Inequality and the Pandemic, Part 1: Luck

Here’s an extract from my contingent* book-in-progress, Economic Consequences of the Pandemic commissioned by Yale University Press. Comments and compliments appreciated, as always.

The Covid-19 pandemic has taught us several things about inequality, or rather, it has dramatically reinforced lessons we, as a society, have failed to learn. The first is the importance of luck in determining unequal outcomes.

Some of us will get Covid-19 and die or suffer lifelong health consequences. Others will lose their jobs and businesses. Many, however, will be unaffected or will even find themselves better off. Some of these differences may be traced to individual choices that are sensible or otherwise, such as deciding whether to wear a mask in public places. But mostly they are a matter of being in the wrong (or right) place at the wrong (or right time).

Moreover, this isn’t specific to the pandemic. From the moment we are born, luck plays a critical role in our life chances. Our families may or may not be in a position to help us succeed, and may or may not hold together through our childhood. Moreover, this isn’t specific to the pandemic. From the moment we are born, luck plays a critical role in our life chances. Our families may or may not be in a position to help us succeed, and may or may not hold together through our childhood. A child born into the bottom 20 per cent of the US income distribution has only a 4 per cent chance of ending up in the top 20 per cent. The opposite is true at the other end of the distribution with the striking exception of Black children, especially boys.

These facts have been known to social scientists for decades. Yet until recently, in the face of glaringly unequal outcomes, most Americans comforted themselves with the idea that the United States was a land of opportunity where everyone who worked hard had a fair chance of doing well. This was true a century ago, but now there is more mobility between economic classes in European countries than in the US.

That’s not to say everything in Europe is rosy. Piketty examined the UK and France as well as the US and found growing inequality in all three. It seems likely that other European countare are on the path towards what Piketty calls a patrimonial society, where inherited wealth is the most important determinant of success.

Luck doesn’t end with the lottery of family background. Young people who enter the labour force during a recession will experience permanently reduced life chances compared to those who enter during a boom. And at an individual level, lucky or unlucky breaks of various kinds are much more important than many of us like to believe. Robert Frank provides detailed evidence in Success and Luck: Good Fortune and the Myth of Meritocracy.

The pandemic has reinforced this lesson in the most brutal way possible. As is usual, the poorest members of society have been most exposed both to the risk of death and disease and to economic hardship. But everyone is vulnerable, and it is a matter of chance whether any of us gets infected, and whether the consequences are harmless, severe or fatal. Similarly, exposure to economic damage is largely random, depending on the way in which the pandemic affects different industries and regions.

The randomness of economic success implies that concerns about the incentive effects of high taxes on those at the top of the income distribution are misplaced. If the lucky winners in the economic lottery are discouraged from working (something unlikely to happen on a significant scale until marginal tax rates exceed 70 per cent), there are plenty of unlucky runners-up who can replace them.

  • Contingent because I’m writing on the assumption that Biden wins the US election, and takes office. While a Trump win would be an object lesson in the importance of luck, it would render any commentary on responses to the pandemic pointless as far as the US is concerned and would have drastic consequences for the rest of the world for which I have no analysis to offer at the moment

11 thoughts on “Inequality and the Pandemic, Part 1: Luck

  1. For a random individual, skin melanin is a matter of luck too – though not from the point of view of their parents. The same goes for a large number of characteristics relevant to life chances, including athletic ability and sexual attractiveness. Perhaps we should think of IQ as being unusually malleable by environment. and effort.

  2. Was expecting those numbers to be worse. And frankly, i sort of doubt them. Meaning most moving from the bottom 20% to the top 20% income quartiles in all likelihood had other assets that did not show up in income quartiles. Possibly in a quite literal sense -fiscal assets or just grandparents that were better off, parents with high education levels etc…

  3. Once you get gender-specific bad outcomes among blacks there is however little left beyond plain old-fashioned discrimination as plausible explanation. Frankly not much surprise it works the other way round everyone is talking about regarding gender either.

