Could Family Ties Predict Future Income?

Anna Williams
Posted

family ties incomeDoes our high-school popularity (or lack thereof) really determine our earning potential?

A 2012 study from the National Bureau of Economic Research showed that our high-school status seriously pays off in the long run, with students who sat at the cool kids’ table amassing 10% more in income 40 years down the road than their less-popular peers.

Now, a new study re-examining that data proposes that it’s family—not friends—that actually has the bigger impact on future income.

The working paper, authored by Yale University’s Jason Fletcher and again published by the National Bureau of Economic Research, took a look at the link between childhood “non-cognitive skills” (i.e. personality factors like leadership and social skills, as opposed to just smarts) and adult earnings.

In re-examining the previous study, Fletcher confirmed that the popularity link held true when looking at the data as a whole—but he also found some nuance: When the data was controlled for siblings, the association suddenly disappeared.

What’s Family Got to Do With It?

One student might be a wallflower in high school, while his brother heads the football team. But in the long run, the findings showed, there would likely be no noticeable wage gap between the two.

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“This evidence is consistent with the theory that the families might determine both a child’s popularity and future wages,” Fletcher told the Wall Street Journal. “So it might be about family per se—and not popularity.”

Fletcher proposed that a child who comes from a high-income family with tons of connections will enjoy more of an advantage than those who are just popular at school. Mom and Dad will hand down valuable social networks and ties that will nudge a child onto a successful path, no matter how he fares in the cafeteria.

Sure, the skills that often lead to popularity (like leadership and social savviness) are still beneficial to your career, but in this case, your parents are cooler than your friends.