Quantifying luck egalitarianism

To what extent is income inequality the result of family background? This new paper looks at correlations between the earnings of siblings to adjudicate; the idea being that the higher such correlations are, the more important is the influence of the family. It finds:

In Denmark 20 percent of the inequality in permanent earnings can be attributed to family and community factors shared by brothers while the corresponding estimates are 43 percent in Germany and 45 percent in the US.

(The numbers are a little lower for women).
This is consistent with other research, which suggests that intergenerational mobility is lower in the US than it is in the Nordic countries.
This fact bears directly upon the notion of luck egalitarianism. This says that inequalities are acceptable insofar as they result from individuals’ free choices about, say, how hard to work, save and study but are impermissible insofar as they arise from luck.
Now, it is obviously a matter of luck what type of family we are born into. If you subscribe to luck egalitarianism, then, you should favour a tax and benefit system that removes the inequality arising from this source. Which requires that inequality fall by 45% among men (and 29% among women). But the US system seems to fall well short here. Taxes and benefits cut the Gini coefficient by less than one-fifth - perhaps because the benefits system is mean, rather than because the rich are lightly taxed.
I suspect  - given that intergenerational mobility is similar to the US’s and that taxes and benefits reduce the Gini coefficient by 27% - that the UK system also falls well short of luck egalitarianism. 
Anyone who wants to defend the existing low levels of redistribution in the US and (to a lesser extent UK) should therefore argue against luck egalitarianism. Whilst I’d expect right libertarians to do this, I’d be interested to see how Lib Dems do so.

Comments

[Paul Sagar]

"I’d be interested to see how Lib Dems do so."

Nick Clegg has spectacular form here. he basically just redefines redistribution, poverty, inequality and justice. Search for Stuart White's various peices at Next Left for scathing analyses.

[Martyn Griffin]

The same Nick Clegg who is making it compulsory for universities to take students from poorer backgrounds even if these children performed worse at school than richer children? That strikes me as exactly the type of policy that a luck egalitarian would endorse :)

[The Silent Sceptic]

The 'Luck Egalitarianism' definition seems to choose a completely arbitrary boundary beyond which equality isn't rebalanced. What about if you're unlucky enough to be born bone idle?

How many 'free choices' do we really have?

[Sarah AB]

@Martyn - A five-year study tracking 8,000 A-level candidates found that a comprehensive pupil with the grades BBB is likely to perform as well in their university degree as an independent or grammar school pupil with 2 As and a B.

http://www.guardian.co.uk/education/2010/dec/03/state-school-pupils-university

[Peter]

We are such a class-conscious society in Britain, that if you apply dedication to your skill and become valuable enough to freelance, you now find hostility and passive aggression from employed people you need to work with. It wasn't always like this. Since Labour harped on about distribution, it has become very difficult to earn greater pay. The result is that directors of larger companies (freelance clients) are increasingly using cheaper slave labour, and retaining the profits. Thus exacerbating the inequality problem.

[Mariana]

Family background may have a certain weight in how rich or poor we are as it is in our family that we learn the first financial lessons: saving money, buying things, looking for prices, asking for budgets and so on. However, I dont think that our background is a determining factor in deciding whether we are rich or we are not.

[john h]

I'd like to temper your characterisation of the basic luck egalitarian claim.

I do not think it is that insofar as one's advantages are down to luck they are impermissible. rather, it is that it is a good thing ceteris paribus other things equal if one's advantages are not down to luck.

What this means is that even though equality of luck is a good thing it does not wholly determine what is permissible. Other values might outweigh it.

So, this still allows the classic levelling down criticism of egalitarianism to have force. One could still be a luck egalitarian and believe that one should never level down (i.e. make the best off worse off even if it does not help the worst off in any way) because making the best off worse off is bad in a different way.

This is at least what luck egalitarians shoudl think, though they are not often very clear about this.

[hans]

assuming that intergenerational mobility is measured by comparing the income decile of parents with the income decile of their offspring, it seems normal that a country with a more compressed income distribution would come out of the study with a larger such mobility.

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Household underpinning level would have a certain weight in how rich or underprivileged we are as it is in our household that we study the first budgetary lessons.