  4. Inequality of wealth at birth is almost impossible to overcome. If you impose a wealth tax then the wealthy will use tax havens, this may be why there are so few wealth taxes out there in the USA and Australia. I know that Australia has not even bothered to do a wealth inquiry for over one hundred years. Only Europe seem capable of doing anything at all and even there it seems to be having little impact.

  5. I feel I have had more than my fair share of luck. Can’t give the stuff away. Doesn’t seem to be failing me now either. Or am I merely privileged ?

    Can’t really see what it has to do with the Pandemic Depression though, except in so far as it has “dramatically reinforced lessons that we, as a society, have failed to learn” as you quite rightly say.

    The lessons, I hope, are about what is important in life, respecting the importance of menial but underpaid work, and about the importance of caring for the less fortunate ? Are these economic consequences ?

  6. I agree with the luck premise of the original post. We do not get to choose the time, place, milieu or endowments attendant on our conception, birth and upbringing. We have little control over the many accidents and contingencies of personal history and human history. I think we need to unpack the meanings (and interactions) of luck, choice and merit very carefully. We need to take this care to avoid injustice and inequality.

    What is luck, good or bad? In the context of J.Q.’s discussion it means fate, fortune, contingency. It tends to mean events whose causes are beyond our personal choices and powers. What is merit? It tends to mean deservingness based on personal qualities. In turn, the deservingness is often thought to derive most from (volitional) personal choices and efforts.

    Choice, or personal choice, is a difficult topic. At the outset in this discussion I would say that the rumors of personal agency are much exaggerated. We tend to assume that others and ourselves have far more agency than we actually do have. The bias of modern Western thought, passing as it has and does through Christian, Cartesian and Individualism lenses, is to focus on and emphasize individual free will and responsibility. Yet, it is not entirely clear that free will even exists, let alone exists to the degree necessary to support the pushing of meritocratic thinking into blame and reward justifications to the degree that is done in modern Western societies.

    I can hear the howls of disagreement already. Of course, we have free will the theological, Cartesian and common sense critics will say. Leaving aside dogmatic assertions of the existence of free will, the first adduced empirical evidence of having free will is that we feel we have it. Is feeling we have something, evidence that we have it? Is feeling knowing or is feeling simply believing? Many people even today believe and feel that they have a soul. Many other people today do not believe and feel they have a soul. This is taking the word “soul” to have the meaning that a monotheist or spiritualist would give it.

    However, free will does appear to give unambiguous empirical evidences of itself which cannot be said of the soul, the supposed evidence of which is unambiguous to some and ambiguous or absent to others. Free will however appears to be discernible in the sequential or even near-simultaneous congruence between conscious internal decision (executive decision) and external action. A conscious decision can be made to have a cup of coffee or a cup of tea, or a conscious decision can be made to lift one’s left arm or right arm. We can play the game of foregrounding internal conscious decision making by making it explicit in internal monologue. “I will now do this action.” Then I do it. The freely willed conscious decision is made, freely, and then the action decided upon follows if it is in my powers to do it. Ergo, conscious free will exists… or so it seems.

    “In a controversial set of experiments, neuroscientist Ben Libet (1985) scanned participants’ brains as he instructed them to move their arm. Libet found that brain activity increased even before participants were aware of their decision to move their arm. Libet interpreted this finding as meaning that the brain had somehow “decided” to make the movement, and that the person became consciously aware of this decision only after it had already been made. Many other neuroscientists have used Libet’s findings as evidence that human behavior is controlled by neurobiology, and that free will does not exist.” – Psychology Today.

    Libet’s experiments might seem to indicate that the subjective-feeling view of willing action being both before and wholly determinative of the action may not be correct or at least it may not be the whole story. It seems that free will is more complicated than a simple moralistic sketch of personal free will and responsibility would have it. If the detectable potential in the brain arises before awareness of intention then willed intention already would seem to be an effect of a prior cause or causes and thus not the only prime or initial cause.

