between income inequality and upward mobility. Graphs showing these two variables show a strong positive correlation between inequality and generational stagnation.
Gatsby Definition, And Here Are Some Examples As Well
Alan Krueger, then-chair of President Obama’s Council of Economic Advisers. He coin the term “Great Gatsby Curve” in a 2012 speech to the left-leaning Center for American Progress.
The name refers to F. Scott Fitzgerald’s classic novel about the wealth gap. Between generations and the newly wealthy during the Jazz Age.
The Great Gatsby Curve
According to The Great Gatsby Curve. There is a link between income inequality. The gap between richest as well as poorest people in a country. And the ability of lower-income people to rise economically.
The Y axis depicts intergenerational earnings, also known as “elasticity” or “stickiness.” The closer a country is to the Y-axis, the greater the income gap between parents and children.
Consequently, countries with higher income elasticity have lower upward mobility.
The Great Gatsby Curve
In statistics, correlation does not imply causation. So, just because societal income inequality tends to be associated with less upward mobility. That doesn’t mean inequality is the cause of income stickiness.
But Krueger and other progressive economists imply. If not explicitly state, causation. Krueger. For example, supported the Affordable Care Act and extended unemployment benefits. In the same speech he introduced the Great Gatsby Curve.
The Great Gatsby Conclusion
Several right-wing economists and commentators have questioned Krueger’s conclusion. Therefore claiming inequality does not impede upward mobility.
In 2013, J.D. Vance, author of Hillbilly Elegy. Suggested that demographics and cultures. May be more important than income parity in determining mobility.
A single liberal talking point is reduced by the Gatsby chart, wrote Vance. It’s a good strategy for political gain. But useless for understanding economic stagnation (which, again, is too high).
Great Gatsby Curve Relationship
The Great Gatsby Curve depicts relationship between income inequality and upward mobility in a country. Inequality and wealth “stickiness” appear to be strongly correlated in developed countries around the world.
The Great Gatsby Curve And Inequality
Citizens in countries on far right of the horizontal axis and high on the vertical axis. Hence this will have more difficulty moving from a low economic class to a higher and wealthier economic class.