Even in America, a tremendous amount of your life success is determined by your parents.
Often referred to as the “birth lottery,” this concept is nothing new. The basic idea is that some people are born to families that are better off, better educated, and better situated. That matters a lot and puts them at a natural advantage.
A new study from the National Bureau of Economic Research details just how big that advantage can be. According to the authors, your parents’ income, marriage, and locational choices all have a huge impact on your future.
Let’s start with income. Not surprisingly, the amount of money people make is strongly predicted by what their parents earn. Up until a parent-household-income threshold of roughly $US150,000, adult children tend to earn another $US0.33 for every dollar their parents’ earn. Above that cutoff, the increase they see in their income based on their parents’ earnings is less dramatic:
Your parents’ income also directly affects your likelihood of going to college, and, for women, of becoming a teenage mum. As parent income rank increases, college attendance rates rise and teen birth rates fall, which is illustrated below:
If the income factors all seem obvious, this next finding may be more surprising: your parents marriage and family stability might be the biggest determinant of all. Growing up in a single-parent household significantly hurts a child’s change of upward income mobility, the study finds. You can see the negative effect in this graph:
The researchers further suggest that the “fraction of children living in single-parent households is the strongest correlation of upward income mobility among all the variables we explored.”
Finally, where your parents decide to live is another major factor in your future earning potential. Different areas come with different opportunities for education, friends and colleagues, and jobs. And all of that influences your ability to get ahead.
A regional breakdown of the United States shows that the Southeast is the worst area for upward mobility. The most opportunity seems to lie in the Midwest and West, with mixed results in the Northeast and central New England. You can get a more detailed picture of that finding from the heatmap below (darker = less mobility; lighter = more mobility):
Considering all that, it’s no wonder they call it the “birth lottery.” You have no say in the parental cards you draw, but there’s a lot riding on your hand.
Business Insider Emails & Alerts
Site highlights each day to your inbox.