Friday, January 11, 2019

Facts Rarely Speak for Themselves

The richest families in Florence in 1427 are still the richest families in Florence 

is the headline of a story describing some interesting research in economic history. I have not read the article it is based on but, assuming the report is correct, its conclusion is that there is a close correlation between the last names of the wealthiest Florentine families in 1427 and the last names of those currently wealthy.

There are at least two quite different interpretations of the reported facts. One is that families are surprisingly good at passing wealth and status down from one generation to another. The other is that the characteristics that produce wealth and status are to a large extent heritable.

One problem for the second is that last names are passed down in the male line, while talents are passed down through both sons and daughters—a fact observed by Galton more than a century ago. A family could choose to exclude daughters from inheritance of wealth but not of talent. But that is a less serious problem than it at first appears, because high status women mostly married high status men. The daughter of a wealthy Florentine family would usually combine her genetic heritage with the last name of a husband from a different wealthy Florentine family. Hence both genetic advantages and wealth would for the most part remain, from generation to generation, associated with the same pool of last names.

The story illustrates a general point: Facts rarely speak for themselves. How you interpret new facts depends on the picture of the world you fit them into.


At 11:34 AM, January 11, 2019, Blogger Rohan said...

A third possibility is that the wealthy Florentine families were pragmatic enough to allow the newly rich, or talented up-and-comers, to marry into the families, and absorb newly created wealth.

At 11:55 AM, January 11, 2019, Blogger August said...

Wealthier families also had more children. The names would tend to dominate. I do think there was an important effect- i.e. people who had wealth would generally try to select for people able to keep and administrate it. But often, it seems, a generation comes along that kind of squanders everything. So it's just more likely the names reflect the number of children rich people used to have.

At 12:07 PM, January 11, 2019, Blogger Unknown said...

From the article:
"While researchers admit the flaws to tracing family wealth using surnames, they point out Italian surnames are usually highly regional and tend to pass on linearly."

Sounds like they didn't actually trace the families, but rather just assumed that the same name means a direct family connection.

Maybe this is valid, but it sounds like a pretty big hole until someone shows that its not.

At 12:17 PM, January 11, 2019, Blogger Julien Couvreur said...

I looked in the article for an understandable and quantitative summary of observation. Hopefully this captures their main point:

"Stated differently, being the descendants of the Bernardi family (at the 90th percentile of earnings distribution in 1427) instead of the Grasso family (10th percentile of the same distribution) would entail a 5% increase in earnings among current taxpayers (after adjusting for age and gender). Intergenerational real wealth elasticity is significant too and the magnitude of its implied effect is even larger: the 10th-90th exercise entails more than a 10% difference today"

At 6:49 AM, January 22, 2019, Blogger Unknown said...

For the many decades, of TOP 7 richest people in America , 4 of them were the Waltons! They were born with silver spoons in their mouths and never had to work a day in their lives, at a lift of a finger they could have solved many national emergencies and crisis, yet they never did. Monopoly and conspiracy is alive and well despite all the laws made to stop it.


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