Is Financial Success a Product of Inherited Genes?

http://ineteconomics.org/ideas-papers/blog/is-financial-success-a-product-of-our-genes

By Abdul Alasaad
Aug 10, 2015

How much does a family’s wealth determine a child’s financial prospects? Is Ivanka Trump a success because she inherited smarts and drive from her father, Donald Trump, or did her father’s success give her a leg up?

Of course, no one completely denies the impact of affluent upbringing on a child’s educational and financial prospects. But the far more important question is: by how much does an affluent upbringing influence a child financial and educational prospects?

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The relationship between the wealth ranking of adoptive children and with those of their adoptive parents is strikingly positive and almost as strong as the relationship between parents and their biological children

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More conclusively, the relationship between the wealth ranking of adopted children and with the ranking of their biological parents is much weaker with a coefficient of .11. In other words, a child’s wealth is more strongly correlated with the wealth of their adoptive parents than to the wealth of their biological parents. Nurture, when it comes to wealth, is far more important than nature.

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It turns out that the biological children had in fact accumulated more net worth; but by a very small, and almost irrelevant, margin. On average, biological children held 5% more in net wealth than adopted ones.

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Biological children completed 0.4 of a year more education on average than the adopted children.

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Wealth, like most things in life, has more to do with environmental factors than genetic ones.

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