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What are your friends and family worth?

2 weeks ago
David Surdam
business man walking past a homeless man

“A rich man beginning to fall is held up of his friends…. When a rich man is fallen, he hath many helpers.”

This proverb is apt for today’s world. In today’s political climate, people debate the justice or desirability of income and wealth distributions. The numbers bandied about in the press, as with most statistics, are just good starting places for discussions. These simple numbers fail to reveal important nuances. Economists and researchers recognize how complicated the topics of income and wealth distributions are. Politicians and activists tend to neglect the nuances inherent in these distributions.

The distributions both understate and overstate the disparities in income and wealth. I illustrate potential understatement by using a former student of mine. After playing racquetball one afternoon, we were talking about his CPA degree. He was going to start making an income above the median household income in America. His fiancé was also a CPA. Between them, they would be comfortably ensconced in the upper half of American households upon graduation.

Their marriage reflected what economists denote as “assortative mating,” where people tend to marry within similar socio-economic classes. The fairy tales of Snow White or Cinderella marrying the Prince are just that: fairy tales. There is nothing unethical or evil about people marrying within socio-economic classes, but doing so carries the ramification that it amplifies differences in income and wealth between people.

My young friend, however, had even greater advantages. His brothers, brother-in-law, and parents were also well off. They were not rich, but they were definitely upper-middle class. He also had many friends, who earned CPA degrees while studying at UNI.

If an unlikely combination of financial, emotional, or health disasters hit him, his family and friends were well positioned to help him. The proverb quoted above applies to him.

In contrast, many Americans lack such a network. If they stumble, their family and friends may not have the financial wherewithal to extend loans. If their family and friends are not well educated, they may lack knowledge of various government and charitable programs designed to help people temporarily down on their luck.

A simple unexpected car repair wreaks financial havoc for all-too-many American families. Workers facing car repairs may miss shifts and, in extreme cases, be fired by unsympathetic bosses. The necessity of playing first and last month’s rent exceed many families’ budgets and contributes to prolonged homelessness.

My friend’s family and friends could readily extend informal loans. He does not have to worry about such financial reverses that may cost him his job or render him homeless.

None of this is to suggest that my young friend, his family, or friends did anything unethical. Nor am I describing my friend as “privileged.” People’s benign choices, however, can, in the aggregate, contribute to socially undesirable outcomes. The proverb is ancient, but its truth remains fresh.



Headshot of David Surdam

David Surdam

Professor of Economics

University of Northern Iowa

Leave a Comment


Submitted by Ami on
This was a very good post. I love the way you ended it saying that you are not calling anyone privileged or saying that they did something wrong. I think that this topic often doesn't go over very well. People get defensive and people attack each other. Nonetheless, what was said is true. Some people do have that luxury. Money is not a huge issue for them and inconveniences will not turn their lives upside down. Some people have multiple sources to turn to while they are in need. Others however, do not have that--they are alone. And just like having the luxury of being well-off isn't necessarily anyones "fault", being on the other end isn't necessarily anyone's fault either. Rich people do help poor people, but it seems like rich people help rich people more--whether that's intentional or not.

Submitted by Matt Johnson on
This is a great article that can bring up many good arguments for both sides. There is definitely a large gap with wealth in our country, and the fact that wealthier families are able to provide more for their children to be successful plays a large role in it. Is this a problem? Maybe. Is it unethical? No. If someone takes advantage of the opportunities that have been provided to them they cannot be blamed for it. On the other hand, I do believe that it is much more difficult to get out of hard situations when one does not have the same opportunities as others. There are people that come from difficult living situations and not a lot of wealth that become successful, which changes their family tree. This is a wonderful thing that does not happen as often as it should. It is very difficult to do, but making it a priority to make a lifestyle change will not only help the individual, but their future family as well. I can relate to this in some ways, but not completely. It would be hard to lessen the gap in wealth, but I believe that both sides can control what they do financially to make sure that they are okay when financial hardships happen. No one should have to put that burden on anyone but themselves, but it does unfortunately happen.

Submitted by Baron West on
Let me first start off by saying I did enjoy this read. Something that I kept going back to when I read this article was the part where it talked about people basically being drawn to someone who is of the same "socio economic class" as them. I hadn't really taken the time to look at my friends and their spouses in comparison to where they stand class wise but after reading this article it makes sense, they too were drawn to someone of the same socio economic class as them. My personal opinion on this is that, people are most comfortable with someone who grew up with a similar lifestyle as them. No, I am not saying this is true for everyone. Though, this statement does make it hard for those who are less fortunate to get to where others are but I do believe that they can get there. There are some who have to work a lot harder than others and it may take more time to get to where some people are but it is not impossible. To say that any of this is unethical, well, I don't think that one can say that. I do think that some call it unfortunate or unfair. You can't always change from where you come from or what you started out with but you can change where you end up and there are many people who start out on the bottom and work their way to the top so it's not impossible.

Submitted by Austin McConnell on
After reading this article, I do agree with the quote that if a rich man has fallen, many others are there to help. I have seen first hand that a person who is doing very well financially hits a bump in the road. This person did not have to worry too much because he had multiple family members and friends there to support him. It also helped that those supporters were also doing very well financially. I have also seen first-hand when someone hits a bump in the road but their friends and family are not doing well financially, so they cannot offer them much. I would say that I am lucky enough where if I do have something unfortunate happen to me, I have friends and family there to help me out.

Submitted by Molly Keyes on
I see this happening on the UNI campus today and even in my friend group. I am dating someone in my same socio-economic class and so are many of my friends which could cause the gap to become even bigger. Also, when I have car troubles I can count on my parents or the small amount I have saved to get me through to the next paycheck, but I have friends that struggle to even make monthly rent, so when a car problem comes up they have go sacrifice something in order to pay for the repairs. The same thing goes for sickness. When I feel sick I have no problem taking the day off because I don't need every single penny I earn, but if some of my friends were to get sick they would feel obligated to still get to work since they need the money. I feel like some of that is their own fault, since they have high credit card bills and car payments. Some need to learn how to better manage their money, but I do agree there is a large problem with the gap between economic classes in America and it's not an easy fix since choices that are very individualistic grow these issues.

Submitted by Allison Ries on
I really enjoyed reading this article because it had good points to each side. There is a significant wealth distribution today and I think that is a result of many things. One thing I have never really thought of before is the idea of "assortative mating", where people tend to marry within similar socio-economic classes. After reading this and looking examples in my own life this seems to be very true. I can understand why people tend to marry within their own class because that is the norm for them. I don't see this to be unethical, but I also do see why it would expand the wealth distribution gap. I think that some people are just presented with more opportunities and I think, unfair as it may be, that starts with the socio-economic class they are born into. With that being said I don't think it is impossible to work from the bottom up.