Having wealthy friends in childhood boosts your income in later life, a Stanford social scientist says.
Dr Matthew O. Jackson is a professor of economics at Stanford University with research interests in social as well as economic networks.
He's the author of The Human Network: How Your Social Position Determines Your Power, Beliefs, and Behaviors.
The analysis behind the book was based on 72 million Facebook users and 21 billion friendships.
Photo: Unsplash
A data set that large makes the findings compelling, Jackson told Jim Mora.
“We could piece together how different patterns of connections that people have, across different parts of the country, ended up predicting how mobile people would be, or what the chances they would have being born into a poor family in the bottom quarter of the income distribution, and actually rise above that.”
The facts are striking, he says.
“What really matters [for social mobility] is on average what fraction of those friends have parents who are above median income, so how well connected are they to wealthy kids, and that simple statistic completely dominates pretty much anything else that we can look at in terms of predicting the child's future outcome.”
As to why this happens, he is less sure, he says, but connections are key.
“It's hard to know exactly what the relative contributions of all these things are, but it's pretty clear that those connections are highly predictive of your future outcomes.”
Something like social housing in more affluent areas can help foster more connections between rich and poor, he says.
“If you don't have people in close proximity, then those relationships can't form. But also, these friendships can form in the workplace, they can form in churches, they can form in recreation groups.
“So, there's a whole series of different places where friendships form, and it's important to have people interacting across class lines in these different settings.”
The old adage that birds of a feather flock together is borne out in social science theory, he says.
“That's something we refer to as homophily in network parlance. And that tendency is so ingrained in humans that it's very difficult to overcome.”
There is powerful research, he says, that shows moving to a more affluent area can have a marked effect on future earning power for a poorer person.
“Previous studies have shown that people who are randomly moved into neighbourhoods with more wealthy people will tend to do better, on average.”
The US government encouraged this a 1990s experiment where they gave people vouchers with which to pay their rent, but only if they agreed to move to a wealthier neighbourhood, he says.
“It was pretty stark, if you move a kid at eight years old, from a below average income area to a much higher income area, their lifetime earnings increased by about $300,000, over their lifetime, that's an enormous amount.”
The Human Network book cover Photo: supplied
Referrals are the dominant way in which people find employment, Jackson says, further entrenching the power of connections.
“Employers are looking for people who are very similar to the people that they already have employed. It's very difficult for them to look at open applications and really judge a person.
“So, they rely on referrals for information about how well a person is going to perform. Referrals are really important for getting a job.”
There was a peacetime dividend from the social mixing caused by war, he says.
“There's a fascinating study that looked at people that were together in the First World War, randomly put together and looked at them later in life, because you can look at the census you could follow them throughout their lives and how employed your friends turned out to be and how well off they were.
“This kind of intermingling of people that are put randomly together, people can form strong bonds, which then follow them for the rest of their lives.”
Countries can also benefit from rich networks, he believes.
“The interesting thing about networks is it applies at many different scales.
“Diversity in someone's friendships is important at an individual level, but countries that have more trading partners tend to be much more likely to be at peace, they tend to be better off in terms of GDP, the overall productivity.
“So, there's a number of benefits as a country to having a diverse and strong set of allies and trading partners. It's not just as an individual that this matters.”
The sheer size of the study which looked at connections would not have been possible a few years ago, he says.
“I think the scale of the data that we had access to was very helpful, and probably couldn't be done even a decade ago in terms of the computing power that we needed, and the techniques that needed to be employed to actually work with all the data.
“I think we're moving into a new age in terms of social sciences and the way that we can really map large populations and see how they're interacting and see what their outcomes look like - so, it's very exciting as a social scientist.”
