Of course, earnings, wealth, and the like are economic measures of a person's status, so it is natural that economists would be engaged in studies of intergenerational mobility according to these measures. Furthermore, it is the economic way of thinking that quickly leads to attempts to measure things in terms of money so, for example, the degree of mobility of a money-measured status indicator might be readily comparable over time or across countries. Nonetheless, it could be the case that, beyond some of these questions of measurement, economic theory is not particularly helpful for understanding the inheritance process. Goldberger (1989) is quite explicit about this point. By emphasizing the distinction between genes and environment, and using statistical theory as the main analytical tools, Bowles and Gintis' chapter is also suggesting that economic theory is not the starting point for interpreting intergenerational correlations. We take this view very seriously, and our review puts the burden on economic theorists to demonstrate that they have added something significant to predicting empirical intergenerational economic relationships.
Section I provides a broad overview theoretical work using a familiar partition of determinants of a person's earnings. Because a full treatment of all relevant theory is impossible, in Sections II and III we examine in detail two modeling blocks–credit market failure and intrahousehold allocation. In order to assess the value of theory in creating public policy, Section IV then considers two government programs – public investments in human capital and bequest taxes. Finally, Section V provides a partial scorecard for the economic theory in an attempt to evaluate the case for or against the utility of economic theory in studies of intergenerational mobility.