Straightest Course to Riches – Parents

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Some Boston University students cruise city streets in their BMWs or Lamborghinis. Three of Donald Trump’s five children have joined the family business so far. And the financial media are full of useful advice for parents who might want to buy a house for their adult offspring.

Nature versus nurture? Not surprisingly, nurture won out when researchers applied this question to who has more influence on the wealth of young adult Swedes who were adopted as children – their biological parents (nature) or their adoptive parents (nurture).

Wealth “is not due to the fact that children from wealthier families are innately more talented,” the international team of researchers concludes. “Instead, it appears that even in a relatively egalitarian society like Sweden, wealth begets wealth.”

While this might seem obvious, there had been surprisingly little research on the topic, which is gaining prominence here as U.S. wealth inequality widens. The study used an unusual Swedish data source that allowed the researchers to compare the wealth of adopted children with the wealth of both their adoptive and biological parents. The adoptees’ average age was 44.

They found that adoptees’ wealth (excluding inheritances) was much more similar to the wealth of their adoptive parents who raised them than to the wealth of their biological parents. Further, any financial similarity to the biological parents was “weak.”

There will always be rags-to-riches stories of talented people pulling themselves up from disadvantaged beginnings. But wealthy parents often give their children a financial leg up by providing generous gifts, such as housing down payments, which prevent their offspring from taking on debt, or perhaps social connections that provide pathways to advancement.

For those who want to be rich, this study seems to say that having wealthy parents is still the smoothest path to success.

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1 comment
Ken Pidcock

When I was young, I was proud of my (real) middle class origins. The older I get, though, the more I wish there had been family money.

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