Research Highlights

The Impact of Social Capital on Economic Mobility

headshots of theresa kuchler and johannes stroebel

In “Social Capital I: Measurement and Associations with Economic Mobility” and “Social Capital II: Determinants of Economic Connectedness,” NYU Stern Professors Theresa Kuchler and Johannes Stroebel, along with their co-authors, analyze the effect that friendship networks have on upward income mobility.

In “Social Capital I: Measurement and Associations with Economic Mobility” and “Social Capital II: Determinants of Economic Connectedness,” NYU Stern Professors Theresa Kuchler and Johannes Stroebel, along with their co-authors, analyze the effect that friendship networks have on upward income mobility.

Overview: In “Social Capital I: Measurement and Associations with Economic Mobility” and “Social Capital II: Determinants of Economic Connectedness,” NYU Stern Professors Theresa Kuchler and Johannes Stroebel, along with their co-authors, analyze the effect that friendship networks have on upward income mobility. The researchers also studied the factors which influence the degree to which individuals interact with people of other socioeconomic backgrounds and provide suggested policy interventions that could increase such interactions.

Why study this now: There have been previous arguments that suggest social capital, or the strength of an individual’s social network and community, can shape other social situations like economic opportunity. However, until now there has been no analysis of the large-scale data that is available from social networks to understand what type of relationships may impact such outcomes.

What the researcher found: Using data from 72.2 million Facebook users, who constitute 84% of the US population between ages 25 and 44 years, the researchers found that the share of high socioeconomic status (SES) friends among individuals with low SES—which they identify as “economic connectedness”—is among the strongest predictors of upward income mobility (i.e., the chances of rising up the income distribution).

The researchers also found that “the extent to which individuals interact across class lines depends on both exposure (the socioeconomic composition of the groups to which people belong) and friending bias (the rate at which cross-SES friendships are formed conditional on exposure).” They further determine that both of these factors can be shaped by social structures and institutions, and thereby can be impacted by policy initiatives such as:
  • Changes to how groups are sized and tracked (e.g., in school learning communities)
  • Restructuring of space and urban planning (e.g., a larger cafeteria space to allow for all students to interact with each other)
  • New opportunities for interaction (e.g., the Boston gym Inner City Weightlifting (ICW) began a program to increase cross-SES connections by recruiting personal trainers from lower-SES backgrounds to coach their more affluent clients)
Key insight: Economic connectedness may be more impactful in affecting upward income mobility than other factors such as quality of school, job opportunities, or family structure. Increasing economic connectedness could be addressed by certain policy changes like urban planning and creating new opportunities for cross-class interactions to occur.

What does this change: The ability to reduce poverty may lie in the increasing relationships and connectedness of people across the socioeconomic spectrum.

This research was published in Nature and featured in a New York Times article. The data is available for exploration at socialcapital.org.