Upward mobility—succeeding above and beyond the economic and social station of your parents—is a core component of the American Dream. This trend held throughout much of the 20th century and was especially appealing to immigrants, who often traveled to America in hopes of “finding a better life for their children.”
Then something happened.
In 2018, Harvard economics professor Raj Chetty published disturbing data: when factoring inflation, his team found that half of 30-year-olds earn less than their parents. Four years later, a Pew Research poll found that 72% of American respondents believe children today will be worse off than their parents. That was close to the median number of 70% of respondents who felt the same way across 19 countries.
While the reasons for such a decline are multivariate, Raj Chetty recently published a pair of articles in the journal Nature that suggest one possible explanation: social capital.
Networking as destiny
Chetty defines social capital as the “strength of an individual’s network and community.” This term can mean a lot of things, and how you define “strength” matters. And so his team crunched data on 72.2 million Facebook users with a total of 81 billion friendships to investigate three main factors:
- Connectedness between different types of people, such as those with low versus high socioeconomic status (SES)
- Social cohesion, such as the extent of cliques in friendship networks
- Civic engagement, such as rates of volunteering
Chetty’s research doesn’t focus on the social network platform itself. What he really wanted to uncover is how cultivating relationships across socioeconomic statuses help determine the potential for upward mobility.
It turns out that these sorts of relationships matter—a lot. As he frames it,
The share of high-SES friends among individuals with low SES—which we term economic connectedness—is among the strongest predictors of upward income mobility identified to date.
As the team writes, previous data depended on smaller cohorts that were usually reliant on in-person or telephone interviews. Social networking platforms empower researchers with previously unimaginable sets of data. How you use that data is another story.
For this set of studies, Chetty’s team focused on cross-type connectedness, how many people of different SES were friends; network cohesiveness, the strength of cliques across networks; and civic engagement, which measured trust or participation in civic organizations.
Given that this information was mined from social media, they leaned on external data, such as relative wealth of zip codes and self-reported educational levels. One important discovery, however, is that geographical regions that allow for more connections between low-income and high-income earners increase the likelihood of upward mobility.
Most fascinatingly, Chetty’s Opportunity Atlas—a project he began years ago after scouring millions of IRS tax records to discover how much upward mobility was possible in each region of the United States—clearly shows how the potential for upward mobility is geographically dependent.
Now this is his latest map, which he calls the Social Capital Atlas:
The overlap between these maps is significant. One of the foundational principles of Population Finance is that opportunity is geographically distributed, a phenomenon clearly backed up by these two sets of data.
But what does it mean?
Is upward mobility possible if you live in an overwhelmingly red area on these maps?
Yes, it’s always possible, though the likelihood decreases as the intensity of red increases. Chetty notes that his team’s findings are cause for further research. In the second study, though, he notes that while location helps, geography isn’t necessarily destiny. There are two main reasons.
The first is that exposure doesn’t automatically mean people from different groups will intermingle. Humans are subject to a range of cognitive biases that prevent us from associating with out-group members, a main driver being what journalist Will Storr calls the Status Game.
Status feeds into the second concern, what Chetty calls the friending bias. As he told NPR about this phenomenon,
Even if you somehow—and we're nowhere close to doing this—solve the economic segregation problem by perfectly integrating every school, every college, every zip code in America, so that they're all perfectly balanced by income, you would still have 50% of the social disconnect between the poor and the rich left because friending bias remains.
Fortunately, like all biases, this one can be overcome. Workplace and recreational settings tend to be lower in friendship biases—score one point for exposure. In faith-based settings, where concepts like charity and acceptance are higher, the friending bias also appears to be much lower.
In fact, Chetty’s data found that the same individual can be more biased in one setting over another. Who you are at church is not necessarily who you are in a restaurant. In some ways, this means the more exposure, the better.