The Big Society, charitable giving … and cheese

Sarah Smith

 

At the end of last year, the Irish government received rather unfavourable coverage for its suggestion that it help the work of many charitable organisations by distributing the European cheese mountain to the poor.  In fact, research that we publish today finds a new link between charitable giving and cheese. On average, UK households spend as much on cheese as they do giving to charity – around 0.4 per cent of their total spending.

Of course the aim of our research is a little broader than the charity-cheese comparison. We analyse more than thirty years of data on household charitable giving and look at the main trends over that period.

We find that a lower proportion of households today give to charity in a two-week period than was the case three decades ago (27 per cent compared to 32 per cent). However, the Millennium year marked a turning point in the long-term downward trend (in 1999, the proportion was down to 25 per cent). This was a year in which the government reformed Gift Aid. There were also many individual charity campaigns.

On average, households give more now in real terms than they did three decades ago – £2.34 in 2008 compared to £0.98 in 1978. This takes account of donors and non-donors. The fact that real donations have gone up in spite of falling participation is because donor households are giving a lot more (their donations have done up nearly three-fold over the period).

However, looking at the past twenty years, the rise in donations has done little more than keep pace with rising GDP. As a share of total spending, households are giving exactly the same now (0.4%) as they did ten years ago – and as they did twenty years ago. This is in spite of big changes in charity fundraising, in tax incentives and in methods of giving. The good news about the resilience in generosity is that giving appears to be fairly recession-proof, for example. But, it may be hard to achieve the kind of step-change in generosity that David Cameron sees as part of his Big Society.

 

Who gets the best jobs? The economics evidence

Lindsey Macmillan

 

Social mobility is back on the agenda with the first meeting of social mobility czar Alan Milburn’s advisory panel taking place next week to assess how well the current coalition Government is doing with its aim of improving social mobility.  So far it might be too early to tell but we do know there is a lot to do.

Tonight’s BBC programme ‘Who gets the best jobs?’ illustrates the growing evidence in the UK that social mobility is worse now than it was a generation ago. Well-cited evidence from economists showed that individuals born to poorer families in 1970 were more likely to end up poor as adults than if they had been born to the same circumstances 15 years previously (Blanden, Gregg, Goodman, Machin, 2004).  Following on from this, research into the potential drivers of mobility found that educational attainment was one of the key factors in accounting for persistence in incomes across generations. For the later cohort born in 1970, the fact that where they came from was a better predictor of their educational attainment than before was a key factor in their lack of mobility (Blanden, Gregg and Macmillan, 2007).

This is not to say however that the change is driven by ability. Ability and education are clearly two different things. It has been argued in the past that some degree of persistence in how well you do compared to where you come from is to be expected given genetic transmissions of ability. The trouble with this argument is that you wouldn’t expect the underlying trend in genetic transmissions to change much across time. If all of the persistence across generations was driven by well-off, more able parents’ having more able children, why would things be getting worse?

Evidence from a report looking into the family background characteristics of those entering top professions illustrates this point. The evidence suggests those who go on to become lawyers and doctors were from substantially richer families than those who went on to become engineers or nurses compared to the average at age 16 in both British cohort studies. Consistent with the mobility evidence, this trend appears to have worsened for many of the top professions over time. For those born in 1970 compared to those born in 1958, the gaps in family income between top professions and the sample average had increased. Evidence on the ability levels of these individuals however suggests that whilst those who became doctors and lawyers were of higher ability than the average, this trend has decreased across time. This would suggest that there is a widening social gap in entry to the top professions. Some of the top professions are increasingly being filled by individuals who look less different to the average in terms of ability and more different to the average in terms of family income (Macmillan, 2009).

One of the main problems with mobility evidence is the length of time it takes to measure trends. All of the evidence mentioned above focuses on individuals now in their 40s and 50s. What do we know about mobility for younger people? A couple of new pieces of work have analysed the link between family background and educational attainment for younger individuals to get a picture of what we might expect from future trends in mobility. The evidence is mixed. On the one-hand, there is some evidence for children born around 1990 that the association between family incomes, Key Stage 2 attainment and GCSE attainment is weakening. This could be a promising sign. There is also the suggestion that post-16 participation has become less associated with where you come from (Gregg and Macmillan, 2009). On the other-hand, there is less evidence of this trend continuing into higher education and no change in the relationship between background and early attainment (age 3 to 5) for children born around 2000 (Blanden and Machin, 2009).

So what can be done?  Identifying policy levers in this setting is often problematic. However, some research in the US from the Perry pre-school program indicates that improving ‘soft skills’ in childhood had positive effects in terms of greater employability, less contact with the police and higher completed education (principally the work of Nobel Laureate James Heckman and others). There is also evidence that lower family income in childhood causes lower educational attainment and lower educational attainment causes lower incomes in adulthood (Dahl and Lochner (2008), Oreopoulus et. al. (2006)).  With this view that education is still a key policy lever in changing patterns of mobility, policies aimed at widening participation in higher education for those from the poorest backgrounds could be important to reversing the current trend of where you come from predicting your educational attainment and hence later-life income. Unfortunately the most recent policy announcements with the scrapping of EMA and trebling of tuition fees are unlikely to encourage such changes in behaviour.

 

Blanden J, Goodman A, Gregg P and Machin S. (2004) Changes in intergenerational mobility in Britain. In M. Corak ed. Generational Income Mobility in North America and Europe, Cambridge University Press, Cambridge.

Blanden J, Gregg P and Macmillan L. (2007) Accounting for intergenerational income persistence: Noncognitive skills, ability and education, The Economic Journal, 117, C43-C60.

Blanden J and Machin S. (2008) Up and down the Generational Income Ladder in Britain; Past Changes in Future Prospects. National Institute Economic Review No. 205.

Dahl G and Lochner L. (2008) The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit NBER Working Paper No. 14599.

Gregg, P. and Macmillan, L. (2009) Family income and education in the next generation: exploring income gradients in education for current cohorts of youth. Journal of Longitudinal and Life Course Studies, Vol. 1 (3), 259-280

Macmillan, L. (2009) Social mobility and the professions. CMPO report. http://www.bris.ac.uk/cmpo/publications/other/socialmobility.pdf

Oreopoulos P and Page M. (2006) The Intergenerational Effects of Compulsory Schooling. Journal of Labor Economics, 24(4), 729-760.