Make money quicker by making rich friends

If you want to make money quicker, make rich friends. We know this might rub some of you the wrong way but hear us out: "Money makes money".

We don't mean to downplay hard work and these are not just words meant to make us sound opportunistic or greedy either. In fact, if you look at it from an economic and social perspective, these words have more to them than meets the eye. This is exactly what Raj Chetty, a Harvard economist has done.

Making friends who come from money plays a very important role in determining your economic mobility. This basically refers to how quickly your income changes overtime. Chetty and his team wanted to find out if that is indeed the case and examined 72.2 million Facebook users between the age of 25-44 and formulated three determinants of measuring "social capital."

The three factors are —
Economic Connectedness: How connected people from different income groups are.

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: Relates to how much individuals participate in civic organisations (i.e. volunteering)

Of the three aforementioned factors, Chetty found out that the only one that is directly connected to economic mobility involves friendships with those from a higher socioeconomic status — "Economic Connectedness". The study found out that if lower-income kids grew up in the same area as higher-income kids and formed friendships/connections with them, their future earnings can increase by as much as 20 percent on average.

The truth is, people from higher socioeconomic backgrounds tend to have more friends and connections than people coming from a lower-income background which means that connecting with them gives us a chance at making more friends/connections for ourselves thereby increasing our economic mobility. We will get the shot at getting access to people we would not normally get access to on our own.

Chetty and Co. used Minneapolis and Indianapolis as examples in their study. In the former, kids from low-socioeconomic backgrounds have a much higher rate of forming bonds and friendships with high-socioeconomic people as opposed to the latter. This results in them reaching a higher income percentile bracket when they grow older. The average annual income of kids in Minneapolis is $34,300 by the time they are 35. In contrast, kids from Indianapolis make only $24,700.

Obviously, education, hard work, talent and even luck play big roles on our income, but Chetty's study also pointed out an underrated factor which we often overlook that can equally impact it. We are not asking you to only choose friends based on their social status. We understand that friendships and relationships have their own definitions in a Bangladeshi context. However, a little effort on increasing our networks can actually take us a long way. It can open a plethora of opportunities for us which we won't get access to under normal circumstances.