    We are already aware from experience, scientific research and medical data, that levels of consciousness exist. We may make and take what we call conscious and unconscious decisions and actions. There are also compulsive and obsessive actions, including serious obsessive-compulsive disorders. Then there are neurotic and psychotic conditions. We already recognize legally, socially and empathetically that people are not always in control of or responsible for their actions, reactions and reflexes. We already recognize significant limits to personal freedom and responsibility even at the somatic, neurological and physiological levels. This of course is aside from external contingent obstacles.

    Leaving aside monotheistic or Cartesian dualism explanations of free will (res mensa and res extensa as thinking substance and corporeal substance) we are left with considerable difficulties in accounting for and supporting any doctrine of free will. That is to say, if we can’t magic away our difficulties with metaphysical dogmas (which in any case ignore how spiritual or mental substance impels physical substance) then we are left with the empirical approach which presents its own material (scientific) and metaphysical difficulties, especially in terms of what is called upward causation and downward causation.

    How can we account for the arising of free will empirically and materially? Upward and deterministic causation is the causation theory we are most familiar with from the reductionist side of the physical sciences. Reductionist and mechanistic science utilizing upward causation explanations cannot account from free wall. If an atom does not have free will and reacts in predictable and deterministic ways above the quantum level, i.e. at the chemistry and non-quantum physics levels, how does a collection of atoms achieve free will? The thinking now is to resort to theories of upward, downward and pluralistic causation from the complex systems perspective.

    “The idea of a higher level phenomenon having a downward causal influence on a lower level process or entity has taken a variety of forms. In order to discuss the relation between emergence and downward causation, the specific variety of the thesis of downward causation (DC) must be identified. Based on some ontological theses about inter-level relations, types of causation and the possibility of reduction, three versions of DC are distinguished. Of these, the `Strong’ form of DC is held to be in conflict with contemporary science; the `Medium’ version of DC may for instance describe thoughts constraining neurophysiological states, while the `Weak’ form of DC is physically acceptable but may not in practice be a feasible description of the mind/brain or the cell/molecule relation. All forms have their specific problems, but the Medium and the Weak version seems to be most promising. ” – Levels, Emergence, and Three Versions of Downward Causation by Claus Emmeche, Simo Køppe and Frederik Stjernfelt.

    Some modern thinking and research is looking at the possibility that quantum probabilistic effects in the brain may also play a role in giving rise to what we feel as and call free will. The brain may be a physical machine capable of harnessing quantum probabilistic effects to generate a level of indeterminism in thought and action, hence complex and unpredictable behaviours. My own thinking on this, purely speculative, is that this might generate what should properly be called pseudo-free will. Just as know that deterministic computers can only generate pseudo-random numbers then it seems possible that quantum probability and indeterminism could generate “only” pseudo-free will. A possessor of pseudo-free will would experience it as free will.

    There may even be an evolutionary explanation of the importance of a feeling of free will for higher animals. There may be a reason why such a capacity to feel free (whether or not truly free in fact) evolves. The issue has to do with constraints and degrees of freedom both physically and psychologically (the latter meaning at the level of quale or instances of subjective, conscious experience of feelings and thoughts). To feel constrained and imprisoned means to feel pain, first at the external physical level (imagine being tightly and painfully bound with rope for hours) and then at the internal psychological level (imagine the mental pain of a severe obsessive-compulsive disorder which “binds” a person to actions perhaps even their mental executive judgement does not judge or wish that such OCD actions should be undertaken. Even if will is not free, there may be an evolutionary necessity to evolve the subjective feeling that it as free in higher animals, otherwise the feeling would be one always of pain by constraint and imprisonment in in fully compelled and determined conscious existence. This last is speculative as I say but perhaps not entirely implausible.

    The latest thinking related to free will in at least some sense can be found in papers like this one.

