Episode summary: When people say upward mobility is collapsing, they rarely define their terms. This episode unpacks the actual data behind the American Dream — absolute vs. relative mobility, the Great Gatsby Curve, and what opportunity hoarding looks like in practice. We trace the steady erosion from a 90% chance of out-earning your parents in 1940 to a coin flip by 1980, and explore why inequality, not slow growth, is the main culprit. Plus: what downward mobility actually looks like when the ladder itself shifts. Show Notes A child born in 1940 had a 90% chance of out-earning their parents by age thirty. A child born in 1980 had a 50% chance. That's the empirical anchor of this entire conversation, drawn from Raj Chetty's landmark 2017 paper "The Fading American Dream." The decline wasn't a sudden cliff — it was a steady erosion across four decades, with the steepest drops in the 1970s and 1980s. And crucially, this isn't about slower GDP growth. Chetty's counterfactual simulation showed that if growth had been distributed the way it was in the 1940s, absolute mobility would still be around 80% instead of 50%. Two-thirds of the decline is explained by inequality, not growth. The episode draws a critical distinction rarely made in public discourse: absolute mobility (are you better off than your parents in real dollars?) versus relative mobility (did your position in the income distribution change?). These can move in opposite directions. The Great Gatsby Curve — Alan Krueger's 2012 finding — shows that countries with higher inequality also have higher immobility. The U.S. ranks 27th out of 30 OECD countries on intergenerational earnings elasticity. A child born in the bottom quintile has just an 8% chance of reaching the top quintile, compared to 12-13% in Denmark or Canada. Perhaps most striking: a low-income kid who scores in the top decile on standardized tests still has worse odds of reaching the top income quintile than a high-income kid who scores in the bottom decile. Talent is less predictive than birth. Downward mobility, meanwhile, is less about dramatic falls into poverty and more about structural inability to maintain your parents' standard of living despite equivalent effort — climbing at the same speed but ending up lower because the ladder itself moved. Listen online: https://myweirdprompts.com/episode/fading-american-dream-definitions

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