Does Social Capital Increase Future Income? Research Explained

Have you ever heard the term social capital?

It might sound a bit difficult, but simply put, it refers to the power that “connections with people” possess.

For example, relationships with friends and seniors, interactions with teachers and local community members are all part of it.

In fact, it has become clear that this social capital affects future income and job opportunities, as well as educational advancement and mental stability.

What particularly drew attention was the world-renowned paper “Social capital I: measurement and associations with economic mobility“.

This research used a large amount of data to examine how much “who you interact with” relates to your future.

(This paper is the first part, and the second part is introduced in the article “Social Class Changes Based on Friends, Where You Live, and Hobbies! Paper Explanation“.)

In this article, we will introduce the meaning and importance of social capital, along with familiar examples, in an easy-to-understand way while avoiding difficult terminology as much as possible.

Once again, personality researcher and author of Villain Encyclopedia, Tokiwa (@etokiwa999), will provide the explanation.
※We have developed the HEXACO-JP Personality Assessment! It has more scientific basis than MBTI. Tap below for details.

What is Social Capital?

A Simple Explanation of Social Capital

Social capital refers to the power that connections with people possess.

For example, relationships with friends, family, and local community members fall into this category.
When you have such connections, you can receive help or obtain information.
Also, when connections are strong, you can gain a sense of security and trust.
As a result, opportunities for learning and work may expand.

Social capital includes the following types:

• Connections with people from different backgrounds (bridging type)
• Connections among similar people (bonding type)
• Participation in community activities and volunteering (civic engagement type)

In this way, connections with people are valuable assets even if they are invisible.
Building trust relationships with many people will expand your future possibilities.

What Types of Social Capital Are There?

Social capital is mainly divided into three types.

Each has a different role, but all are important.
First, “economic connectedness” refers to connections with people from different backgrounds.
For example, this means a low-income person becoming friends with a high-income person.
Next, “network cohesiveness” refers to the strength of close-knit groups.
This refers to relationships where friends are all friends with each other.
Finally, “civic engagement” means participation in community activities.

Specifically, they are as follows:

• Economic Connectedness (EC): Friendships with people from different social backgrounds
• Network Cohesiveness: Strong connections within peer groups
• Civic Engagement: Involvement in volunteer work and community activities

As you can see, social capital takes various forms.
Each type plays an important role in supporting each other within society.

Social capital has diverse forms depending on the purpose.

Why is Social Capital Getting Attention?

Recently, it has become clear that social capital is deeply related to issues of inequality and opportunity.

Previous research suggested that household income and education influence the future.
However, it has become clear that friendships and community connections also have great power.
For example, if you have many high-income friends, your own future income is likely to increase.
This is because the possibility of receiving information and opportunities becomes higher.
Conversely, if you’re only surrounded by similar people, growth opportunities don’t emerge.

The reasons for attention are as follows:

• The influence of connections can be greater than income or education
• Large regional differences provide clues for policy
• It has become possible to measure objectively from data

What is particularly drawing attention is “Economic Connectedness (EC)“.
This has been found to strongly influence future income.

Social capital is an important factor related to the expansion of opportunities.

How Has the Value of Connections Changed from Past to Present?

Compared to the past, the form of social capital has changed significantly.

Previously, relationships with neighbors and relatives were central.
However, now connections are formed in various places such as schools, work, and the internet.
Especially with the development of communication, it has become possible to connect with people far away.
On the other hand, opportunities to meet and talk in person have decreased.
Therefore, how to build trust has become important.

The points that have changed are summarized as follows:

• Past: Connections centered on family and neighbors
• Present: Diverse connections through school, work, and the internet
• Building trust relationships has become more important

We’ve also come to understand that the quality of connections affects the future.
It’s not just about having many friends, but what kind of people you interact with that matters.

The value of social capital remains unchanged, but its forms have become more diverse.

What’s the relationship between social capital and money?

Human connections can sometimes influence income and work style.

For example, if you become friends with people who earn high incomes, it becomes easier to get job information.
Also, talking with people who have goals makes your own thinking more positive.
Research shows that people who interact more with economically wealthy individuals tend to have higher future incomes.
Conversely, if connections are limited to people in similar situations, opportunities don’t expand.
This is because information and introductions are limited.

Examples of influence are as follows:

• Job introductions and consultations become easier
• You can learn positive ways of thinking
• Future options increase

One study showed that living in an area with 0.5 higher economic connectivity results in children’s income increasing by an average of 8.2 percentiles.

Social capital is invisible, but it’s an important force that affects income and opportunities.

The Impact of Social Capital on Life

Does the type of friends you have change your income?

What kind of friends you have can sometimes change your future income.

