A parent's social class impacts his or her child's economic future
Posted August 3, 2016
A parent's social class impacts how his or her child is raised and whether the child will have a promising economic future, according to Ann Owens, a sociologist at the University of Southern California who found that the neighborhood a child grows up in matters because rich neighborhoods tend to have better schools.
In her research, published in the American Sociological Review, Owens has found segregation in communities has steadily increased over the past two decades with rich and non-rich people less likely to share neighborhoods.
"Forty to 50 years of social-science research tells us what an important context neighborhoods are, so buying a neighborhood is probably one of the most important things you can do for your kid," she told the Washington Post.
A 2015 Pew Research Center survey found children from poor families are more likely to grow up in neighborhoods parents say aren't ideal for raising children with a risk their children might become victims of violence.
Additionally, poor children may not have the same opportunity for extra-curricular activities as rich children and spend most of their time at home or with their extended family.
The New York Times explained the cycle this way: "Poorer parents have less time and fewer resources to invest in their children, which can leave children less prepared for school and work, which leads to lower earnings."
Sean F. Reardon, a professor of poverty and inequality in education at Stanford University, told the Times: “Early childhood experiences can be very consequential for children’s long-term social, emotional and cognitive development. And because those influence educational success and later earnings, early childhood experiences cast a lifelong shadow."
Another study found children of wealthy parents have the most potential to be wealthy as adults, even if they are adopted.
Children who were raised by their biological parents were projected to have the strongest correlation (0.33) for being wealthy. Adopted children with biological parents were less likely (0.13) correlation and adoptive children with adoptive parents also had a strong correlation (0.23).
Researchers analyzed the adult net worth of various Swedes and then compared those figures to the net worth of their biological or adoptive parents.
"These numbers suggest that children who are raised wealthy owe their future financial success more to the household they grew up in than any inherent ability they possess," the Atlantic reported.
Conclusions could not be made as to why children raised by wealthier parents had improved economic outcomes, but the researchers speculated that children of rich parents are gifted with more money, which leads to less debt.
Steve Siebold, a self-made millionaire, interviewed 1,200 of the world's wealthiest people and found that "rich people teach their kids to be rich," according to Business Insider.
"The average family unconsciously passes down the same limiting beliefs they were taught about money from generation to generation," Siebold wrote. "These are the beliefs that have kept families at the same level of financial success for dozens, if not hundreds, of years."
According to a Brown University study, the majority of children pick up habits from their parents by age 9 that will set them up to succeed or fail in life.
"Eighty percent of America’s adults struggle with joblessness, poverty, near-poverty or reliance on welfare for at least parts of their lives. Eighty percent of kids grow up to struggle financially as adults," according to Thomas C. Corley, author of "Rich Habits: The Daily Success Habits of Wealthy Individuals."
But, there are some downsides to growing up in wealth.
A study published in Harvard Business Review found that "children who grow up in wealthy families tend to have high levels of narcissism, impulsive tendencies and low levels of empathy — all of which can make them sub-par leaders in their adult lives."