It Pays To Be Popular

This is a blow to nerds everywhere (abstract):

Popularity
Gabriella Conti, Andrea Galeotti, Gerrit Mueller, Stephen Pudney

What makes you popular at school? And what are the labor market returns to popularity? We investigate these questions using an objective measure of popularity derived from sociometric theory: the number of friendship nominations received from schoolmates, interpreted as a measure of early accumulation of personal social capital. We develop an econometric model of friendship formation and labor market outcomes allowing for partial observation of networks, and provide new evidence on the impact of early family environment on popularity. We estimate that moving from the 20th to 80th percentile of the high-school popularity distribution yields a 10% wage premium nearly 40 years later.

One caveat before going over the results – the sample from which the researchers derived their results are primarily white, non-Hispanic Americans, and because of the need for unbiased earnings data, they concentrated on male social networks only (women have a lower rate of formal labour participation).

Now that that’s out of the way, some of the conclusions are fascinating:

1. The obvious one is the earnings impact – the more “popular” you are, the higher your lifetime earnings potential;
2. Homophily, or the desire to associate with others like yourselves, is an important factor in defining social networks and building social capital, but appears to be most closely associated with intelligence levels rather than family background (so much for class loyalties);
3. The ability to make “friends” (i.e. build social networks), is more important than having them – the earnings premium is still evident even among students who emigrated. In other words, its not so much being popular that matters but more about having stronger social skills.
4. Family background is also pretty important, particularly sibling and maternal relationships (smaller families would have children seeking greater external social contacts).

Note that the authors use a very restricted definition of “popular” in the sense of having and maintaining friendships, rather than the broader use of the term which would include notoriety and fame.

So, parents…it’s not just about the grades, soft skills matter a great deal too. That and good dental work.

Technical Notes

Conti, Gabriella, and Andrea Galeotti, Gerrit Mueller, & Stephen Pudney, "Popularity", NBER Working Paper No. 18475, October 2012