Economics faculty assess causes, effects of inequality
The message from William M. Rodgers III, vice president and director of the Institute for Economic Equity at the Federal Reserve Bank of St. Louis, was stark.
鈥淔or a growing number of United States households, financial stability is nothing more than a pipe dream, no matter how hard their members work,鈥� Rodgers told the audience at last month鈥檚 Boston College Economics Symposium, 鈥淧athways to Innovation, Sustainable Productivity & Equitable Growth.鈥�
Rodgers鈥� talk centered on the approximately 42 percent of the U.S. population categorized by the United Way as 鈥淎LICE鈥濃�攁n acronym for Asset Limited, Income Constrained, Employed鈥攚ho 鈥渆xist on a survival budget, including firefighters, teachers, police officers, and college graduates unable to land a job in their major.鈥�
While these families may not meet the federal benchmark of poverty, he said, they struggle 鈥渢o afford basic expenses, are forced to make impossible choices each day.鈥� Even with a 鈥渃ontinuous period of strength, labor market opportunity and amazing prosperity and growth, persistent and widespread wealth inequities remain, particularly within this group. Increases in child care鈥攅ven prior to the pandemic鈥攁nd health care are driving up the costs.
鈥淚n every state, at least one-third of U.S. households are below the ALICE threshold.鈥�
Syposium organizer Brian Bethune (Caitlin Cunningham)
The symposium at which Rodgers spoke, organized by part-time faculty member Brian Bethune, is one example of the Economics Department鈥檚 focus on both domestic and global inequality. BC is by no means the only academic institution to examine inequality, but Economics faculty believe the University鈥檚 approach鈥攏otably from a Jesuit, Catholic standpoint鈥攐ffers students a multifaceted understanding of the issue, and how to address it.
鈥淥ur focus in both the graduate and undergraduate curricula is to develop in students an understanding not only of how appropriate economic policies can support and sustain a country鈥檚 economic growth but also of how the gains from economic progress are not shared equally across societies,鈥� said Professor Robert Murphy, the department's chair, who noted that 聽Macroeconomic Theory鈥攚hich primarily covers models of external and internal growth and development鈥攊s a required course not only at the undergraduate level for economics majors and minors, but also for all econ doctoral students.
鈥淏oth Jesuit teaching and economic inquiry urge us to take a broad, world-wide perspective, not limited to a single country,鈥� said Professor Susanto Basu, pointing out that economics is perennially among the most popular majors at BC鈥攍ast year it was second with 1,278, and for more than a decade was the top-enrolled major.
Economics Professor Susanto Basu (Peter Julian)
鈥淚 strongly believe that we have so many majors not just because economics is viewed as a stepping stone to good jobs, but because students understand that we teach them how to think rigorously about important, socially relevant issues.鈥�
On the undergraduate level, Basu鈥攃o-author of a 2022 article in the Journal of the European Economic Association, 鈥淧roductivity and the Welfare of Nations鈥濃�攑ointed to the popular course, Economics of Inequality. Taught during the fall semester by Associate Professor of the Practice Geoffrey Sanzenbacher, the class is designed to outline the structural economic factors that result in or lead to inequality in financial outcomes and opportunity.聽 Of particular importance is understanding the distinction between opportunity inequality and outcome inequality, as well as the current domestic policies and those suggested to alleviate these disparities.
Additionally, Sanzenbacher co-teaches two Core Curriculum courses: The American Divide: The Economics of Inequality, with Philosophy Professor of the Practice Cherie McGill, which examines the meaning, causes, and consequences of inequality from the economic perspective; and Real Estate and Urban Action, a look at the economics of housing policy that includes an exercise in which students present a plan for redeveloping a neighborhood to a simulated city council. The latter is co-taught by Neil McCullagh of BC鈥檚 Urban Action Lab, who concentrates on the history of housing policy.
Sanzenbacher鈥檚 work includes the articles 鈥淩ising Inequality in Life Expectancy by Socioeconomic Status,鈥� in the North American Actuarial Journal, and 鈥淢easuring Racial/Ethnic Retirement Wealth Inequality,鈥� for BC鈥檚 听(颁搁搁).
Relevant and related courses are the Economics of Aging, taught by Associate Professor of the Practice Matthew S. Rutledge鈥攚ho, along with Sanzenbacher, is a Research Fellow at CRR鈥攁nd Public Policy in an Aging Society, taught by Rutledge and Professor Joseph Quinn, which both examine the inequality of wealth across generations, Basu added.
A course set to debut next spring, The Economics of Discrimination, will cover such topics as the now banned practice of 鈥渞edlining鈥濃�攖he refusal by banks to authorize mortgages or loans to an individual because they live in a neighborhood deemed to be a poor financial risk鈥攖hat significantly reduced the ability of minorities, particularly African Americans, to accumulate wealth in the form of real estate, said Basu.
Looking internationally, Basu said, 鈥渨e offer courses on the economics of developing countries and the deep sources of growth and technological changes over hundreds of years, and why outcomes have differed across nations.鈥�
These include Impact Evaluation in Developing Countries鈥攍ed by Professor of the Practice Paul L. Cichello鈥攁nd From Stone Tools to Robots: Economic Growth and Development, a course taught by Professor Pablo A. Guerron-Quintana which explores economic growth over the past millennia, and why economic results have varied by continent.
聽 As William Rodgers underscored at the October symposium, the concept of ALICE鈥攁 term he coined and helped develop on behalf of United Way, and has since been adopted by more than 25 branches鈥攖he concept is most useful to help people begin to see how we are connected with one another, a theme clearly echoed by the BC Economics Department鈥檚 mission to train students to apply their knowledge of economic theory and use the tools of calculus to analyze economic problems and interpret public policy alternatives.
鈥淚f folks in this category don鈥檛 have good housing, or substandard or no child care, there鈥檚 a social and economic impact for everyone in the surrounding community,鈥� Rodgers said. 聽鈥淲hen ALICE is having difficulty, there鈥檚 a spillover effect on overall productivity and economic growth.鈥