Redistribution by Ability

Ten percent of the richest Americans account for 30% of income, while the bottom 10 percent earn just 1% of income. But what if pay were based purely on factors that reflect ability? (Each income decile represents 10 percent of the population.)

Chart: Source: Author analysis of U.S. Bureau of Labor Statistics, National Longitudinal Survey of Youth, NLS79. Sample size is 6,274 observations. Note: Actual incomes are adjusted for inflation and calculated as a mean value from 2000-2012. Predicted income is derived from statistical model that regresses actual income on standardized measure of IQ (measured by AFQT score), responses to three personality items, years of education, and age. Respondents are effectively given the average income for people with their characteristics. Respondents were asked how well personality traits apply to them on a 1-7 scale: enthusiasm/extroversion; dependable/self-disciplined; and anxious/easily upset. To calculate the value of personality traits, the first two were added together and the response from the last was subtracted. Responses to these items are highly predictive of income and health. Get the data