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Info IEB. Parental Responses to Children’s Differences in Innate Conditions: Are Parents Inequality-Averse? Number 42. December 2022

Lifetime inequality is due to multiple factors, including the environment where individuals grow and innate differences, such as differences in health at birth or simply in genes. A large strand of literature in economics and psychology demonstrates the importance of characteristics shaped in childhood in determining later-life success. Crucially, this literature shows that at least 50% of the variability of lifetime earnings across people can be attributed to characteristics determined by age 18 (see, e.g., Heckman and Mosso, 2014). This suggests that our income is largely determined by characteristics beyond our choice. Does this imply that some part of inequality simply reflects differences in innate endowments and is unalterable? It does not. Inequality based on differences in innate characteristics can, like other inequalities, be ameliorated via redistributive policies, such as compensatory education, or via parental investments.