黑料视频

December 22, 2024
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Want to make more money? You can start by spending time with the right friends, new research reveals

School of Management Assistant Professor Brad Cannon co-authors study examining how social interactions affect choices about personal finances

Friendship and money have often been compared to oil and water: they just don鈥檛 mix.

Well, there might be a way around that.

New research involving Assistant Professor Brad Cannon from 黑料视频鈥檚 School of Management shows how people with friends who make more money than they do are more likely to save and make smart financial investments themselves.

The study, titled 鈥淔riends with Benefits: Social Capital and Household Financial Behavior,鈥 was published by the , and it was co-authored by researchers from the University of Southern California鈥檚 Marshall School of Business and Baylor University鈥檚 Hankamer School of Business.

By combining Facebook data with county-level tax information, researchers sought to better understand how social interactions affect choices regarding personal finances.

鈥淭here are plenty of people who have some money saved, but they鈥檙e not taking full advantage of it, whether they could be making more in interest or maybe they just don鈥檛 know how to make investments of any kind,鈥 Cannon said. 鈥淭here really needs to be a social connection to help people overcome these obstacles, so the most natural takeaway from this study is that we can benefit from interacting with people who have more financial experience because they can help us improve our financial decision-making.鈥

The researchers point out that simply having richer friends doesn鈥檛 guarantee that a lower-income person will automatically start making better investments, and the study鈥檚 findings include the savings decisions of all households (including those of high and low socioeconomic status).

Cannon and his collaborators used data created by other researchers with access to Facebook鈥檚 database of 27.2 million users 鈥 those social media connections served as a proxy for the relationships people have in their daily lives 鈥 and financial information, particularly interest and dividend income from IRS tax returns. Interest and dividend income served as indicators that a person had a bank savings account and owned stocks.

County-based data was also used to examine areas where people could potentially connect with others of higher and lower socioeconomic status compared to counties where there was less potential for such interactions.

The researchers found that for every 10% increase in friends of high socioeconomic status, there was a nearly 3% greater chance of stock-market participation for a person with a lower income and a 5% increase in the chance they saved money.

Cannon said one of the study鈥檚 unexpected findings was that being around wealthier people mattered more than friending ability.

For example, he said, a person who joins a tennis club where most of its members are wealthy becomes more likely to make wealthy friends since they鈥檙e around more people of high socioeconomic status.

On the other hand, he added, if you鈥檙e part of a lacrosse team where there are fewer wealthy members, you could still have many wealthy friends if you鈥檙e proactive or strategic in choosing who to be friends with.

鈥淥ur results indicate that the former (exposure to wealthier individuals) has a much larger effect on household savings decisions than the latter (proactively making wealthy friends),鈥 Cannon said.

鈥淚t is a well-documented fact that Americans, on average, do not have enough saved for retirement. This is likely partially due to low levels of savings and partially due to low levels of stock market participation. Additionally, there is evidence suggesting that wealth inequality is exacerbated when the stock market does well,鈥 said , assistant professor of finance at Baylor University, who co-authored the study. Our findings suggest that encouraging friendships with wealthy individuals could help Americans to save and invest more.鈥

鈥淚ndividual choices, the social environment, or public policies that enhance economic connectedness within the social network may help people achieve greater financial market participation. Such participation is important for upward mobility by providing access to financial opportunities and knowledge,鈥 added , professor of finance and business economics at the USC Marshall School of Business, who also co-authored the study. Greater financial literacy and greater saving and investment in the stock market are, in general, important for wealth accumulation.鈥

Pointing to other research, the study cited casual restaurant chains Olive Garden and Applebee鈥檚, as well as publicly funded locations, such as libraries and parks, as examples of places where it could be easy for people of different income brackets to interact.

鈥淪o, if you鈥檙e thinking about policy,鈥 Cannon said, 鈥渢his suggests that just creating more opportunities in communities to interact socially with wealthy people or people who have experience investing seems like it could potentially go a long way toward helping those who could benefit from that knowledge to save more.鈥

Posted in: Business, SOM