Harvard economist Raj Chetty has come across quite the discovery: if you want to get rich, it helps to make a few rich friends.
No, this isn’t some elaborate punchline about asking for a loan and never returning what’s owed a la Anna Sorokin. The ability to maintain a friendship with the wealth is simply an “important determinant” of economic mobility.
Across two new studies, Chetty and his team examined the social networks of 72.2 million Facebook users aged between 25-44 to create three distinct ways of measuring “social capital”…
- Economic Connectedness: how connected individuals with lower income are to those with higher income.
- Social Cohesion: the degree to which a friend group is connected (i.e. whether there are cliques, whether friends within the group are mutual friends with each other).
- Civic Engagement: an examination of whether individuals participate in civic organisations (i.e. volunteering)
Of the three methods outlined above, Chetty et al. found the only true factor linked to upward economic mobility involved friendships with those from a higher socioeconomic status.
“In fact, if lower-income kids grew up in areas that have the same economic connectedness as higher-income kids’ neighbourhoods, their future earnings increase by an average of 20%,” explains Juliana Kaplan of Business Insider.
“The research comes as upward economic mobility — long viewed as the American Dream — is increasingly out of reach for many.”
“Wealth gains for the lowest earners are being wiped out by inflation. The chasm between the wealthiest and everyone else has only grown, especially as America’s highest earners own more and more of the stock market.”
You can read more about these how to get rich with rich friends studies conducted by Harvard’s Professor Raj Chetty via the link here.