When asked why he is a Democrat, billionaire Warren Buffett explains what he calls “the ovarian lottery” and the role luck played in his success. New data show the stakes of that lottery are increasing. (More)

Getting Lucky, Part I: The Ovarian Lottery

This week Morning Feature explores luck and its role in success. Today we begin with what Warren Buffett calls “the ovarian lottery,” the luck of one’s birth, and how that shapes life opportunities. Tomorrow we’ll see that conservatives view luck very differently, if not as divine blessing than at least as a personal virtue. Saturday we’ll conclude by considering when and how policy should buffer the effects of luck.

“Dip your hand in and that is what you get”

Philosopher John Rawls called it the veil of ignorance and the concept dates at least to Immanuel Kant, but I like Warren Buffett’s version:

Just imagine that it is 24 hours before you are born. A genie comes and says to you in the womb, “You look like an extraordinarily responsible, intelligent, potential human being. [You’re] going to emerge in 24 hours and it is an enormous responsibility I am going to assign to you – determination of the political, economic and social system into which you are going to emerge. You set the rules, any political system, democracy, parliamentary, anything you wish – you can set the economic structure, communistic, capitalistic, set anything in motion and I guarantee you that when you emerge this world will exist for you, your children and grandchildren.

What’s the catch? One catch – just before you emerge you have to go through a huge bucket with 7 billion slips, one for each human. Dip your hand in and that is what you get – you could be born intelligent or not intelligent, born healthy or disabled, born black or white, born in the U.S. or in Bangladesh, etc. You have no idea which slip you will get. Not knowing which slip you are going to get, how would you design the world? Do you want men to push around females? It’s a 50/50 chance you get female.[…]

My sisters didn’t get the same ticket. Expectations for them were that they would marry well, or if they work, would work as a nurse, teacher, etc. If you are designing the world knowing 50/50 male or female, you don’t want this type of world for women – you could get female. Design your world this way; this should be your philosophy.

Simply, many of life’s opportunities and risks are a function of the womb from which a child emerges: his/her sex, birthplace, parents’ wealth and connections or lack thereof, and other factors. And as we can’t choose our parents, that means many of life’s opportunities and risks are a function of … luck.

“Poverty poisons the brain”

Conservatives like to talk about “personal responsibility” and “making good choices,” but research shows that making good choices is, in part, a function of the ovarian lottery … and not in the way conservatives think.

Neuroanthropologist Daniel Lende has studied the research on how poverty poisons the brain:

[A] neuroanthropology of poverty shows that poverty is not bad simply because of lower social status, increased environmental stressors, and a lack of resources. Poverty is bad because it unites individual and societal lack of control, creates unpredictable adversity, sets conditions that leave people unable to respond, and creates a sense of helplessness and despair.

And that correlates to measurable differences inside the brain:

This study was designed to examine the possible association between household family income and the hippocampus, a brain region central to many important cognitive and emotional processes. We identified an association with the hippocampus and income, as hypothesized. The hippocampus has previously been found to be associated with quality of environmental input and stress. Taken together, these findings suggest that differences in the hippocampus, perhaps due to stress tied to growing up in poverty, might partially explain differences in long-tern memory, learning, control of neuroendocrine functions, and modulation of emotional behavior.

“They so often face this challenge with diminished capabilities”

As neuropsychologist Martha Farah explains, those differences make life far more difficult for children from poor families:

We have found that distinct aspects of early childhood experience (cognitive stimulation and parental nurturance) are predictive of distinct aspects of neurocognitive ability in later childhood (language and memory ability). Consistent with these results, and with animal research implicating stress and parenting behavior in hippocampal development, we found that early parental nurturance predicts hippocampal morphology in adolescence. [Citations omitted.]

People of low [socio-economic status] face enormous economic and social barriers to improving their lives. It is a tragic irony that they so often face this challenge with diminished capabilities as a result of the hardships experienced early in life.

The effects continue into adulthood. A recent study by University of British Columbia psychologist Jiaying Zhao and Harvard economist Sendhil Mullainathan found that living in poverty is like pulling an all-nighter, every night:

In the mall experiment, shoppers underwent a battery of tests to measure IQ and impulse control. However, half the participants were first given a “teaser” question – what they would do if their car had broken down and needed $1,500 worth of repairs – designed to put a pressing financial concerns at the forefront of their thoughts.
[…]
The results showed that people wrestling with the mental strain of poverty suffered a drop of as much as 13 points in their IQ – roughly the same found in people subjected to a night with no sleep.

“Increasingly, it’s your zip code that predetermines your destiny”

And a new study by the National Bureau of Economic Research found that problem is getting worse:

Although rank-based measures of mobility remained stable, income inequality increased over time in our sample, consistent with prior work. Hence, the consequences of the “birth lottery” – the parents to whom a child is born – are larger today than in the past. A useful visual analogy is to envision the income distribution as a ladder, with each percentile representing a different rung. The rungs of the ladder have grown further apart (inequality has increased), but children’s chances of climbing from lower to higher rungs have not changed (rank-based mobility has remained stable).

On first reading, that seems like good news: children from poor families have as good a chance to reach a median income as in past generations. But the authors emphasize that is misleading, as today’s rising inequality means more and more wealth concentrated at the very top of the ladder:

This result may be surprising in light of the well known cross-country relationship between inequality and mobility, termed the “Great Gatsby Curve” by Krueger. However, as we discuss in Section IV, much of the increase in inequality has come from the extreme upper tail (e.g., the top 1%) in recent decades, and top 1% income shares are not strongly associated with mobility in the cross-section
across countries or metro areas within the U.S. [Citations omitted.]

Simply, rising from a poor to a median income no longer means as much as it did a generation ago, as median incomes have flatlined and all but the top earners now face near-poverty at some point in their lives. Thus, as yesterday’s Opportunity Nation report shows, the stakes in the ovarian lottery are rising:

Central to our identity as Americans is a shared belief that, no matter how humble your origins, with hard work and perseverance, you can improve your prospects and give your children a shot at a secure and productive future. For generations, Americans lived this dream. Social mobility was a reality, and millions were able to climb the ladder to economic security. But today, the American Dream is too often just that – a dream. Increasingly, it’s your zip code that predetermines your destiny.

Tomorrow we’ll see a conservative who thinks that’s just fine because, he argues, rich children deserve to inherit wealth and their luck trickles down on the rest of us sooner or later.

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Happy Thursday!