The Economics of Inheritance in Vanity Fair
By Bryan Caplan
The latest movie version of William Thackeray’s Vanity Fair is more than watchable, and I don’t think there’s ever been a “chick flick” with so much economics in it. The basic setup is that poor but brilliant Becky Sharp uses her wits and charms to ascend the social ladder. In the process, we get a detailed but paradoxical model of social mobility.
The thrust of the model is that in 19th-century England, inherited wealth was supremely important. As a result, the elderly are the targets of constant rent-seeking by their younger and healthier relatives. In fact, aristocrats don’t really do anything besides consume and rent-seek for bigger inheritances.
This is basically the model that Becky subscribes to, so she tries to marry her way up the social ladder. It isn’t hard for her to hook Rawdon, the favorite nephew of a wealthy spinster. But Becky’s plans come to naught because Rawdon’s aunt disinherits him for marrying beneath his station. Then they have to wait long years for Rawdon’s father to die… but I don’t want to give away the whole plot.
Yet despite the centrality of the “inherited wealth is all-important” model in Vanity Fair, we also see some extremely rich self-made men like Mr. Osborne, and bankrupt aristocratic families like the Sedleys. So while Becky and Rawdon act as if inheritance is the one and only key to prosperity, it is plainly possible to pull yourself up by your bootstraps, or imprudently burn through your family fortune.
The shortcut solution to these conflicting models, of course, is to point out that this is a work of fiction. But even adjusting for dramatic license, it still seems likely that we’re a lot less focused on inheritance than we used to be. Why would that be?
The simplest explanation is that most people today divide their estates equally between their children, regardless of their behavior. If 19th-century English aristocrats had more flexible attitudes about their wills, then potential heirs would have tried harder to maintain and increase their cuts (and discredit competing heirs, of course!). Notice, however, that simple primogeniture (eldest son gets everything) would not encourage rent-seeking any more than equal division does. The vital distinction is between fixed and flexible inheritances.
Another explanation is that wealth used to be much larger relative to income. That would encourage people to drop out of the labor market to ingratiate themselves with elderly relatives. I’ve never seen any data on this, but I’m skeptical.
A last story that intrigues me is that aristocrats simply weren’t very talented relative to the rising middle class. They didn’t sit on the sidelines of the economy because no one could make it on their own, but because they couldn’t make it on their own. Maybe this reflects economic change per se – succeeding in agriculture takes very different skills than succeeding in industry. Or perhaps is reflects the decline of mercantilism, with the nobility losing ground in the face of open competition.
Which story is right? I’m not sure. But I think Becky would have done better for herself if she studied more economics and less French.