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The Economic Value of Popularity

It probably seems obvious to most people that being likeable and having good friends could be valuable in life. Since most economists are neither likeable nor have good friends, it is an idea that hasn’t been studied by economists until now.
My friend Gabriella Conti and a host of co-authors try to quantitatively measure the association between high-school popularity and wage earnings 35 years later in a new research paper.

“What a 1957 friend could do for you might be very different than what a 2009 friend can do for you.”

They use data from roughly 4,000 male respondents in the Wisconsin Longitudinal Study. In a 1975 survey, they were asked to name up to three of their closest friends when they were in high school back in 1957. Conti et al. then use the number of other people who named a specific person as a friend as their measure of that person’s popularity, and they compare that to a person’s current earnings.
They find that each extra close friend in high school is associated with earnings that are 2 percent higher later in life after controlling for other factors. While not a huge effect, it does suggest that either that a) the same factors that make you popular in high school help you in a job setting, or b) that high-school friends can do you favors later in life that will earn you higher wages.
Before you get on the phone to call your old high-school pals to complain that they’ve never done one darn thing to earn you more money, a few caveats are in order about the study.
First, out of necessity (because the authors want to look at earnings later in life) the data on friends is very old. What a 1957 friend could do for you might be very different than what a 2009 friend can do for you. Second, if I understand it correctly, people are asked to name their high-school friends 18 years after high school. I could easily imagine that there is a bias toward naming people who have been successful since high school as friends. For instance, I would imagine that if you went back and surveyed the people who went to high school with Barack Obama, his name would appear on the list of close friends a lot more today than it would have 20 years ago. Third — and this is quite interesting in its own right — popularity is highly correlated with other traits that prove to be very valuable in the labor force. For instance, people with high I.Q.’s and who planned to go to college are much more popular in their data. People with high I.Q.’s and lots of years of education also earn higher wages. While the 2 percent wage premium associated with popularity attempts to control for these other factors, to the extent that the authors aren’t able to control for everything, it is likely that their estimates will overstate the importance of popularity.
This is a very interesting study, especially when put side-by-side with Roland Fryer‘s work on the “acting white” phenomenon among African-American teens. Roland finds that — unlike whites — among African-Americans, the students who are most successful academically in high school are punished by their peers when it comes to popularity. That finding has inspired Roland to institute a number of programs in the New York schools to try to make it “cool” to do well in school. In light of this new paper by Gabriella Conti and co-authors, I am even more eager to find out if Roland’s programs are working.
(A brief write-up of the Conti et al. research recently appeared in the London Times.)