Economy

The Unrealistic Optimism of Indians on Prospects of Upward Social Mobility

To rectify this gap between perception and reality, inequality of opportunities and the lack of emphasis on primary education need to feature more prominently in Indian policy discussions.

We are constantly reminded of how Narendra Modi started from humble beginnings by selling tea and rose to occupy the position of the prime minister of India. Irrespective of which side of the political divide one is on, there is no disputing the fact that this is an incredible trajectory and an impressive achievement.

Modi is, of course, not alone since Margaret Thatcher, born into a family of grocery shop owners, assumed the office of the prime minister of the UK. By sheer coincidence though, both Modi and Thatcher rose to head their respective governments as leaders of right-wing parties wedded to free enterprise and the protection of privileges handed down from one generation to another.

Though Modi and Thatcher’s achievements are isolated and extreme examples, they nevertheless have encouraged the perception that there are no barriers to upward mobility in their respective countries. What is the evidence for this?

While in recent years there has been considerable attention paid by economists such as François Bourguignon, Thomas Piketty, Branko Milanović, Joseph Stiglitz and others to the topic of income inequality, the issue of inequality of opportunities associated with the lack of social mobility has not figured as prominently in the discussions. Yet, inequality of income is a result of inequality of opportunities which is linked largely but not exclusively to one’s ‘accident of birth’.

By focussing on income, which is an output, and not on the range of inputs that generate the income, we are in danger of overlooking the source of the problem. There was an early recognition of this in the Human Development Report (HDR), 1990 that introduced the measure, Human Development Index (HDI), used to rank countries.

HDI downplayed the exclusive role played by income in per capita income based comparisons by reducing its weightage from one to a third and bringing in education – which is widely regarded as one of the most effective means of achieving upward mobility.

Also read: Cost of Inequality in India May Be High, but Doing Nothing About It Is More Expensive

Though HDI has recently been extended to the more sophisticated concept of the multi-dimensional poverty index (MPI) in HDR, 2010, we are yet to see a satisfactory measure of social mobility of socioeconomic groups embedded in such measures that are used in international comparisons.

The gap between perception and reality

What then is the evidence for social mobility? There are of course several aspects to ‘social mobility’. In this piece, we restrict the discussion to ‘intergenerational social mobility’ on the back of mobility between jobs and income advancement from one generation to another, though in the case of Modi rising from a tea seller to the Indian prime minister – the mobility is within one generation.

Before turning to India, let us examine some data from international statistics on economic mobility. Some of the evidence is both surprising and interesting. In a report, produced by Julia Isaacs from the Brookings Institution, the ‘land of opportunities’ – the US – ranks quite low in social mobility amongst the affluent countries based on the correlation between father’s and son’s income.

In a list of 27 affluent countries grouped into ‘low’, ‘middle’ and ‘high’ mobility countries, both the US and Thatcher’s UK fall into the ‘low mobility’ category. In the author’s words, “the earnings of American men are more closely tied to the earnings of their fathers than are those of men in other countries”.

This is in spite of the fact that this report also found that ‘Americans are more optimistic than others about their chances of getting ahead’.

High-rise residential towers under construction are pictured behind an old residential building in central Mumbai. Photo: Vivek Prakash/Reuters

This was confirmed in a report in the Economist that ‘Americans overestimate social mobility in their country’. Perception couldn’t be further from reality. A recent report in the Guardian found that social mobility in the UK has been virtually stagnant since 2014. At the other end, Canada, Norway, Finland and Denmark fall into the category of ‘high mobility countries’ where “parental earnings had the least effect on sons’ earnings” and ‘less than 20% of income advantages are passed onto children’.

To add to the mismatch between perception and reality, the same report also found that ‘in Europe climbing the ladder is easier than most people believe’. It is perhaps significant that the Scandinavian countries belonging to the ‘high mobility’ group are among those with the lowest income inequality on a 2018 international ranking based on Gini inequality.

Social mobility in India

Let us now turn to India. According to a recent survey by the World Economic Forum in 27 countries,  India was the top-ranked country graded on the residents’ belief in upward social mobility – ‘Indians, more than any other nationality, believe it is common for someone in their country to start poor, work hard, and ultimately become rich’.

Also read: As India’s Inequality Spirals, How can the Government Step in and Intervene?

India is in good company in this misperception since it is closely followed by Saudi Arabia, Pakistan and Egypt. The mismatch between perception and reality is also evident in the finding that India is among the top countries that believe that people have access to quality education, though the UN Human Development Index for 2017, ranks India at a low 132 among 189 countries when it comes to the years of schooling received by individuals in the country. An average Indian, with 12 years of schooling, is unlikely to have a college degree.

