These are complicated issues, with much room for conflicting data and hidden agendas. The political left wants to reduce inequality, and the political right says the rich earn their high incomes. We want to point to just one important statistical twist. Figure 12.4 and 12.5 report “cross-sectional’’ data that give a snapshot of households in each year. “Longitudinal’’ data that follow households over time might paint a different picture. Consider a young married couple, Jamal and Tonya. As students, they work part-time, then borrow to go to graduate school. They are down in the bottom fifth. When they get out of school, their income grows quickly. By age 40, they are happily in the top fifth. In other words, many poor households are only temporarily poor.

Longitudinal studies are expensive because they must follow the same households for years. They are prone to bias because some households drop out over time. One study of income tax returns found that only 14% of the bottom fifth were still in the bottom fifth 10 years later. But really poor people don’t file tax returns. Another study looked at children under five years old. Starting in both 1971 and 1981, it found that 60% of children who lived in households in the bottom fifth still lived in bottom-fifth households 10 years later. Many people do move from poor to rich as they grow older, but there are also many households that stay poor for years. Unfortunately, many children live in these households.