    All of the above considerations suggest we should put a relatively small reward premium on deservingness and merit. Luck, as fate, fortune or contingency plays a huge role in life trajectory. Also, since true and extensive free will is strongly circumscribed at best and possibly non-existent and an evolved illusion at worst, we should reduce our appeal to moralistic free-will and responsibility arguments. Employing the doctrines of free will and personal responsibility as justifications for determinations of excessive rewards and punishments is a process which needs to be much curtailed.

    To those who are exceptionally good at something and want large extra rewards for it (remuneration much greater then the average), I would say this. Being highly capable in your métier is reward enough. A person, performing work or even play sometimes constructive and useful to both them and to others, needs only the experience itself plus adequate (not excessive) means to repeat it and possibly improve on it.

  7. I like what Daniel Kahneman wrote in his “Thinking, Fast and Slow”:

    success = talent + luck
    great success = a little more talent + a lot of luck

    Something the Trumps and Kushners clearly don’t believe.

  8. I feel lucky to have been a tentative ,sensitive ,and shy child and young adult . There was a downside but I eventually found my feet and my life has turned out well .In some ways I wasnt given good guidance but luckily my family was stable so I had the space to sort a few things out- it took a while. I think the parts of me I like the best are related to this basic disposition. There might be a genetic component to shyness ,all of my family are similar. Modern parents tend to see shyness as a problem in children ,its not a good fit with our ‘me first’ ,survival of the fittest entrepreneurial world. Everyone is supposed to grow up to be the CEO of Me Inc. The adult world looks scary to shy kids.

    There is lots of luck to be had ,some people just get illnesses .General personality traits are vital. Scott Morrison standing with a champion race horse and declaring that ‘ those who have a go get a go ‘ sticks in my craw .Horse racing is a cut throat ‘industry ‘ and for every winner there are 1000’s of horses who came dead last (literally). I have been doing a bit of reading about how survival of the fittest libertarian homo -economus thinking is built into the algorithms that more and more of our lives are being handed over to .Those silicon valley tech bro’s have a lot to answer for.

    Free will is one of those conundrums like ‘ there is nothing outside the text ‘ ,regardless of our view we will just go on as if there was anyway. We should keep it in mind though because doubt is useful. I am no authority (I did some of this at undergrad level) but I believe there is no direction of time inherent in physics or chemistry ,they both could/do work backwards . For Relativity there is no future or past as we conceive of it . It’s more like everything just exists at once -not much room for free will there.

  9. sunshine,

    I agree that;

    (a) we will act like and/or feel free will is real whether it is or not;
    (b) there might be some limited free will in some ways; and
    (c) it’s good to retain serious doubts about the extent of free will so we don’t become excessively judgemental and punitive of self and others (which is me thinking I have free will to prescribe good actions to be followed for sefl and others so the whole thing s quite a conundrum).

    I think there is a direction to time but I don’t feel totally sure about it. Is not entropy related to the “arrow of time” as it is called? As the universe continues the total entropy of the universe increases presumably until the heat death of the universe. This implies the universe commenced as highly ordered (a heat energy lattice?)

    An alternative thought on the end of the universe is not heat death but “fundamental law death”. When the universe becomes fully expanded, attenuated and heat dead, the fundamental physical laws all fail. The universe no longer “knows” what size it is or what its laws are as it has no size and no laws. Then it can be a new singularity (for what reason or cause I did not know) and start a new big bang, expansion process and new fundamental laws can arise not necessarily at all like our universe’s fundamental laws. That’s one view anyway.

  10. Hix, if “most moving from the bottom 20% to the top 20% income quartiles” is taxable income then it’s a subject to all the usual gaming of taxable income. The one that sticks in my mind is that some ridiculous percentage of total investment properties are held by people in the lowest income bracket. The connection between that and negative gearing is so obvious that I am more shocked when the statistic is presented than by the actual number. But those exact people could also easily move from the bottom to the top should they de-gear. Or their children could transition through a taxable income phase before jumping on that particular scam in turn.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s