Professor Steven Durlauf

The Harris School of Public Policy has launched the James M. and Cathleen D. Stone Center for Research on Wealth Inequality and Mobility. Funded through a $5 million donation from the James M. & Cathleen D. Stone Foundation, the Stone Center will take a dynamic, multidimensional view of inequality that studies intergenerational mobility and wealth inequality in the U.S. and other countries around the world.

Led by executive director Steven Durlauf and associate directors Damon Jones and Geoffrey Wodtke, the Center will push an interdisciplinary focus that integrates ideas from economics, sociology, psychology, and political science and, as such, will draw strength from the University of Chicago’s scholars in these areas.

The following is edited from a recent conversation with Durlauf, the Steans Professor in Educational Policy at Harris, who discusses the Stone Center’s timely vision and the various questions that need to be asked about inequality in 2022 and beyond.

Tell me a little bit about your research interests, which so neatly align with the work the Center will be doing.

I’m primarily a methodologist. I write formal models of aspects of inequality and work on econometrics issues, which come down to asking, for given data sets, what in principle you can learn about the determinants of inequality, such as education, income, race, and many others.

On the theory side, I’ve been focused on integrating sociological ideas into models. But there’s a cliché that has a lot of truth: Economists are great at answering questions, and maybe not so great at formulating questions in a sufficiently rich way. My theoretical work has tried to formulate questions about inequality that integrate sociological influences with traditional economic influences. On the statistics side, I have worked on understanding how social and individual level influences may be disentangled empirically. These interests come together in trying to understand the complex dynamics of intergenerational mobility.

You’re an economist who is deeply interested in sociology.  What’s the relationship between economics and sociology as it relates to the study of inequality?

Sociologists have a lot to offer economists and vice versa. One example involves determining which dimensions of inequality warrant focus. For example, economists tend to focus on income mobility; sociologists tend to focus on occupations. Since occupation and education are the proximate causes of income, they are of course deeply related.

One of the Center’s themes is to integrate these things into a study of intergenerational mobility. The interactive relational nature of factors that operate within economies or societies has implications for inequality that you can’t understand by looking at an individual human being in isolation.

What are some of the larger sociological concepts at play in the work of the Center?

Racial and economic segregation are major factors that will be central to the Center’s work. Various types of segregation aren’t properties about a person—they’re properties about a population. Thinking about features of inequality that are defined at a collective level gives important insights into phenomena such as poverty traps or affluence traps. How do you identify the role of neighborhoods or schools, in influencing trajectories of parents and children? Is it the neighborhood that matters, or the fact that you have rich or poor parents? Which directly influences you? Another way to think about population properties is this: How do we identify the distinct roles of individual acts of discrimination versus systemic discrimination in creating group inequalities, and how do they reinforce one another? Which directly influences you? Those are the sorts of questions I try to untangle in my research and they are the kind of questions we’ll be working together to unpack at the Stone Center.

You think a lot about the relationship between individuals and larger groups of people. Can you explain your memberships theory of inequality?

The central premise of the memberships theory is that individuals have a range of overlapping memberships. You’re a member of a family, a member of an ethnic group, a member of a gender. We understand our memberships, and often we think of them one at a time.

Memberships are quite complicated. In some cases they’re well defined: you go to this school, as opposed to that one. Something like gender is much more complicated – it doesn’t have to be binary. This complicated set of memberships, set on top of one another, interact to control or to influence probabilities of outcomes. And a lot of the outcomes we have in life are socially determined.

Here’s one example of a socially determined outcome: my children had no real choice about going to college, because their father was a college professor and they lived in a world where it was a strong norm to go to college. It was deeply ingrained and determined by their family but also by the communities in which they grew up.

A different example would be the local public finance of education. There are large disparities, of course, across school districts, which are often funded through property taxes, which are dependent on property values in a particular locale. That can create segregation. The affluent want to live in affluent neighborhoods, and move there, rather than to those that are less affluent and perhaps could use some additional tax base. Of course, those disparities don’t lock people in. To say that this neighborhood is a poverty trap doesn’t mean everybody who grows up there is going to be poor. It means it’s more likely they’ll be poor. Calling it a poverty trap doesn’t respect the agency of the people or the heterogeneity. What the Center aspires to do is to provide new ways of conceptualizing these probabilities and their attendant implications for mobility.

What pushed you in this direction professionally?

Something shook me up when my first child was born in 1990. I was at a hospital and saw all of the other children born on the same day, many of them clearly disadvantaged. It made me profoundly sad to know these other parents probably couldn’t do the things that I wanted to do for my child. I should have known that before, but there was something about that, the shock effect of having my own child in the ward with the other newborns. I became increasingly morally troubled by inequality. At that time, I was developing mathematical models and economic phenomena that turned out to be very good for modeling inequality. So I had both a personal epiphany (I hope that does not sound too pretentious) about what research I should pursue, and had fortuitously learned a lot of new mathematics that was conducive to operationalizing my desire to study inequality.

Any revelations in your research that have really surprised you?