What is the evidence for social mobility in India?  Unfortunately, the lack of jobs and income data from different generations of the same family have forced researchers to base their evidence on education as measured by years of schooling received by successive generations in the same family. As in the US and UK, perception is at odds with reality in India.

In a recent study by US-based researchers, Paul Novosad, Charlie Rafkin and Sam Asher, the authors found that “India has seen little change in the rate of upward mobility since Independence…Indians born in the 1980s have only about as much chance of outstripping their parents in socioeconomic rank as those born in the 1950s”.

This report also highlights some interesting findings on the differences between socioeconomic groups in India on social mobility. Contrary to the widely held belief, Dalits and Adivasis have seen some improvement, the scheduled castes have seen considerable improvement, the forward castes and the OBCs were in the same situation as they were in the 1950s, but the group for whom the upward mobility has fallen significantly has been Muslims.

The share of national income accruing to the top 1% of income earners is now at its highest level since the creation of the Indian income tax in 1922, says the paper. Credit: Reuters/Vijay Mathur

Since the early 1980s, India’s growth has been unevenly distributed within the top 10% group. Photo: Reuters/Vijay Mathur

The last feature of this study is quite significant since while the plight of the Muslims under the Modi regime has attracted considerable media attention, in fairness to the present regime, Muslims have fared poorly on social mobility under all the regimes.

There has been a lack of recognition under all the previous regimes including UPA-I and UPA-II of the plight of the religious minorities and the absence of concerted policy action in breaking the intergenerational ink in their socio-economic backwardness.

What is also quite revealing is that ‘while Muslims are the least upwardly mobile group, they are not the worst in terms of living standards. As per data from the National Sample Survey, Muslims are above Dalits and Adivasis in metrics such as wages, consumption and income’. This calls for different policy initiatives at improving the plight of the Dalits, Adivasis and Muslims recognising the heterogeneity in their circumstances. It is not helpful to brand these groups together as ‘marginalised communities’.

Also read: In Terms of Educational Mobility, India’s Muslims Worse off Than African-Americans

The same report also draws attention to sharp spatial disparities in social mobility in India. North India does quite badly, the worst performer being Bihar, but Gujarat does not do all that well either. In contrast, the Southern states of Kerala and Tamil Nadu do quite well.

At a time when we are obsessed with growth rates, the Gujarat experience is that of “a state with very high economic growth but relatively low mobility”. Clearly, the economic performance of Gujarat has done relatively little for Gujaratis. An equally significant result is that liberalisation has not improved upward mobility in India.

Policy lessons

There are, principally, three messages that follow from this discussion. First, the focus needs to shift from inequality of income to inequality of opportunities. A key aspect of the latter is primary education which has been a great promoter of upward social mobility. Yet, primary education has not featured much in Indian policy discussions.

According to the Legatum Prosperity Index, India fares quite poorly in primary education, ranking a lowly 92 in a list of 145 countries. Yet, one of the first policy pronouncements of the re-elected Modi government has been to set up 100 ‘centres of eminence’, when what we need to focus on is in improving the dire state of primary schooling in India. Our neighbour, China, is featuring increasingly in international lists of high quality universities and research institutes and it has been able to do that on the back of significant improvements in primary and secondary schooling.

Second, we need to have better data for keeping a track on social mobility by providing information on the education levels of, and income earned by, members of the same family from different generations. The recent decision to merge the CSO and the NSSO is a backward step, in this regard, since the NSSO is uniquely placed to provide such information through its household surveys, a feature that may be lost in the merger.

Finally, the a-temporal cross-sectional comparisons between households need to be supplemented by intergenerational comparisons between the same families. Unlike comparable emerging economies, such as China, Indonesia and Vietnam, India lacks panel data that can allow researchers to track household welfare over time. To allow increased intertemporal comparisons of inequality of opportunities, it is vital to have panel data covering a host of information.

Also read: Global Inequality Is Getting Worse, but Fewer People Than Ever Are Aware of It

Let us recognise the promotion of social mobility as a key policy objective and the importance of good schools and teachers in facilitating upward social mobility in backward communities. As concerns mount over rising income inequality, it is necessary to go behind the symptom and address the core issue of inequality of opportunities.

As India seeks upward mobility in the international income ladder, she must make every effort to achieve upward social mobility in the domestic ladder as well.

Let the rise of Modi from tea seller to PM act as a catalyst for this.

Ranjan Ray is a professor of economics at Monash University.

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