How Long Do Wealth Shocks Persist? Less Than Three Generations in England, 1700–2026
What happens across generations to wealth shocks? Do they endure and even magnify, or do they dissipate? By implication, how much modern wealth is attributable to events before 1900? This paper uses random shocks to family size in England before 1880 that created wealth shocks for the children to measure the persistence of wealth shocks. […] The post How Long Do Wealth Shocks Persist? Less Than…
How long do wealth shocks persist across generations? New research suggests the answer is less than three generations in England from 1700 to 2026. The study examines the impact of sudden changes in family size on the wealth of subsequent generations. Given that fertility in England before 1880 was a matter of chance, researchers were able to pinpoint the effects of these fertility-related wealth shocks.
The findings reveal no lasting impact on descendant wealth after three generations. This implies that, over the long term, wealth likely originates from factors other than inherited wealth. The link between nineteenth-century and modern wealth, however, does not stem solely from wealth transfers. Instead, it is traced back to the transmission of wealth-related behaviors and practices across families.
These conclusions are drawn from a recent study by economists Gregory Clark and Neil Cummins. The findings were highlighted by Kevin Lewis in an article for Marginal REVOLUTION.
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