In the context of intergenerational inequality, regression toward the mean is captured by which of the following?
A)The tendency for inequality to be wider as a country experiences economic growth.
B)The tendency for countries to diverge in their inequality.
C)The tendency for income differences across families to get smaller over time as the various families move toward the mean income of the population.
D)The tendency for the 90-50 wage gap to approach the 50-10 wage gap as a country experiences economic growth.
E)The tendency for the tax code to erode inequality by targeting the mean tax rate to mean income.

Question

Quizplus · Accepted Answer

Regression toward the mean refers to the tendency for extreme values to become less extreme over time, and is an important factor in intergenerational inequality. In the context of income inequality, this means that families with high or low incomes will tend to move closer to the mean income of the population over time. This is captured by option C, which describes the tendency for income differences across families to get smaller over time as they move toward the mean income of the population. Options A, B, D, and E do not accurately capture the concept of regression toward the mean.

In the Context of Intergenerational Inequality, Regression Toward the Mean