Let me discuss a paper in progress with Yoosoon Chang, Joon Park, and Seungheon Lee that studies how parental incomes at different ages predict outcomes of their children in adulthood. Interestingly, at least in the data we analyzed, it turns out that the incomes in a child’s adolescence are more predictive of adult outcomes than incomes the parents have in early childhood. This is surprising relative to much contemporary research in economics that has emphasized the importance of early childhood. I don’t think there is a contradiction, Rather, I think the reason is because parents spend on different things in different phases. So for little children, what is it you have to provide? Food, healthcare, and shelter. For adolescents, what we provide is a school and a neighborhood. So the income of the parent influences the income of the children throughout childhood and adolescence, but you have to ask what they’re doing with the income. Income means access to different things at different ages. To be clear, the reasons for these findings are conjectures at this point. The excitement of research is determining whether the conjectures are correct.

How is America’s inequality problem different from the issue in other developed nations?

One reason involves the different attitudes towards inequality. Europeans, I think, care more about equality of outcomes. Americans care more about equality of opportunity. These attitudes operate through politics and have led the US to have less egalitarian social policies. However, there are good reasons to believe that equality of outcomes and equality of opportunity are complements, not substitutes. As an empirical proposition, this is called the Great Gatsby Curve: countries with more inequality tend to have lower intergenerational mobility. Almost 30 years ago I wrote a paper that predicted that if you increase inequality, mobility will go down. The reason was that the more inequality, the more segregation – and the more segregation, the lower the mobility. Other important reasons why the US is less willing to address inequality include racism and discrimination.

Let’s talk a little bit more about the Stone Center. What can you tell me about the Stone Center’s team?

There’ll be two associate directors, both of whom have thought deeply and widely about a range of inequality issues. One is Damon Jones. Damon is a master empiricist fresh off of a stint at the White House Council of Economic Advisers. He’s done very important work on questions such as: What are the incentive effects of unconditional income benefits? He’s done work on understanding Black-white differences and reactions to income shocks. But identifying individual papers understates what he brings, which is a deep empirical understanding. It’s obviously a boon to have him. The other associate director is Geoff Wodtke, a star sociologist who works on neighborhood effects and school effects, as well as interesting work in intergenerational wealth issues having to do with entrepreneurship. One of Geoff’s important contributions involves identifying how family and neighborhood influences on children differ across stages of childhood and adolescence and how they interact with each other. This work deeply influenced the research I described earlier. He and Damon have deep and complex visions of the inequality process. They’re both terrific scholars.

How will this center contribute to the larger body of work regarding inequality?

The Stone Center will be dedicated to promoting interdisciplinary thinking on inequality. There are many axes which may be used to study inequality: economics, sociology, psychology, political science. Our objective is to move beyond thinking of the form, “From an economist’s perspective . . .” To understand inequality phenomena, you need to have all the perspectives. The Center will bring economists, sociologists, psychologists, mathematicians, and philosophers together to talk to one another and hopefully collaborate. I mention mathematicians and philosophers deliberately. Modeling inequality as a multidimensional dynamic process requires the sorts of complex models that are the bailiwick of mathematicians. Philosophers have a key contribution to make in guiding social scientists to focus on morally salient dimensions of inequality. Part of what the Center will do is create a kind of virtual college for people with very different methodological orientations, but a common focus on inequality.

What are some of the specific plans for the Center?

I aspire for the Center to play a role in creating a welcoming intellectual community for younger scholars. There will be an affiliate program set up. Research will be made visible via a working paper series and Center website. There will be grant opportunities and workshops. If you’re a junior scholar, it is very important to have access to senior scholars who read your work, give you feedback, provide professional mentorship. We’re planning summer schools on inequality that would bring together 25 graduate students and have lectures for a week with a group of five or six senior economists with the aim of creating interactions.

In addition, there are many seminars on this campus, but there isn’t actually one dedicated to inequality per se. The Center is going to sponsor a campus-wide inequality research seminar. We’re also establishing a Stone Inequality lecture series. Every other year, we will invite somebody to come to the campus to give a lecture series with the understanding that they will be published. 

What makes this Center crucial right now?

The prominence of inequality in social science research, especially economics research, has clearly changed in the last 30 to 40 years. The change reflects, partially, increases in inequality over this period.  A second factor involves data: much of the new inequality research has relied on new data sets that have allowed for exploration of inequality dimensions that were simply not done before. Finally, I think the US is engaged in a complicated, painful, and of course grossly overdue conversation about the lasting harms of historical injustices to African Americans and to women as well as the contemporary variants of these justices. Inequality research can ground the normative debates.

Is there something about UChicago, and Harris specifically, that makes the Center a good fit?

Harris has an interdisciplinarity and a policy focus, combined with its critical mass of scholars examining issues that contribute to inequality, across health, education, and economic factors, that together makes it a uniquely good home for the Center. And to have a big campus in an urban setting with an extraordinary range of good scholars, matters as well and will reinforce the value Harris brings to the Center.