A 2002 paper by Bowles and Gintis casts serious doubt on whether income similarities between parents and children can be explained by IQ. Based on the data they offer, however, there doesn’t seem to be much doubt that in modern America the income of children will be very similar to the income of their parents.

The question of course is why? Is it genes or is it environment?

It turns out that the answer depends in large part of how you define genes vs. the environment.

For example, suppose that Amy was born very beautiful. Because Amy was beautiful the teacher always called on her on her school. She always got the job if she made it to the interview. Her boss gave her the assignments she wanted. Amy wound up making a lot of money.

Did Amy succeed because of genes or because of her environment? In one sense it was her environment. She faced a different set of opportunities than did most people. Her choices yielded different results than most people. Under the most uncharitable of interpretations Amy’s success was the result of blatant discrimination. A preference for the pretty.

However, the genesis of that discrimination was in Amy’s genes. Her genetic differences induced an environmental difference.

This is important, because if we assume that the difference between fraternal twins and identical twins is all genetic, then 71% of intergenerational success is genetic. If instead we think of identical twins a sharing a more similar environment because they are identical then perhaps as little as 36% of intergenerational success is genetic.

For practical purposes I think the 71% figure makes more sense. The environmental differences between identical and fraternal twins are not the types of things we can easily tweak with policy or parental awareness. Telling people not to favor the handsome, or the tall or the gregarious is not likely to be very effective.

From a policy perspective I think this helps to soothe our economics concerns about heavily progressive taxes. Whether or not you think high taxes on the rich are fair, chances are taxes will not alter their genetics. If genetics are strong determinates of economic success then it is likely that high taxes won’t make as much of an economic difference.

HT: Delong