The concept of ‘The American Dream’ was enshrined in the Declaration of Independence with its groundbreaking statement that all men have the right to “life, liberty and the pursuit of happiness”. F. Scott Fitzgerald interrogated that central myth of Americanness in his classic 1925 novella The Great Gatsby. But the phrase “American Dream” wasn’t used until 1931 by the author James Truslow Adams and didn’t boom until the 1960s. Google Ngram Viewer, a tool that plots the use of words and phrases based on Google’s vast reservoir of books, shows the ascent in the use of the phrase from 1957 to 1971: the most culturally transformative period of 20th century America and correlated to the post-war boom in the U.S economy. If you place The Great Gatsby itself in the Ngram viewer you see a similar sharp rise from 1957. The classic appears to be attuned to the times. Although the book was published in the middle of the Roaring Twenties, its vision of society enraptured by the possibility of material success offered a startling template for post- World War Two American consumerism. This is the American Dream as consumption: The American McDream. But the use of the phrase ‘American Dream’ stagnated from the early 70s and Gatsby too shows a sharp decline in references.
The American Dream turned into an American hangover as it became increasingly harder for working and middle class Americans (a definition far removed from English class definitions) to achieve social mobility. Robert J. Gordon, professor of economics at Northwestern University, points out in an NBER paper that growth started to stagnate in the the 1970s. More than just consumption, then, the American Dream is about income mobility. Donald Trump’s campaign slogan “Make America Great Again” successfully exploited that sense of stifled ambition and recollection – real or imagined – of a time when ordinary Americans believed they could, and did, achieve upward mobility. It’s not a new phenomenon and is core to the American psyche. French intellectual and diplomat, Alexander de Tocqueville, perhaps the most astute observer of the infant nation in the 19th century, had this to say in his classic Democracy in America: “Amongst democratic nations, new families are constantly springing up, others are constantly falling away, and all that remain change their condition; the woof [weft] of time is every instant broken, and the track of generations effaced,” he wrote. Economists and social scientists have established what to many will seem obvious and which again has been clear from literature: that being in an environment where it is possible to rise from your station is key to achieving social mobility. It is increasingly clear that there are huge variations within the United States in the ability of people to break out of their station, even as locally as from one county to another. A 2016 study by Raj Chetty of Stanford University and Nathaniel Hendren of Harvard concludes: “Counties with less concentrated poverty, less income inequality, better schools, a larger share of two-parent families, and lower crime rates tend to produce greater upward mobility.”
Stoner: a loser for today
John Williams’ novella Stoner, published in 1965 but rediscovered in the early 2000s when it seemed to mirror the zeitgeist, doesn’t have the glamour of Gatbsy. It is midwestern America, not New York. The eponymous character, William Stoner, fulfils a version of the American Dream: he rises from rural poverty to university-educated financial comfort. He marries the daughter of a banker. But there is sadness: he never ascends above the position of assistant professor. His marriage is unhappy. He is stifled by his mediocre life. The style of the novel – its taut tone, the moments of exquisite stillness – reduces The American Dream to quiet tragedy. For Gatsby, it is a loud tragedy. In truth the result of the American Dream is not fixed but varies hugely. A child from the bottom quintile in San Jose, California, for example, has a 12.9% chance of reaching the top quintile. A child from the bottom quintile in Charlotte, North Carolina, only has a 4.4% chance. Overall, the Dream is in decline. If you were born in 1940 the chance of earning more than your parents did at the age of 30 was 90%. If you were born in 1980 it is 50%. From Chetty et al’s Equality of Opportunity project website. But what is causing its decline and what could reverse it? One good candidate is income inequality.
