Why the Next 300 Years Are Crucial to the Success of Your Family

As a second-generation Irish American, I was a huge believer in the American dream as a kid. My parents quoted Walt Disney at the dinner table, and taught us that anyone could achieve whatever they wanted to in life, as long as they worked hard enough. Abraham Lincoln's rise from a one-room log cabin in Kentucky all the way up to the White House seemed to me like the perfect illustration of my parents' teaching. 


Photo: Wikipedia

It appears that my early faith in rapid social mobility in the United States might not have been entirely justified, according to a recent study. Gregory Clark, author of "The Son Also Rises: Surnames and the History of Social Mobility", has found that the pace of social mobility is much, much slower than we previously thought. According to his research, you may eventually succeed in raising the status of your family, but in some cases, it could "take 10 to 15 generations (300 to 450 years), much longer than most social scientists have estimated in the past."

What car did your great grandfather drive?
Clark has conducted a rigorous analysis of surnames in order to track the rich and poor across the generations in England, the United States, Sweden, India, Japan, Korea, China, Taiwan, and Chile. Instead of just looking at one aspect of social mobility, he considers a wide array of factors such as wealth, income, occupational status, and education. His research focuses on surnames inherited by fathers because most of the societies he studied were characterized by this form of surname inheritance. Clark doesn't think the results would be any different by studying the matrilineal lines.

This is how he concisely summarizes his main thesis:

To a striking extent, your overall life chances can be predicted not just from your parents' status but also from your great-great-great-great grandparents'.

While believing that success depends very much on individual effort, Clark's findings seem to indicate that "the compulsion to strive, the talent to prosper and the ability to overcome failure are strongly inherited."

Lessons from my family's history
"The Son Also Rises" is a highly complex book, and its findings are based on an impressive amount of research. I'm not qualified, however, to weigh in -- one way or another -- on some of the more controversial arguments put forward by Clark. Instead, I'm more interested in what his work might mean for investors. For me, I was intrigued by his view that time horizons are longer than we think, and the idea that maybe you won't achieve the status you were hoping for, but your grandchildren might.

In order to further explore this idea, I decided to take a closer look at my own family over the past 151 years. Are there any long-term lessons there about social mobility in America?

In the table below, I've included information relating to five generations of my family (I'm the fourth one listed). For consistency, I followed the patrilineal line, as Clark does in his book.

Our particular story seems to support Clark's findings about the slowness of social mobility. During the course of one and a half centuries, you can see a very gradual improvement in my family's fortunes. Charles Reeves was an uneducated, unskilled immigrant, who worked for a railroad in central Massachusetts in the 19th century. His great-great-grandson (my sixteen-year-old son, Maxim), however, is now securely established in the American middle class with a promising future ahead of him. What accounts for this remarkable turn of events?

A gradual, but important shift in fortunes began with my dad who became the pivot for the family's rise into the middle class. First of all, he wisely married my mom who came from a relatively prosperous family. Secondly, he obtained a college degree by going to night school.

"Remember the ladies..."
The role of my mom and her parents in this tale shows how much information might not be visible by looking solely at surnames inherited by fathers. Despite being the daughter of two Irish immigrants, my mother had been comfortably in the middle class her entire life. Unusually for a first-generation Irish-American woman raised in the 1930s, my mom had earned a four-year college degree, and worked as a teacher before getting married. Her father had graduated with a classics degree from Holy Cross in Worcester, Mass., before getting a job at Procter & Gamble during the Great Depression. And her mother was a savvy investor who was able to grow her husband's wealth tremendously over a period of 60 years or so. So my mom's family succeeded in injecting some much-needed financial security into the Reeves line.

The second step taken by my dad was also significant. By working hard to get a college degree, he provided himself with more income and greater opportunities. Perhaps most importantly, he and my mom instilled a love of learning in their children that would be passed down to subsequent generations.

Obviously, all families are different, but I do think our experience underlines two important principles for the long-term success of any family. The first principle relates to the importance of building up a pot of capital through saving and investing. The availability of capital can bolster a family when tragedy or misfortune strikes. It also allows you to pass on wealth to your children and grandchildren, which can provide them with significant advantages and opportunities. The capital built up by my grandmother's investing activities provided a considerable amount of stability to my family over the years. When I think of why I invest, this is the primary reason that comes to mind.

The second principle is how important education is to the long-term prospects of a family. I realize there's currently a big debate about the value of a college degree in America right now. Looked at in the context of my own family, however, I can confidently say that a college education has meant a great deal.

Working on the railroad
One big takeaway from both Clark's research and my family's experience is that the "rags to riches" metaphor may not be the best way of thinking about social mobility in America. Instead, we may want to think more along the lines of "rags to fewer rags" or "some riches to greater riches." The pace of improvement might be slow, but it can still be very gratifying. I bet Charles Reeves would feel pretty good about the material condition of the family he helped create many years ago.

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Read/Post Comments (13) | Recommend This Article (17)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 23, 2014, at 10:35 AM, Chloe234 wrote:

    I agree wholeheartedly: our investing is the key to enabling our children to enjoy a better life than we had (not that it's been all bad), which should be at the top of our "reasons for investing" list. These investments includes both a useful (and reasonably-priced) education for one's children and, as you conclude, building wealth that can be passed down to them (assuming the envious redistributionists don't come up with some new scheme to seize it when we die).

    My ancestors exemplified this process, though I didn't realize it fully until I read your article. My great grandparents all were immigrants who came here with nothing and built their own husband-and-wife businesses. My grandparents carried on this tradition and passed along their work ethic to my parents. My parents, who were depression babies, learned to live very frugally. They paid cash for everything - my folks never even had a mortgage! - provided me with a college education, and left behind a nest egg that enabled my wife and I to do the same for our kids and to invest the rest.

