Personal Finance

Popular Kids in High School Tend to Make More Money: Study

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There's much more to high-school popularity than just being elected prom-king or prom-queen, a recent study from a top economic research organization that is tasked with calling the beginning and end of recessions, has found.

Social skills necessary to developing networks of friends also leads to a substantial difference in long-term income, according to the National Bureau of Economic Research (NBER).

By attempting to design an "Econometric model of friendship formation and labor market outcomes," the study found out that a teenager's popularity in high-school is directly and positively related to a subject's income decades later.

The research team based its work on a 1957 study that asked students at a Wisconsin high-school to name up to three of their best friends. Forty years later, the result shows that "moving from the 20th to 80th percentile of the high-school popularity distribution yields a 10 percent wage premium."

Two theories were then drawn to explain the observation. Researchers first thought that "connections established in high school are maintained throughout the life-cycle and produce positive spillovers, such as privileged access to job opportunities."

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However, it turned out that individuals that had left the region and its social circles were relatively better off, throwing cold water on the thesis.

Sociologists then realized that "the number of friendship nominations received is a reflection of the popularity of a student among his schoolmates, (and this was) a measure of his skill in building positive personal and social relationships and adjusting to the demands of a social situation."

These social skills can not only help a high-schooler be the next Ferris Bueller, but perhaps be valuable within their work environment.

"An individual needs to have acquired and developed the appropriate social skills: understand the "rules of the game"—how to gain acceptance and social support from colleagues, whom to trust and when to reciprocate," the researchers explained in their working paper.

"It is the productive skill itself that is rewarded in the labor market, rather than friendships per se," they added.

The researchers said they had been able to estimate the value of each high-school friendship.

"An increase in the stock of popularity"—as measured as a subject being quoted by another student as their best friend—"is associated with about 2 percent higher wages 35 years later."

The impact of early family environment

In order to explain the differences in "stock of popularity," the researchers have turned to the subjects' early family environment. According to the study, there is a "positive association between a warm early family environment and the number of friendship nominations given and received."

Classmates who share similar characteristics with the respondent, and the respondent's relative position among schoolmates also play a role in the popularity building process.

"There is a lot of evidence documenting a tendency for various types of individuals to associate with others who are similar to themselves," the study found.

The phenomenon, called "homophily" helped specific students in their race for popularity, the study found.

Researchers also discovered "that relatively older and smarter students are more popular."

Surprisingly, the study also pointed out that "relative family income status plays only a minor role."

—By , Assistant Editor,