Introduction

In the United States, the wealthiest nation in the world, approximately 12% of people live in poverty and 75% of people live paycheck to paycheck. Meanwhile, the US also has the most number of billionaires and is home to the 3 richest men on the planet. (Emmiemartin 1) This raises the question, “What factors make some people more financially successful than others?” From a political perspective, Democrats would argue that people environments inhibit them from being financially successful while republicans would typically say some work harder than others (Diffen 1). But which side is correct? Are either of them correct or is the question far more complicated than it seems? This research paper will consider all the known factors and how it affects financial success.

 

Child poverty

After much statistical research done by scientists, it is an irrefutable fact the child poverty is correlated to finicall success. Looking at some things that contribute to financial success such as, completed college by age 25, consistently employed ages between 25–30, no premarital teen birth, and never arrested by age 20, people who never experienced being poor compared to people who were persistently poor as a child had a much higher percentage in all categories (Ratcliffe 3). However, according to brookings.edu children only need to do 3 things to guarantee to not end up in poverty. Those are graduate highschool, find any type of job, and don’t have children until they get married (Haskins 1). However, according to the data, children growing up in poverty are much less likely to meet these requirements. Though we understand that child poverty and adult success are now correlated, let’s look into some possible causes.

One factor that may contribute to child poverty leading to lack of adult success is the area people grow up in. According to “Child Poverty and Adult Success” by Caroline Ratclliffe, she says: 

“Compared with children in the most advantaged neighborhoods, children in the most disadvantaged neighborhoods are 28 percent less likely to complete high school and a staggering 99 percent less likely to complete a four year college degree.” (Ratcliffe 4)

People who complete college on average are more likely to earn more than those who only graduated highschool. Moreover, those who graduate highschool, on average, make more than those who don’t graduate highschool (Osborn 1). This makes clear as to how growing up in a disadvantage and advantage neighborhood is correlated to adult success. However, the reason for this is unclear. It may be the lack of resources or schools tend to perform worse in disadvantaged neighborhoods but the exact reason is uncertain.

Another factor that may contribute to child poverty leading to the lack of adult success is parent education. The less a parent is educated, on average, means that their annual income will be less. According to “Child Poverty and Adult Success” “Compared with ever-poor children whose parents did not complete high school, children whose parents have more than a high school education are 30 percent more likely to complete high school, more than twice as likely to enroll in postsecondary education by age 25, and nearly five times more likely to complete college by age 25.”(Ratcliffe 4) 

This means that the education level of the parents is correlated to the education level of the child. This, thus, leads to the child being less financially successful when they grow up. This is significant because it shows a cycle being formed where the parents being less successful due to lack of success which leads to the child being less successful due to the same lack of success. Furthermore, this is a correlation and doesn’t necessarily answer the question of how this cycle started and how it can be broken.

A third factor that may contribute to child poverty leading to lack of adult success are social and cultural determinants. According to “Social and cultural determinants of child poverty in the United States” by Sri Ranjith and Anil Rupasingha it says 

“Garis argues that the presence of religion and the exposure of children to cultural enrichment experiences, to some degree, reduces the likelihood of youth becoming involved in at-risk behavior.” (Ranjith and Rupasingha 1)

Here the researchers are suggesting some cultural aspects such as religiousness, has an affect on children’s future success. The paper goes on to explain how religious communities tend to become impoverished. This is due to them not valuing money as much as though who aren’t religious.  

 

Intelligence

The IQ test was invented in 1904 by Alfred Binet as a way to measure an individual’s intelligence. Since then, there has been multiple studies trying to answer whether IQ is correlated with adult success. The answer is yes. The SAT and ACT, standardized tests taken in the US, is based on the IQ test and is a way to measure a student’s readiness for college, which shows how the significance of IQ is already accepted by society. According to “ACT and general cognitive ability” there is a very strong correlation between IQ and standardized tests (Koenig, Frey, Dettermen 4).  A study done in the 1920s, shortly after the invention of the IQ test, by a psychologist named Lewis Terman aimed to show the correlation between high IQ and financial success. According to an article titled “Are people with high IQ more successful”, Terman gathered 1,500 children who were between the ages of eight and 12 and had an average IQ of 150. The average IQ in society is 100. Terman followed these children into adulthood. The results were:

1. “The average income of Terman’s subjects in 1955 was an impressive $33,000 compared to a national average of $5,000.
2. Two-thirds had earned college degrees, while a large number had gone on to attain post-graduate and professional degrees. Many of these had become doctors, lawyers, business executives, and scientists.”(Cherry 1)

Terman conclusion was “intelligence and achievement were far from perfectly correlated.” 

