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This week in Class Notes:
- Lack of social mobility, rather than income inequality or cultural change, fuels populism.
- Higher federal student loan limits make for better student outcomes, in terms of graduation rates, earnings, and loan repayments.
- Acting selflessly makes people happy; smart policy design can capitalize on it.
- This week’s top chart shows that most Americans think casual sex is always or sometimes OK.
- The recession is already in the rearview mirror for high-income earners; the road to recovery for the bottom half, Catherine Rampell opines, will be long.
- Check out a new piece by Richard Reeves and Katherine Guyot, which considers workers’ schedule and income uncertainty.
- Limited time offer: As a loyal reader of this newsletter, we wanted to give you a chance to snag a free copy (while supplies last) of “A New Contract with the Middle Class,” an upcoming book from Isabel Sawhill and Richard Reeves. If you didn’t earlier this month, register here with a U.S. address.
The 2016 U.S. Presidential Election, as well as Brexit and other European elections have generated plenty of speculation about the precise cause of rising populism. Different theories chalk it up to economic inequality, social media use, high levels of immigration, or older generational backlash against younger generations’ values. Eric S. M. Protzer tests several hypotheses across four elections in a quest to find the cause of populism’s rise. According to his study, the most likely culprit is a lack of social mobility. Drawing from data on long-term trends in social mobility and voting patterns in U.S. counties and European countries, Protzer suggests that low rates of mobility predict higher vote shares for populists causes or candidates. He argues that a sense of economic unfairness underpins voting decisions – and that populists seduce disillusioned voters by attributing inequity to elites or foreigners, especially where social mobility is in short supply.
Over half of U.S. undergraduates depend on federal student loans to help pay for college, and many are constrained by the limits on borrowing. But would it be worthwhile for students to take on additional debt if the limit were higher? According to Black et al., the answer is yes, at least for students who are constrained by federal student loan limits. When the limit increases, these students borrow more—which improves their degree completion, raises their post-graduation earnings, and improves their student loan repayment rate. Contrary to student debt skeptics’ concerns, the authors find that increased borrowing benefits come at no cost to students’ homeownership or ability to repay other debt.
Acting selflessly – volunteering, donating, giving advice, sharing food, donating organs – makes people happy. And, according to Aknin & Whillans, policymakers can make the most of this emotional benefit by designing policies that give people autonomy, make them feel useful, and facilitate social connection. The authors demonstrate their reasoning in three policy areas: taxation, where taxpayers are more satisfied with paying and feel more connected to their community when they see how their money is allocated; blood donation – people are more likely to donate blood again when they can choose when to give, and when they see where their blood went; and workplace initiatives – giving employees the opportunity to donate, choose their preferred charity, actively engage in charity, and build social connections boosts morale and charity.
This week’s top chart from Pew Research Center gauges views on premarital sex. The majority (65%) of survey respondents say sex between unmarried adults in a committed relationship is acceptable at least sometimes, while a quarter say it never is. Even casual sex is accepted by most (61%), with 29% saying it is “always” acceptable, compared to 24% who say it is “never” acceptable.
“There are two American economies right now: a buoyant recovery resting atop a possible depression. There’s the economy of higher-income, mostly college-educated white-collar workers: people who can still work from home (as I can), who can order delivery for nearly every need or desire, and whose finances have been barely dented by the recession, if at all. For these households, the recession is largely over…. Then there’s the other economy. That’s the economy of lower-wage, predominantly non-college-degreed, blue- (or pink-) collar workers. These are people once employed in restaurants, bars, hotels, salons, gyms and retail stores, who generally must show up in person, but whose customers are now afraid to do so,” writes Catherine Rampell for the Washington Post.
Nearly 20% of workers know their schedules less than a week in advance. Companies profit from “just-in-time” scheduling, but their employees are paying the price. In their latest piece, Katherine Guyot and Richard Reeves find that unpredictable schedules constrain workers’ ability to arrange child care, result in uncertain incomes, and can put workers’ access to safety net programs at risk. The good news? Some companies and local governments are now cracking down on schedule uncertainty, and it’s improving both productivity and morale.
Isabel Sawhill and Richard Reeves have authored a new book entitled, “A New Contract with the Middle Class.” It covers five areas where the quality of life for the middle class could be improved: their relationships, their material resources, the allocation of their time, their health, and the respect they receive from others. If you didn’t last time and you’re a U.S. resident, submit your contact information and we will send you a free physical copy while supplies last!