What do we need to know about income inequality? 

Part of the “American Dream” narrative says that, through effort and hard work people can lift themselves out of troubling scenarios so as to attain economic success. That’s an appealing narrative. We all would want to believe that we have agency in determining our future. But what is in plain sight but commonly ignored is the role of resources in and of themselves. One attribute of resources that is defining is wealth. Wealth becomes the largest determinant of one's socioeconomic status. Wealth is generational. 

We think about wealth as an outcome but the real value is its functional role. So if I want to go to a high-priced school, if I have resources, I can get into that high- priced school and be successful. If I’m confronted with the criminal justice system, I can hire a high-powered attorney to protect me. 

So, the functional role of wealth gets ignored in this paradigm. And on the flip side, we overstate the functional role of education. I’m committed to education and I think education is a citizenry right. But, we overstate the functional role of education at the expense of understanding the authentic functional role of wealth. 

The U.S. places a strong emphasis on individualism. Is it possible to have income equality with an “every man for himself” attitude? 

I think we can certainly get closer than what we have. So, I like economists like Sakiko Fukuda-Parr who are trying to redefine how we determine economic health and by using a term called human capabilities. Human capabilities mean how well we facilitate people to define and achieve their goals. If that's how we define economic health, we’re a lot better off than our current preoccupation with things like growth in GDP. 

How do we measure the outcome of economic health through human capabilities? 

Making sure that everyone has capitol, everyone has health care, and everyone has quality education. That really gives people individual agency and choice. We use words like choice and freedom but if you have no wealth and no resources, the market does not give you choice and freedom. It just becomes a rhetorical device to dissuade us from really giving people agency. On the other hand, if people have financial capital, then they can really make decisions as it impacts their lives. So without finances, you don't have agency and it becomes a rouse to state that you do and that the market will reward you. 

How does wealth inequality influence stereotypes’ depicting people of color as financially illiterate? For example, there are people who believe that Blacks are poorer because they misinvest. 

Well, empirical evidence refutes a lot of that understanding. If we think about the racial wealth gap and compare Blacks and Whites at similar incomes, Blacks save slightly more than Whites. There is no evidence in any economic study that has been published in any credible journal that has demonstrated that Whites have a higher savings rate than Blacks. The other fallacy is this notion that people invest in the wrong things. One slogan that my colleague William Darity and I often use is “all the financial literacy in the world is irrelevant if you have no finances to manage in the first place.” If somebody ends up with low wealth and we attribute that to choices they made perhaps we have the causation wrong. Perhaps if they had resources to begin with they would end up with better outcomes. 

How do we draw the line between basic human rights and luxury? Is it a luxury to buy a latte? Are purchases outside of basic needs only intended for the wealthy? 

When it comes to poor people, we constantly try to control various aspects of their decision-making. The irony is that if we look at the limited resources they have and how they are able to manage budgets and survive from week to week, it probably indicates a level of financial sophistication that some of us lack. The vulnerability of poor people leads them to decisions that people might judge as seemingly irresponsible but what’s missing from that understanding is resources themselves. 

Explain the concept of “baby bonds” for readers. 

It was a collaborative idea with my colleague William Darity. Some young adults have resources at a key point in their life that allows them to invest in an asset that is going to passively appreciate over their life. What if as a birthright you are seeded with some capital that is set aside as yours for when you become a young adult so that you can make choices that can help impacts on your life? In other words, you have financial agency to choose. 

Hypothetically speaking, could young adults spend the baby bonds on anything they wanted? 

It would be restricted to investing in some wealth-generating asset. The goal of the program is really to address wealth inequality. In some ways we need to protect people from social structures that don't allow them to generate wealth. So that’s why we would restrict it to some asset-enhancing endeavor. The accounts would be based on the wealth position that you’re born into. So if you’re born into the poorest family you get a larger account than those that are born into a wealthier family. 

What future research projects should we expect from you? 

Right now we have the American narrative of working harder and showing some grit in the face of obstacles. What we’re asking in this research is what are the health consequences associated with working twice as hard to get by. Health literature tells us that education, income, and occupational status are supposed to be protective factors to generate good health. But why is it that with higher levels of education health disparities persists or even worsens? Why is that a Black expectant mother with a college degree has a greater likelihood of an infant death than a White expectant mother who dropped out of high school? Is there a health consequence associated with grit and effort in a social context of stigma, discrimination and racism associated with working twice as hard to get by? I’d rather live in a world where people’s efforts are rewarded but they don't have to work twice as hard to get by. 

Read prior interviews here.