Friendships as Pathways to Upward Income Mobility

“For example, if poor children grew up in a neighborhood where 70% of their friends were wealthy, their future income on average will increase by 20%, similar to the effect of going to a four-year college.”

Our conversations about economic mobility are often about the individual gaining financial rewards, accumulating wealth, and rising from one income level to the next. This focus on material resources is incomplete because it neglects the relational aspects of success. Local institutions and programs foster this relational dimension by creating new friendships, and other shared connections. This builds social capital among lower and higher income neighborhood residents, boosting economic mobility and the pursuit of opportunity. We have new evidence that this neighborhood economic connectedness across classes, or cross-class friendships, is a major predictor of whether poor children rise out of poverty and move up along the income distribution.

It comes from two reports published in the peer-reviewed multidisciplinary academic journal Nature, and authored by a team led by Harvard economist Raj Chetty, with nearly two dozen others from the National Bureau of Economic Research. Its unique information source is 72.2 million American Facebook users, with at least 100 United States-based friends accessing the site at least once in the prior 30 days, all of whom can be sorted by zip code. That is 84% of American adults between the ages of 25 and 44, with 21 billion friendships.

The analysts estimate individual incomes based on factors that include zip code, education attainment, phone price, and age, linking this with other data sources. The amount of information collected allowed the study authors to develop a detailed analysis of other factors that influence economic mobility, including the high schools and colleges each individual attended. The report includes a website where one can look up their zip code, high school, or college to see how common cross-class friendships are at these locations.