Study estimates the probabilities of poverty and affluence across the American life span
Despite the strong emphasis placed on income in the United States, little is known about the likelihood of an adult experiencing poverty or affluence in their lifetime. Now, a study in the winter issue of Social Science Quarterly finds that Americans have a roughly 50/50 chance of experiencing the American Dream or the American nightmare.
"America can be characterized as a 50/50 society, where the chance of experiencing one economic extreme versus the other is roughly 50/50," said Mark R. Rank, Ph.D., first author of the study and professor at the George Warren Brown School of Social Work at Washington University in St. Louis. Americans tend to think of poverty and affluence as "something that happens to someone else," but the study's analysis drives home the fact these events are mainstream issues.
51.1 percent of Americans are exposed to at least one year of poverty during adulthood, 51 percent will experience one year of affluence, while four out of five Americans will encounter one or the other of these economic events. "The opportunity for extreme economic failure and success appears to be a very real component of American society," said Rank, who co-authored the study with Thomas A. Hirschl, professor at Cornell University.
While Americans in general have a solid chance of experiencing either wealth or poverty in their lifetime, the study shows that being African American or having less than 12 years of education dramatically increases the odds that individuals will experience poverty and significantly decreases the likelihood that they will ever attain a level of affluence. For example, while nine out of 10 blacks in America will experience poverty during their lifetimes, only one out of eight will encounter a year of affluence.
"These findings help to explain why black Americans have such a different perception of the American Dream than do white Americans," Rank said. Race and education largely demarcate Americans into the haves and have-nots in society.
"The U.S. has been characterized as a nation of abundant economic opportunities where affluence is within the grasp of many of its citizens, but America has also been depicted as a free-market society that provides little protection from the ravages of poverty," Rank said. "Our analysis reveals that both views of America appear accurate, with race and education being the fault lines that divide Americans into one group or another."
Contrary to popular belief, gender exerts relatively little affect on the probability of experiencing poverty or affluence, with American men and women remaining near equal odds of experiencing poverty or affluence throughout their adult lifetimes.
The study is based on a unique analysis of a series of life tables constructed from the Panel Study of Income Dynamics (PSID). The PSID is a nationally representative longitudinal sample of households and families interviewed annually since 1968. The official poverty line was used to designate poverty while affluence was defined as 10 times the poverty line. For example, the poverty line for a family of three in the U.S. is $13,738; consequently, affluence for such a family would be drawn at $137,380 and up.
To view a graphic illustrating the results from Rank's study, visit http://news-info.wustl.edu/News/nrindex00/rank.html
Contact information:
Mark Rank
Professor of Social Work
George Warren Brown School of Social Work
Washington University in St. Louis
314-935-5694
markr@gwbssw.wustl.edu
Journal
Social Science Quarterly