Why Social Class Runs in Families

Yes, there's genetics, yes, there are chromosomes, yes, there's biology, yes, there are environment, sociology, parenting, economics class, and all of that. But there is something else. Well, James Hillman, is class genetic? Do people inherit their social status? Welcome to Analyzing Finance with Nick. This might be one of those controversial videos that I really ever do on this channel because it is an observation that I have made not really just from my own anecdotal experiences, but also reading literature on this subject from books particularly that were recommended by many of you subscribers. As I've been diving into this topic and I'm seeing repeated patterns in history. There might be some degree of inheritance in terms of why people are in the social class they are, but it's probably not in the way they think. First of all, there's really no analysis I'm going to do that really applies specific ethnic groups. Like this is kind of a global phenomenon that in all parts of the world within those regions, there are certain families within those regions where everybody is all the same ethnic groups who happen to consistently make the top, whether in every continent of the world. And so it's kind of a worldwide thing that certain countries and regions of the world have the certain families consistently at the top. And it is not just because they just happen to be good stewards of capital and they happen to be on the right side of a war a thousand years ago and just maintained their status. This happens even in societies where the wealth is completely reset due to a variety of reasons, whether it's because that country lost war, whether it was a communist revolution. There, as in the case of China, there's some other sort of catastrophes that have caused these families to lose their fortunes. Within a few generations, these same people come back to the top. And the question really is why? And the book I read on this is called the Sun Also Rises, which is a history of surnames and the history of social mobility by Gregory Clark. He had done a lot of key empirical research as part of his role as a professor at the University of California, Davis, and he basically goes into that. There is a general perspective. He did it based on people who have unique last names that can be easily traced. The example used are people in New York who were in the income tax rolls when they were publicly published in the top 1% of taxpayers. And then seen when their descendants have done similar things in terms of who has the highest intellectually demanding or most prestigious jobs, like whether it's doctors or lawyers or owners of certain businesses or heads of high society. And seeing with those who are the last names of those people and whether they persisted over time. And the data really showed a degree of persistence that was pretty strong. Basically there was intergenerational correlation of social class, a r score of 0.7 to 0.9. This is true whether in low tax countries like the United States or Switzerland, or high tax countries like the UK or Sweden, and even in countries that had communist revolutions like Eastern Europe and China, and in countries that very much got their economies devastated through losing wars like Germany and Japan. You've had these same patterns really all over the world. It doesn't matter religious background, it doesn't matter racial background. It's just within these societies there's certain groups, families who consistently are the ruling class or the educated class or, and I mean educated class, the ones who have highly skilled professions, not anybody who has a college degree, especially since college has been heavily democratized the last 40 years. Or who are the ones who happen to be on the top of the social hierarchy. The question really is why? And some people say, oh, it could be education system, but these cultures all had different education systems and a lot of people were able to move up even if they were deprived of education or formal education in previous generations. Certain societies, like example, the Cultural Revolution in China, a lot of the wealthy or people born in noble families to live out in the rural hinterlands and were banned from going to college. Yet some of these families within a few generations came back to be at the top. So it's not simply a matter of always sending your kids to good schools. In fact, there's also the other side. A lot of kids are sent to good schools, yet they fail to advance and make something in life despite having all the best educational opportunities. That is kind of another factor here. I think there's a few things. One, there's the genetic component. And it is not just raw intellectual potential that does matter to a certain degree, but it's also personality traits such as persistence, grit, willing to take strategic, calculated risks, and a variety social competence and the ability to navigate certain social hierarchies or be an office politician. A lot of these things were perceived as skills that can be learned. But it may be like physical traits like being good at certain sports or being tall or having a certain hair color that are determined by genetics. A lot of people would agree on that. But there might also be certain personality traits that are determined on genetics. And that is going to be something that's kind of disturbing because what do we do in a world if even if you try to level the playing field for everybody. The same people are on the top because they have ingrained value systems in their family, genetic predispositions for diligence, and to follow these ingrained value systems. They're going to be on the top no matter how many times we set the field. And a lot of people give up because they don't feel like they have social advancement or will demand revolution because they know they might not be genetically gifted enough to make it to the top, but the same time feel like that they deserve to have some of the luxuries of modern society. This is especially a problem in the age of social media. So if the personality traits that make somebody successful in the business world, navigating the corporate ladder, or winning electoral races in politics, or being able to complete an education or top education are inherently genetic, what does that mean for society? Especially with the bias of assortive state of mating where people tend to marry people of similar education and intelligence levels. Marrying into a good family was not just a way to maintain wealth in the financial sense, but also the way to maintain wealth in terms of making sure certain traits that make the men in your family successful continue to be passed down to the next generation. Idea is that class might be genetic, but it's probably genetic for reasons that people don't really think. A lot of the personality traits that I try to teach you guys to have like grit, intellectual rigor, having a long time horizon, the willingness to take, delayed gratification, strategic thinking, intellectual curiosity, they might not be things that can be completely taught and inspired. It might be things that are ingrained. And again, it's not really like a solely a single ethnic group or demographic that has this. Because there were ruling classes in literally every country of the world and every region of the world. And this class thing being genetic is something that's probably not like to be talked about because if it is talked about, it's going to create a lot of political tension and unrest overall. What do you think about this? Do you think class is genetic? Do you think the personality traits that people have to succeed are really ingrained in your family? And if so, what are the implications of this other than being way more selective on who you decide to marry and have a family with? Should people have for their own lives as well as for what are the implications for society if this becomes a well known fact? Thank you for watching.