Research shows that even low-income people can increase their future income if they have many high-income friends.
For example, in Minneapolis, this percentage is 49%, and income rankings are also higher.
On the other hand, in Indianapolis, it’s 32%, and children’s income rankings become lower.
In other words, what kind of people are around you is very important.
This is because differences in information and ways of thinking have an impact.

The differences based on types of friends are as follows:

• High-income friends: Lots of information and opportunities
• Friends with goals: You become motivated too
• Diverse friends: You can have a broader perspective

Conversely, having only similar friends results in little change.
Therefore, it’s important to interact with various people.

The types of friends are greatly related to future possibilities.

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Do friends have more influence than parents’ income?

Actually, relationships with friends can sometimes have a stronger impact on the future than parents’ income.

Even if parents’ income is low, children are more likely to succeed if social capital is rich.
Especially when “economic connectivity” is high, future income also tends to be higher.
This is because interacting with diverse people from childhood broadens one’s perspective.
Also, goals and ways of thinking are often influenced.
This has been confirmed from data in many regions.

For example, there are cases like the following:

• Having contact with high-income households during childhood
• Having friends from various households in high school
• Diverse occupations of people in the community

Parents’ income is certainly important, but it’s not determined by that alone.
The surrounding environment and relationships also play a major role.

Connections with friends have the power to transcend family environment.

The relationship between social capital and enrollment rates

When there’s more social capital, the percentage of people who go on to higher education also increases.

This is because when there are many people around you going to university, you’re more likely to want to go too.
You can also get information about higher education and study methods.
Especially by interacting with people from different economic backgrounds, your options expand.
Conversely, in environments where higher education isn’t taken for granted, it’s difficult to have dreams.
Therefore, connections also relate to career paths.

Examples of social capital that influence higher education are as follows:

• Being able to hear about university from friends who went on to higher education
• Getting advice from adults other than parents
• Being stimulated by activities outside school

Particularly for first-generation students (those whose parents did not attend university), this impact is significant.
Differences in information and awareness become triggers for pursuing higher education.

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The Impact of Social Capital on Emotionality

Social capital also affects people’s emotionality.

Emotionality refers to emotional fluctuations and susceptibility to stress.
When there are trustworthy people around, anxiety and stress are reduced.
Also, having relationships where you can consult with others during difficult times provides a sense of security.
Conversely, when connections are few, feelings of loneliness tend to increase.
This impact is particularly significant for younger generations.

The positive effects that social capital has on emotions are as follows:

• Having someone who will listen to you
• Having companions who understand you
• Having friends who encourage you

Having such relationships makes it easier for emotions to remain stable.
Human connections are also an important element for mental health.

Social capital is a great force that also leads to mental stability.

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Are People with High Conscientiousness More Likely to Build Social Capital?

People with high conscientiousness are more likely to build trusting relationships with others.

This conscientiousness refers to a sincere personality that keeps promises.
Such people tend to be easily trusted by those around them.
When there is trust, relationships are more likely to last long.
Also, by listening carefully to others, relationships deepen.
As a result, they can have broad and high-quality connections.

The specific characteristics are as follows:

• Being able to act with consideration for others
• Valuing even small promises
• Being able to naturally lend a hand when someone is in trouble

The accumulation of such actions generates trust.
Trust becomes the foundation of social capital.

Honest behavior becomes the first step in nurturing strong connections.

What is Conscientiousness? Big Five, MBTI J vs P Relations

Social Capital and Regional Differences

Are There Differences in Connections Between Urban and Rural Areas?

The form of social capital differs greatly between urban and rural areas.

First, in cities, you can meet many people, but connections tend to be shallow.
On the other hand, in rural areas, relationships are deep but encounters with new people are few.
In other words, there are differences in breadth and depth.
Also, in cities, there are opportunities to interact with people in various occupations.
This leads to increased economic connectivity.

The characteristics of each are summarized as follows:

• Urban: You can interact with diverse people but relationships tend to become shallow
• Rural: Trusting relationships are deep but difficult to expand
• Economic connections are easier to create in urban areas

In this way, how relationships are formed changes depending on where you live.
However, both have their advantages and challenges.

The nature of social capital differs greatly by region.

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Reasons Why There Are Regional Differences Even Within the Same Town

Even within one town, there are differences in social capital by area.

For example, in Los Angeles, differences in economic connectivity were observed by ZIP code.
While one area had a high economic connectivity (EC) of 1.25, another area had a low value of 0.45.
This is related to the variation in income and occupations of residents.
Also, when schools and workplaces are separated, opportunities for interaction decrease.
Therefore, divisions within regions are created.

The reasons for these differences include the following.

