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The Gatsby Curve

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Cesc0410
@chekohler
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3 min read

Hey Jessocialites

This so-called K shaped recovery as we move towards a post-pandemic world has seen a bifurcation of the market. Asset holders, as always, are winning, just in greater basis points, while wage earners are losing by greater bips.

The economic policy continues to widen the gap between economic classes, and the reversal of these policies are nowhere in sight.

One way to look at the effects fiscal and monetary policy can have on a country is by looking at the Gini coefficient and where your country sits on the gatsby curve.

What is the gatsby curve

The Great Gatsby curve is a chart plotting the relationship between inequality and intergenerational social immobility. Underlying the “Gatsby Curve” is that the greater the economic inequality, the less chance that one generation has to move up (or down) the economic ladder.

This is important because it has the potential to shape the opportunity of the lives of all those countries citizens.

When a country has a low Gini coefficient, it means a more cohesive society. It means the gap between economic classes is manageable divides can be crossed by generating economic value like working, improving your education or starting a business.

How countries rank on the Gatsby curve

Here you can have a look at the Great Gatsby Curve for a wider set of countries, and you can see all economies developed or developing are scattered across the spectrum.

If you don't understand the placement, what you're looking for is a society with a lower Gini coefficient (a smaller gap between the rich and poor) and better intergenerational mobility (the ability for people to work themselves out of poverty within a generation)

Gatsby curve in 2012

Source: - milescorak.com

Gatsby curve in 2020

Source -

What a difference a few years can make, and I am pretty sure after the events of 2020, the replacements are surely going to change. Governments have taken drastic measures that will greatly affect economic freedom for their citizens.

South Africa coming in the last place

As of 2020, South Africa, my home nation, is rated as the worst country for social mobility and a widening of the economic divide.

I can attest to this as one of the luckier individuals, having completed schooling, tertiary education and getting a job in the tech sector. None of that is anywhere near enough to move you out of poverty on an individual level.

When a system fails people the way, ours has, due to gross mismanagement of the country and currency. Both in pre and post-apartheid years, you find people lose hope.

As more people hit a glass ceiling and get pushed back down, pulled into the abyss through inflation of assets and goods while their wages continue to stagnate and deflate, people become disheartened.

Having an invisible enemy you can't see, understand, touch or put a face to or attack directly. Eventually, the pressure gets too much.

  • We see this manifest in the currencies high crime rate, we see this in the level of corruption,

  • we see this in the amount of criminal activity at all levels of society.

  • We see the acceptance of radical political leaders

Not a definitive metric

The gatsby curve is by no means a perfect measurement, and it's all relative. It doesn't mean Denmark, for example, is the worlds perfect society; they have their problems too.

What it means is relative to the rest of the world; they still have a social and economic environment where labour, skill and value are still rewarded in a higher percentage versus financailsation.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, "I am a Jessie."

Let's connect

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