Friday, September 16, 2016

People Choose Their Career Paths, and Therefore Choose What Income They Earn

If people can choose their personal income (as opposed to that number being assigned to them by some cosmic roll of the dice), then it makes no sense to worry about income inequality. I'm using "choose" to mean "select from available options"; obviously you can't just pick some arbitrarily high number. I present the following as “Exhibit A” for the claim that people do, in fact, choose their personal income:

(Scroll down until you see the salary ranges.) I know a lot of smart, underemployed young people who could easily knock out at least the first two or three exams and land a decent analyst job. They’d improve their salaries enormously. They’d also massively improve their options (where to live, who would date/marry them, etc.). It might take a few hundred hours of studying to pass exams 1 and 2. For a well-equipped math person, exam 1 probably requires about 100-200 hours of study, similar for exam 2, at least back when I took them a few years ago. That sounds like a lot, but the opportunity cost is low if you’re current career prospects aren’t so good. And you don’t have to keep going if you decide the exams are boring. You can land a job as a well-paid Excel jockey after completing only two or three. (I personally landed my first actuarial job after passing a single exam.)

These are solid middle-class jobs, well above the median for personal income. All it requires is to hunker down and study for a bit. This is by no means “out-of-reach.” It’s within striking distance of a lot of struggling people, and they don’t reach for it. I can only conclude that they don’t wanna. That’s not a moral judgment. I’m not at all saying they *should* want this career path over whatever it is they’re doing now. And that’s actually my point. We *shouldn’t* be second-guessing other people’s career decisions, nor should we be bemoaning their “inadequate” personal income. For whatever reason, this person had decided to spurn a perfectly lucrative career path for whatever it is s/he is doing right now.

I’m not saying that everyone in the world has this option within arms-reach. I’m sure there are some people who just aren’t smart enough to pass the exams, no matter how hard they study. Some people just don’t have a knack for math, and it’s too late to learn (although I personally think this is overblown and most people can improve their math skills more than they realize). Some people have spotty employment histories, or perhaps a history of being fired or arrested. Such a history will follow you no matter how resolutely you decide to shape up and fly right. (You know, starting now. Or maybe tomorrow.) And maybe some people have personality issues that make them difficult to employ. That’s all fine. Not everyone in the world can turn themselves into actuaries with a few months of study, and I’m not claiming everyone should. The actuarial career path isn’t the only option in the world for improving your future prospects. It happens to be the one that was most readily available to me when I was looking for a grad school exit-strategy, but there are all kinds of options like this one at all levels of education. Learn to code at coding bootcamp, or take a bunch of Coursera classes. Or get certified in a skilled trade (HVAC, plumbing, electrician, etc.). I’m using the “become an actuary” example because it’s relevant to a lot of people who I happen to know, people who could improve their outlook if they really tried. But these *kinds* of unexploited career options are available to everyone. If you really thought about it, you could make yourself more employable and get a more lucrative career. It would take some time, but you could do it.

I think it makes a lot less sense to complain about income inequality when you admit that people have a lot of control over that variable, at least in the long run. That’s not to say we’d all have equal incomes if we all tried just as hard. Some people are the beneficiaries of chance, be it the luck of being born talented or the idiosyncratic luck that rewards random people at random times. But it’s not all luck. I see many cases of equally talented, equally endowed individuals, and one decides to zig while the other decides to zag. So one ends up a doctor making $200,000+ per year, and the other lives on his mom’s couch playing video games and earning zero. It makes little sense to complain about the “unjust” distribution of incomes when you zoom in on the details. An individual’s very high or very low annual income typically become understandable the more you know about them. Rarely will you see that someone’s lot in life is something that was simply “done to” them. 

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