• Differences in residents’ economic situations
• Geographic boundaries and school district divisions
• Differences in access to public facilities and transportation

Even in towns that look the same, there are significant differences in the quality of connections.
This is precisely why community-specific initiatives are necessary.

Even within the same town, the ease of making connections varies greatly depending on location.

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Do poorer areas have narrower connections?

Poor areas tend to have less social capital.

The reason is that many people in similar economic situations surround them.
For example, in low-income areas, there are fewer opportunities to meet high-income people.
As a result, information and opportunities become limited.
This causes low economic connectivity.
Moreover, transportation means and networks are often limited as well.

The challenges that tend to occur in poor areas are as follows.

• Few opportunities to interact with high-income earners
• Limited school and community activities
• Difficulty creating connections with the outside world

Of course, it’s possible to have deep connections.
However, support and systems are needed to expand them.

Social capital tends to narrow in impoverished areas, making countermeasures important.

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Do towns with many high-income people increase opportunities?

Areas with many high-income people tend to have rich social capital.

This is because high-income people have many friends and possess wide networks.
Also, schools and facilities in the area tend to be of high quality.
Therefore, children from low-income families are also likely to receive positive influences.
However, being in the same area is meaningless without interaction.
What’s important is actually engaging with each other.

The reasons opportunities increase are as follows.

• Many good schools and activity opportunities
• Easy to meet people with information
• Environment where you’re easily influenced by friends

However, without connections being formed, no effects will emerge.
Therefore, efforts to create interaction are required.

Even in areas with many high-income people, the quality of relationships is key.

The relationship between social capital and discrimination and inequality

Social capital is also deeply related to discrimination and inequality.

For example, connections may become divided due to differences in race or language.
This makes it easier for certain groups alone to gain information and opportunities.
Conversely, other groups tend to remain closed off.
This state is called “division” and becomes a cause of inequality.
This tendency is particularly seen in large cities.

The related points are summarized as follows.

• Language and cultural differences hinder interaction
• Racial and economic differences limit connections
• Divided relationships create inequality

To expand social capital, interaction without prejudice is necessary.
By engaging with different people, new perspectives are also born.

To eliminate inequality, broad connections and understanding become essential.

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The relationship between social capital and SNS

Do friends on SNS have meaning too?

Friends connected through SNS also become social capital.

Especially in today’s era, many friends exist online.
On SNS, you can easily communicate with people far away.
There are also opportunities to meet people you couldn’t encounter in real life.
For example, you can talk with people in different professions or from other countries.
Such encounters broaden your way of thinking and knowledge.

Examples of social capital gained through SNS are as follows:

• Interaction with friends outside of high school or university
• Group participation through shared interests
• Sharing information useful for work or further education

However, whether SNS relationships deepen depends on how you use them.
Your own attitude becomes important for building trustworthy relationships.

SNS friends also become part of broad and diverse social capital.

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The Power of Connection Revealed by Facebook Research

It has been found that connections on SNS influence future income and career paths.

One study analyzed friend data from over 70 million people on Facebook.
The results showed that in areas where low-income people had high-income friends, children tended to have higher future incomes.
This type of relationship is called “Economic Connectedness (EC)”.
In other words, connections on SNS are expanding future options.
It was also found that childhood friendships have a particularly significant impact.

The key points of the research are summarized as follows:

• Having many high-income friends makes it easier to increase future income
• There are differences in SNS connections by region
• The quality of connections relates to the future

SNS interactions might provide clues to reducing social inequality.
That’s why who you connect with and how becomes important.

Research on SNS has revealed that connections with friends have the power to change the future.

Differences Between Online and Real Connections

There are differences between online connections and real connections.

Online, you can easily connect with many people.
However, deepening trust can be somewhat difficult.
For example, there are fewer opportunities to meet face-to-face, or it’s harder to read facial expressions.
On the other hand, real connections make it easier to help each other and have honest conversations.
In other words, both have advantages and disadvantages.

The differences can be simply organized as follows:

• Online: Can connect broadly and quickly but tends to be shallow
• Real: Relationships can deepen easily but numbers are limited
• It’s important to use both well

Rather than just one or the other, valuing both creates balance.
Let’s make use of each characteristic to nurture good connections.

By combining online and real connections, social capital becomes richer.

What Kind of Friends Change Your Future?

Meeting friends who know worlds different from your own expands your future.

Not just people with the same thoughts and environment, but relationships with people who have different experiences are important.
For example, people older than you or people from different schools.
From such friends, you can gain new values and information.
Also, your way of thinking broadens, and your own possibilities expand.
Sometimes, they can also become catalysts for thinking about your career path.

The characteristics of friends who expand your future are as follows:

• They have different ways of thinking from you
• They are challenging new things
• They take positive and forward-looking actions

It might take a little courage at first, but taking that step is important.
That one step leads to big changes.