Though Terman concluded that financial success and IQ are related, further studies suggest it may not always be the case. IQ is, however, accepted as a strong indication for academic success and, as proven earlier academic successful does tend to lead to higher education which people tend to make more than those with less education. Moreover higher academically achieving students are more likely to experience depression and social isolation when compared to their peers according to a study called “Relationships between Depression and High Intellectual Potential” (Weismann-Arcache and Tordjman 1). They are also more likely to abuse drugs. This is due to them trying to overachieve and not being able to properly deal with failure.

Drug abuse is a very dangerous habit for your health and also your financial success. In an interview that I did with a worker at a homeless shelter named The Landing Family Shelter in Queens, I asked what type of people were walking in? Were they people that abused drugs? I asked this because stereotypically people have a notion that others become homeless from a drug problem. He replied saying that there are a significant portion that he assumes may have abused drugs, though he can’t know for sure, but most people are regular people. After doing further research, about 38% of homeless people are dependent on alcohol whereas the average is 6% (National Coalition for the Homeless 1). This reveals that there is a slight correlation between alcohol abuse and homelessness. 

Personality Traits

A third major contributor to finicall success is personality traits. Psychologists have identified 5 main personality traits in humans: openness, conscientiousness, extraversion, agreeableness, and neuroticism. Some personality traits are better to have in regards to earning more money in life. One being conscientiousness which is being aware of yourself and your surroundings. Conscientious people tend to be organized, responsible and dutiful, while, on the other hand, people with low conscientiousness are more easy-going and careless. According to smartcompany, “There’s a staggering amount of research linking conscientiousness with success. Conscientious people earn higher salaries and have greater job satisfaction; conscientiousness is also the most important factor for finding and retaining employment.” (Golis 1)

This shows that they end up being more successful. On the other hand, it might inhibit them as well. The same article states

“ People with this component make great employees, however it can be a hindrance in a manager. Conscientiousness can make people monomaniacs; they find it difficult to multitask. In addition they tend to focus on tasks and not on the people – and it is people skills that differentiate the successful manager.”(Golis 1) 

This shows being too conscientious may prevent you from being a good leader which hinders your chances of getting promoted.

Another important personality trait is optimism. Optimism is being hopeful of the future. The reason why some are more optimistic than others is still unclear. There is a partially genetic influence but environment is also important.(Mann 1) It is also important to note that people aren’t simply optimistic or pessimistic. It is more so a spectrum where people are slightly optimistic or extremely optimistic and vice versa. Optimism is an important trait that can influence job performance and financial success. According to an article name “8 Types of Optimism: What are the Dangers of Optimism?” it says

“He identified the top quartile of attributional style optimists amongst applicants for jobs as life insurance salesmen (extreme optimists) and found those selected on this basis performed much better and stayed in the job for longer than salesmen selected using standard industry tests.” (Beazley 1)  

This reveals that in certain jobs, such as salesmen, people perform much better if they are optimistic.This was proven by the test he did. However being optimistic can come with its drawbacks. In the same article it says 

“One was optimism bias in information assessment, causing real but unintentional errors of judgment. The errors are predictable, shared by experts and lay people and remain compelling even when people are made aware.” (Beazley 1)

This reveals that optimistic people are bias and always expect the best outcome even when it might not be practical. Overall optimism can help people achieve financial success but too much can be detrimental because it then becomes too unrealistic. 

 

Bibliography

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• Emmiemartin. “The Government Shutdown Spotlights a Bigger Issue: 78% of US Workers Live Paycheck to Paycheck.” CNBC, CNBC, 10 Jan. 2019, https://www.cnbc.com/2019/01/09/shutdown-highlights-that-4-in-5-us-workers-live-paycheck-to-paycheck.html.
• Mann, Denise. “Optimism May Be Partly in Your Genes.” WebMD, WebMD, 16 Sept. 2011, https://www.webmd.com/balance/news/20110916/optimism-partly-in-your-genes#1
• Haskins, Ron. “Three Simple Rules Poor Teens Should Follow to Join the Middle Class.” Brookings, Brookings, 28 July 2016, https://www.brookings.edu/opinions/three-simple-rules-poor-teens-should-follow-to-join-the-middle-class/.
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