Definition of Economic Mobility

What is economic mobility?
Economic mobility is something we all strive for without really knowing what it is. Economic mobility is the ability of someone to elevate or demote their economic status in the world. You’ve heard it thousands of times on TV and movies (and maybe in real life) where the parents wants the child to have a better life than they did. In the United States we really like to fake economic mobility by purchasing luxury goods to make it seem like we’re doing better than we are. This obsession with economic mobility actually make us worse off than we were if we’d never tried to fake it and didn’t make it.

Economic mobility is commonly measured in terms of income. This is counterintuitive to what personal finance usually cares about, which is wealth. But in economics we’re more concerned with one’s ability to generate value, which is better measured in income than true wealth. And since wealth can be inherited, it’s not an accurate picture of an individual’s economic status. The mobility is usually measured in income quintiles. So if you divide all the family incomes in the US into 5 equal groups, you’ve got your quintiles. This way you have an equal set of the population making an income that fits in each quintile. To explain it better, if the US population was 10 people, each quintile would have 2 people in it.

"What Is Economic Mobility? | Weakonomi¢s." Weakonomics. 8 June 2010. Web. 16 Nov. 2011. <http://weakonomics.com/2010/06/08/weakon-329-economic-mobilit/>.