Friends who change your future are people who show you worlds you don’t know.

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Tips for Expanding Social Capital Through SNS

By using SNS skillfully, you can expand your social capital.

Just increasing the number of friends doesn’t make sense.
What matters is how you nurture the relationships.
For example, greeting others first or responding to comments.
Also, actively participating in groups and events is a good method.
Getting to know the other person well is also important.

The tips for expanding can be organized as follows.

• Take the initiative to reach out to others
• Join groups that interest you
• Share topics and continue conversations
• Express gratitude and words of support

By accumulating these actions, trust is born.
And connections naturally expand.

On social media too, compassion and action are key points for nurturing social capital.

What You Can Do to Increase Social Capital

How to Nurture Social Capital at School

School is an important place to nurture social capital.

Through time talking with friends and group activities, you can learn trust and cooperation.
Especially talking with people who have different opinions becomes an opportunity to broaden your way of thinking.
Also, activities across grade levels become good connections.
Relationships with teachers and seniors are also included in social capital.
In other words, school life itself becomes a place of practice.

The ideas for school can be summarized as follows.

• Cooperate with each other in class activities
• Create opportunities to interact with different groups
• Actively talk with teachers and seniors
• Value presentations and discussions

Through these actions, the ability to understand each other is nurtured.
This leads to connections with people that will be useful in the future.

School is a safe place of practice where you can nurture connections with peace of mind.

Why Hobbies and Clubs Affect the Future

Connections formed through things you like expand future opportunities.

In hobbies and club activities, you can become close through common topics.
Also, you can sometimes meet people from different schools and ages.
The characteristic is that these relationships naturally deepen easily.
Furthermore, the experiences gained there sometimes connect to future work and activities.
For example, new encounters through music or sports.

The benefits of hobbies and clubs can be summarized as follows.

• Conversations easily get lively through common interests
• Trusting relationships can be built while having fun
• There are encounters with different generations
• Experiences are useful for future career paths

By continuing what you like, you can grow yourself and expand connections with people.
This becomes the foundation for enriching social capital.

Hobbies and activities are important means to expand connections in your own way.

Connections That Expand Through Volunteering

Volunteer activities are a big chance to create new connections.

By helping people in trouble, trust with people is born.
Also, you can interact with people in different positions from yourself.
For example, there are various places such as community cleaning activities and child support.
Through activities, you sometimes notice problems and social systems you didn’t know about.
Furthermore, you can also gain a sense that your actions are useful to society.

What can be gained from volunteering can be summarized as follows.

• The ability to act for others is nurtured
• You can meet many people
• It becomes an opportunity to learn about society
• Experiences of being trusted increase

These experiences are also useful for future work and activities.
It’s an opportunity to nurture confidence and connections with people at the same time.

Volunteering is a practical place for social capital that expands through action.

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The Importance of Trying to Talk with Various People

Talking with people who have different ideas is the first step to deepening connections.

It takes courage to talk to someone you’ve never spoken to before.
But it’s very important for discovering unknown worlds.
Let’s start with greetings and small conversations.
Listening carefully to what others say is also a key to building trust.
By talking, we can gradually understand each other.

The important points are as follows.

• Don’t be afraid to greet and approach others
• Find it interesting to learn about differences
• Value the attitude of listening
• Slowly deepen relationships

By connecting with various people, your perspective broadens.
That becomes the power to enrich social capital.

By taking one step forward, unexpected encounters and learning opportunities are born.

What are ways to connect authentically?

It’s important to connect in your own authentic way without forcing yourself.

Even if you don’t have many friends, it’s enough to have people you can truly trust.
Building relationships from your strengths or favorite topics is also a good method.
For example, if you like drawing, you can use showing your artwork as a conversation starter.
Also, even if you’re not good at talking with people, you can participate as a listener.
In any form, connecting authentically is what matters.

Ways to connect authentically include the following.

• Talk through things you like
• Build relationships by leveraging your strengths
• Don’t overdo it and go at your own pace
• Cherish relationships with each individual

There’s no right answer to connections.
Let’s nurture trust in ways that suit you.

Connecting authentically is the key to creating comfortable relationships.

In Conclusion

In this article, we have explained the theme of social capital using familiar words.

Social capital is the concept of how connections with people affect your future.

Relationships with friends, teachers, and people in the community are not just human relationships, but important connections that link to future work, income, and mental stability.

Research particularly shows that relationships with “people in different positions” expand your way of thinking and opportunities.

That’s why trying to talk with various people and creating relationships yourself becomes very important for your future life.

While cherishing connections in your own authentic way, let’s increase new encounters and experiences in society.
That step might lead to unexpected opportunities and growth.