Having wealthy friends in childhood can increase your income in the future

Having wealthy friends in childhood can increase your income in the future

An extensive analysis of more than 72 million Facebook users found a big bonus for having rich friends.

Researchers at Harvard, Stanford, and New York universities have found that when poor children grow up around wealthy children and parents, they are more likely to earn higher salaries later in life.

The results show that there really is something to the phrase, “It’s all about who you know”.

On average, the researchers found that if a child from a low socioeconomic family lives in an area where 70 percent of their friends are wealthy (which is common for most affluent children), they gain an average of 20 percent of their adult income. Increases.

Having wealthy friends in childhood can increase your income in the future
Having wealthy friends in childhood can increase your income in the future

This is a very strong correlation. Factors such as education or occupation also do not provide such a strong boost to future earnings.

But there is also bad news. Crossing the income divide to make friends appears to be rare in the United States, another analysis by the same group shows.

Outside of Los Angeles, almost none of the low socioeconomic zip codes in the U.S. that the researchers analyzed showed high levels of economic connectedness. In other words, children hang out with other people their age who come from similar classes.

“It may be that people of low [socioeconomic status] have little opportunity to connect with people of high [socioeconomic status] if there are few such people around,” the authors write.

Researchers have long suspected that social ties can affect income inequality and economic opportunity in society. But until recently, large-scale data to support this hypothesis were hard to come by.

Social media provides an opportunity to study this idea like never before.

Using Facebook data, the researchers analyzed 21 billion online friendships, about 3,500 times larger than the most widely used data set for social networks (known as AdHealth). goes).

The studies looked at a number of factors that can help a child get ahead in life, including family income, family background, educational attainment, occupation and neighborhood.

Finally, economic connectedness was the only measure of social capital that was strongly associated with upward income mobility. (However, growing up in a single-parent household had a negative effect on whether children moved up in income and economic status.)

There are many explanations for why this is so. For example, making friends at school with children from higher-income families can help shape a child’s aspirations or provide access to information and job opportunities they might not otherwise have.

“This is consistent with hypotheses that reducing capital is particularly useful for moving forward (rather than just passing through),” the authors write.

“In any case, there are likewise numerous elective clarifications for the relationship between’s [economic connectedness] and versatility that don’t depend on a causal impact of connectedness on portability,” he adds.

For example, the type of low-income family that chooses to live in an area of ​​high economic affinity may have other demographic characteristics that affect their child’s rate of upward mobility. Or choose to invest in your children’s education.

The present study was only able to demonstrate a relationship between economic relatedness and a child’s future economic prospects. But the relationship was strong enough to warrant further research.

In another study, researchers found that the extent to which friendships form across class lines depends on both a person’s exposure to other classes and their willingness to be friends with other classes.

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If a person tends to make friends with people from their own socioeconomic group, such as in schools, colleges, and neighborhoods, interventions such as affordable housing or higher acceptance rates at different colleges may improve income inequality. Can’t be enough.

Fostering connections between people from different backgrounds can be better, giving them ample opportunity to form appropriate friendships.

Interestingly, the Harvard researchers found that communities with other forms of high diversity, such as race, do not necessarily have high levels of upward mobility. What is really important is that they show economic diversity and interconnectedness.

Study author and NYU economist Johannes Stroebel told the New York Times that “those interested in creating economic connections should pay equal attention to interacting with people of different incomes.”

If the authors are right, climbing the income ladder can be a lot easier if your friends push you into higher places.