A culture of despair? Inequality and expectations of educational success

A culture of despair represents a negative feedback loop, where perceptions of high economic inequality result in declines in expectations of future success and, in turn, lower probabilities of favorable outcomes. We focus on the first link in that proposed causal chain, the relationship between economic inequality and expectations. Using a panel of youths and geographic variation in inequality, we find a link between inequality and expectations regarding educational outcomes. Our findings show that youth of low socioeconomic status (SES) are negatively affected by inequality. In short, we find support for the theory of a culture of despair.