We’ve all heard of the ‘success sequence’, right? This is the idea that if someone manages to achieve three things - finish high school, get a full-time job and get married before having kids – they will avoid poverty.
According to lots of robust research, anyone that passes these three milestones stands a 97 percent chance of not being poor.
If only we could just get every young American to do those three things, some suggest, poverty would soon be a thing of the past. But is the ‘success sequence’ really a solution to America’s socio-economic problems?
Encouraging young Americans to graduate from high school, find gainful employment and marry before having kids is a good and worthwhile thing to do. However, I am doubtful that prescribing the ‘success sequence’ as some sort of magic solution will get us very far.
Why? Sociologists may be right when they point out the correlation between the success sequence and avoiding poverty. But might that not be because the kind of person that finishes high school, holds down a job and invests in stable relationships tends to be the kind of person that has what it takes to make a success of their life anyhow?
I imagine that every US company with a market capitalization in excess of, say, $ 1 billion has impressive corporate head offices. But shiny corporate offices are just an indication of success. Big corporate HQs do not themselves explain why successful firms are successful.
It is something else – having lots of happy customers, perhaps – that accounts for both the high market capitalization and the impressive corporate offices. Similarly, it is not the success sequence itself that is the engine of a person’s accomplishment, but rather a reflection of it.
So, what might the engine of personal accomplishment be?
When people talk excitedly about the success sequence, I suspect they are really talking about one of the most important (and often overlooked) ideas in economics; time preferences.
Several decades ago, a professor at Stanford, Walter Mischel, conducted the famous marshmallow experiment. He offered kids one marshmallow right away, or two marsh mallows if the child chose to wait a while before eating it.
Mischel’s marshmallow experiment measured the extent to which each child was prepared to delay gratification. Those that were willing to wait had what we call a low time preference. Think of them as being ‘tomorrow people’, prepared to wait for what they wanted.
Those that preferred one marshmallow, but right away had what economists would call a high time preference. Think of these as ‘today people’, more inclined to want things right away.
Over the years that followed, Mischel discovered a remarkable correlation between the time preferences of the kids, and their subsequent achievements in life, not only academic but in terms of relationships, too.
‘Tomorrow people’ tend to have brighter tomorrows than ‘today people’.
Those that invest the time and effort in graduating high school, starting out in the jobs market and forming permanent relationships, I would venture, have lower time preferences than those that don’t.
Rather than see the success sequence milestones as the solution to poverty eradication, policy makers ought to think instead about how we might encourage us to be better ‘tomorrow people’. Many government policies encourage us to be ‘today people’. High inflation, for example, discourages savings and incentivizes us to spend. Low interest rates encourage us to borrow. Welfare programs leave millions living a hand-to-mouth existence.
If we want to see more young Americans follow the success sequence, we should implement policies that encourage them to invest their time and efforts in the future. That means stable prices, but it also means taking steps to ensure young Americans can afford to buy a home of their own.
It means lower income taxes, so those that work get to keep more of what they earn. It means taking more active steps to reduce long term welfare dependency. It means giving young families school choice so that they can ensure their children get the right education for them.
Politicians should not just talk about the success sequence. They need to make changes to public policy so that it is easier for young Americans to do the right thing.
The ‘success sequence’ must never become a pretext for social engineering. Someone’s own time preferences are ultimately a matter of personal choice. Some Americans are more ‘today people’ than ‘tomorrow people’, and it takes a certain conceit to believe that government can change that.
Even with the most benign public policies in place, there will always be some who make impulsive choices that diminish their chances of a better tomorrow. Good public policy deals with human nature as it is, not as some might want it to be.