Link between having wealthy childhood friends and higher salary as an adult

Children from low-income homes who make friends from higher-income homes are more likely to earn higher salaries as adults than those who have fewer such friends.

“There’s been a lot of speculation… that the individuals’ access to social capital, their social networks and the community they live in might matter a lot for a child’s chance to rise out of poverty,” says Raj Chetty at Harvard University. He and his colleagues examined anonymized Facebook data from 72.2 million US citizens between the ages of 25 and 44, or 84% of the population in that age group, to determine how well that theory holds up. It is relatively nationally representative of that age group, he says.

Having rich childhood friends is linked to a higher salary as an adult.

The team used a machine learning algorithm to determine each individual's socioeconomic status (SES) by combining data such as the region's median income, the individual's age, gender, and the value of their phone model as a proxy for individual income.

It was determined that the median household income was close to $58,000. The researchers then divided the participants into two groups: those with a SES below the median and those with a SES above it.

You would anticipate that half of each person's friends would belong to each income group if people formed friendships at random. However, only 38% of the friends of those who were below the median SES were also above it. Additionally, 70.6% of the friends of those whose SES was above the median belonged to the same group.

The team then compared these numbers to economic mobility data generated by the Opportunity Atlas, a Harvard University research project. The average household income at age 35 for a person born in the US between 1978 and 1983 was calculated for this project using census and tax data. The data are divided into groups based on parental income, location, gender, and race.

When this data was combined with the Facebook analysis, Chetty's team discovered that poorer children were more likely to have higher adult incomes if they were born in areas where poorer people had a greater number of wealthy friends.

In Minneapolis, Minnesota, approximately 49 percent of those below the median SES have friends in the above-median SES group, whereas in Indianapolis, Indiana, only 32 percent do. Additionally, Minneapolis has a household income average of $34,000 at age 35, compared to Indianapolis' $24,700.

The researchers then traced each person's friendships back to their places of origin. The team accomplished this by attributing the formation of approximately 30% of friendships to a particular location, such as a high school, religious group, or shared neighborhood. The researchers then modeled what would happen to adults in below-median SES groups if they were exposed to the same number of individuals from above-median SES as the average person in that group.

Poorer children were more likely to have higher adult incomes if they were born in areas where poorer people had a greater number of wealthy friends.

About half of the economic disparity between the two groups was discovered to be attributable to a lack of exposure. This may be due to factors such as living in different neighborhoods or attending different schools, according to Chetty. “You can’t become friends with someone you never meet,” he says.

“This is a very impressive study which has implications for our understanding of education and social mobility,” says Hugh Lauder at the University of Bath in the UK. “The first major point is that in schools which are well-mixed in terms of students’ family incomes, students from low-income families are more likely to make friends with those from higher-income families.”

“The second is that the more segregated students are by geographic location the less likely they will have the opportunity to make friends with students from higher-income families,” he says. “These findings should renew policymakers’ efforts to provide well mixed schools in terms of student composition.”

Journal reference: Nature, DOI: 10.1038/s41586-022-04996-4