The term “the Great Gatsby Curve” was coined by Judd Kramer, with the work of Miles Corak as inspiration. Corak, an economist at the University of Ottawa, published a study on the curve in 2013. From Corak’s article. Fitzgerald’s Jay Gatsby is the fictional arriviste who dazzles the West Egg New York elite with his lavish parties. He embodies both the nobility and the tragedy of the American Dream: he goes from a nobody to an ostentatious millionaire, but his status is built on deceit, greed, murder and ends, eventually, in his death. Corak’s “Great Gatsby Curve” describes how income inequality is reducing intergenerational mobility. As income widens between rich and poor, those who are born poor stay that way. In his conclusion Corak notes that “Inequality lowers mobility because it shapes opportunity”. He also, citing economist John Roemer, notes that this inability to break through is driven by access to schools and jobs, genetic contributions like intelligence and personality, and a family culture. Inequality reduces the chance a person born poor can become rich and makes Americans unhappier — and it’s getting harder and worse. A study by Oishi, Kesebir and Diener using General Social Survey data from 1972-2008 found “that Americans were on average happier in the years with less national income inequality than in the years with more national income inequality”. This is corroborated by a study from Nikolaev and Burns which finds that downward socio-economic mobility has a negative effect on subjective well-being.
It’s not fair
Critically, the Oishi, Kesebir and Diener paper also finds that this lack of happiness is mediated more by a perceived lack of fairness. “The negative link between income inequality and the happiness of lower-income respondents,” they write, “was explained not by lower household income, but by perceived unfairness and lack of trust.” Perhaps it’s not so much inequality that is concerning Americans as fairness. This is a distinction that Bloom, Starmans and Sheskin make in a study published by Nature this year. They note that Americans “are bothered by something that is often confounded with inequality: economic unfairness”. So it’s important to frame the American Dream in terms of fairness and not inequality. Having a fair shot at success is not the same as everyone getting success; indeed, as Isabel Sawhill, Kerry Grannis, and Scott Winship put in a Brookings Institution essay, “meritocratic philosophy is one reason why Americans have had relatively little objection to high levels of inequality—as long as those at the bottom have a fair chance to work their way up the ladder”. Income inequality per se doesn’t seem to have a deleterious effect on well-being. What matters is fairness, status and institutional trust: this study uses data from the World Values Survey and finds that countries with higher income inequality have higher well-being than more equal countries. But it also finds that this effect is weakened with countries with high levels of institutional trust. The concept of fairness is consequently the mechanism through which we evaluate income inequality. And perhaps it’s not so much inequality that is retarding the American Dream as another factor that is now typically conflated with income inequality: differences in family formation. Forty percent of US children are now born out of wedlock. But this figures masks a stark socio-economic divide: fewer than 10% of women with a college degree or more give birth out of wedlock, while the figure climbs to 62% for women with a high-school diploma or less. Statistically, marriage is a great way for a mother with only a high-school diploma to prevent her child from sliding into poverty. This study by Melissa Kearney and Phillip Levine points out that the marriage premium for primary outcomes is highest for women in their early to mid 20s with just a high-school degree. They have the most to gain from having an extra stream of resources. This means that a child of a high-school diplomate mother has a best chance of avoiding poverty by being born into a family with married parents. But it’s not simply the increased resources that would allow a child a better shot at the American Dream. Supportive parents matter too. This longitudinal study by Odgers point out that the disparities in anti-social behaviour between kids brought up in richer neighbourhoods and kids brought up in poorer neighbourhoods were “completely mediated by supportive parenting practices”. In his recent book Everybody Lies: what the internet tells us about who we really are, the data scientist Seth Stephens-Davidowitz points out the importance of family in young black Americans being basketball players: “Among all young African-American born in the 1980s, about 60 percent had unmarried parents. But I estimate that among African-Americans born in that decade who reached the NBA, a significant majority had married parents.” The benefits of marriage isn’t contained within a single family; it also has positive spillover effects in a community. In a piece entitled ‘How Utah is keeping the American Dream alive’, the Bloomberg columnist Meghan McArdle notes: “By encouraging members to marry, the Mormon Church is encouraging them to reduce their own likelihood of ending up poor. But it may also be creating spillover effects even for non-Mormons, because Chetty et al didn’t just find that married parents helped their own children to rise; they also influenced the lives of the children around them.” The American Dream is not to be found in New York City, the city of the Statue of Liberty, but Salt Lake City: the city famous for, well, Mormonism. – Tomiwa Owolade is an intern at WikiTribune. He’s a student at Queen Mary University of London, studying English literature.