Tailwinds, headwinds, and social capital: A warning for Mississippi
Tailwinds and headwinds
When I fly back to Britain, I know early on whether I will approach Heathrow by skipping along the south coasts of Ireland and Wales from the west or down through Scotland and the length of England from the north. If I fly out over Hudson, it’s the former; if I fly over Lake Elmo, it’s the latter. The small distance between Hudson and Lake Elmo turns into a distance of thousands of miles between different flight paths.
The wind makes all the difference. Given the power of the winds over the north Atlantic, your 737 is essentially a tin can in the sky — a sobering thought. Like a tin can in the ocean — an equally sobering thought on a transatlantic flight — the 737’s direction is very largely at the mercy of these forces. A pilot at MSP with a landing slot to hit at Heathrow will have his or her path largely dictated by them. A strong tailwind and the tin can will arrive too early, so the longer route over Cork and Cardiff is chosen. A weaker tailwind, and the pilot chooses the short route, and you’ll see Edinburgh and Sheffield. The pilot’s choice is dictated by these forces.
Social capital
This lengthy analogy brings me to social capital.
This, as I noted in my report “The X-Factor: Social capital and economic well-being: A quantitative analysis,” is “social networks and the norms…that arise from them.” Using an index of social capital for 3,000 counties across the United States, I determined that “54.9 percent of the variation in median household income…can be explained by variations in the components of social capital: Family Unity, Community Health, Institutional Health, and Collective Efficacy.”
Median household income had the strongest relationship with the Family Unity subindex. This, in turn, was constructed using data on the “share of births to unwed mothers, percentage of children in single-parent households, and percentage of women who are unmarried.”
So here we have a strong determinant of a key economic variable like median household income, which is driven by factors like the “share of births to unwed mothers, percentage of children in single parent households, and percentage of women who are unmarried,” which have proved stubbornly resistant to influence by public policy.
A warning for Mississippi
Minnesota is generally towards the top of rankings for social capital. Just as reliably, Mississippi is towards the bottom. As Figure 1 shows, across four rankings of social capital by state covering a period of twenty years, Mississippi ranked in the bottom ten states on three.
Figure 1: Various Estimates of State Social Capital
Mississippi policymakers recently passed a law putting the state’s income tax on a path to abolition in a bid to boost economic growth. We endorse this policy. But we should note that this policy, like the pilot and your 737 crossing the Atlantic, will face a significant headwind in the form of low levels of social capital, just as Minnesota’s high levels are strong economic tailwinds working against bad state policy.
When the time comes to assess the success or failure of Mississippi’s abolition of the income tax, the important role of social capital will have to be taken into account.