    Now we are trying to educate our kids as our parents educated us.

    So yes, about 150 years has made a huge difference, thanks to hard work and generational learning. While the climb is probably steeper the higher you get, I still would love to be around to see what the next three generations achieve!

  • Report this Comment On April 23, 2014, at 12:04 PM, TMFBane wrote:

    @Chloe234,

    Thanks for sharing your story! It sounds very similar to mine. I'd also like to be around to see what the future generations achieve!

    Foolish best,

    John Reeves

  • Report this Comment On April 23, 2014, at 6:56 PM, bbell46356 wrote:

    There is a common saying that goes rags to riches to rags. While hopefully not too common, I do know some folks who fit the description. The theory is that Grandpa was poor but worked hard to give his son an education and a better chance, Dad took advantage, worked hard, achieved great things and provided Junior with all of the comforts of life. Junior, accustomed to the easy life Dad provided, goofs off, is lazy and never achieves the success Dad enjoyed, In fact, he blows whatever wealth Dad passed along to maintain a lifestyle he doesn't earn. Junior's kids end up as poor as Grandpa. Is this common or just anecdotal?

  • Report this Comment On April 23, 2014, at 8:07 PM, TMFBane wrote:

    @bbell46356,

    Yeah, I've noticed that pattern in some families as well. It's definitely real in some cases.

    I think the author of the book (Clark) would underline the word "some," however. He focuses on the aggregate and finds considerable variation among particular families and generations. In general, he argues that over long periods (100's of years) all families will revert to the mean. Low status families will move slowly upwards. And high status families will move slowly downwards. So I guess for the highest status folks, the only place to go is down. This, of course, can take centuries as Clark shows.

    Hope that helps. As I said in the piece, his research is quite complex. I found it really fascinating and thought-provoking, however.

    Best,

    John

  • Report this Comment On April 23, 2014, at 8:09 PM, SuntanIronMan wrote:

    @bbell46356

    If we are talking about true riches (the super wealthy), riches to rags is not very common.

    If you are super wealthy, you can afford to send your children to the best schools, give them the best health care, set aside investments for them to inherit, and have connections to help them find great employment.

    If you are a child of super wealthy parents, you have to be the one of the biggest screw-ups in the world to end up dirt poor (not just a little screw-up, but a BIG screw-up). And despite popular Hollywood plot lines, I don't believe the children of the super wealthy are any more screwed-up than the rest of us, haha.

    Children of middle class parents benefit from their parents' successes as well, of course. Middle class parents can often afford to put some money every month in 529 college savings plan, have access to health care, can possibly set aside a little money or a house for their children to inherit, and maybe know a friend of a friend who can help their kid find a decent job after college.

    Thus far my middle class family has been fairly successful. From slaves to second-generation college graduates (third-generation for my first cousins once removed) in just a handful of generations. Living the American dream... well, technically I'm currently living in Japan, but it is my American dream to live in Japan for the time being, haha.

  • Report this Comment On April 23, 2014, at 8:20 PM, SuntanIronMan wrote:

    Small addition to my comment, first paragraph:

    If we are talking about true riches (the super wealthy), riches to rags is not very common. *At least not the single generation you are talking about.

  • Report this Comment On April 24, 2014, at 9:32 PM, enginear wrote:

    Sounds a lot like the story of... every family.

    Civil war times, 150 years ago, were populated by agrarian folks that (generally) didn't read, or had little in the way of real literary capability if they did. As time went on, education grew from optional to required, and finally the G.I. bill produced college graduates (post WWII) at a rate never before imagined. These were worthwhile achievements, and they contributed greatly to America's well being.

    Similar things have occurred across the world (witness China's change in a mere 30 or 40 years!). The world offers more in terms of education, intellectual opportunity, and also living standard than it did in the past. It will keep going, but I think it means America's place relative to the rest of the world will drop, even though in absolute terms, it rises.

  • Report this Comment On April 24, 2014, at 9:50 PM, ScottmFool wrote:

    > The role of my mom and her parents in this tale shows how much information might not be visible by looking solely at surnames inherited by fathers.

    Exactly. In my case, just looking at my father's side of the family would lead some to believe I was destined for the relative success I've achieved, and that I was granted the same opportunity to the best schools and stable parenting (my cousins did on my dad's side; I did not).

    But judging me by my surname doesn't capture the fact that I grew up very much lower middle-class (some would say poor, by American standards), grew up in a single-parent home, grew my career by putting in years of 50-80hr workweeks and spending less than I make.

    I concede, though, that I did end up roughly at a similar financial, professional and personal "success" level as my father's father. So the author's approach has some merit. But it doesn't capture the fact that the journey can be very different from family to family.

  • Report this Comment On April 25, 2014, at 8:21 AM, peterpan wrote:

    Wonder how Happiness measures in the equation.

  • Report this Comment On April 25, 2014, at 9:45 AM, ryanalexanderson wrote:

    "It's the age-old destiny:

    One-in-ten-thousand coolie strikes gold, harbors money, invests in land, saves money, becomes rich, buys young concubines who use him up quickly.

    Second generation discontented, spend money, mortgage land to buy face and ladies' favors.

    Third generation sell land, go bankrupt for same favors.

    Fourth generation coolie."

    - James Clavell, author of Noble House.

  • Report this Comment On April 25, 2014, at 11:41 AM, 4theLongHaul9 wrote:

    Great article! Here's a related one you'll find fascinating about the success in upward mobility of different social groups:

    http://www.nytimes.com/2014/01/26/opinion/sunday/what-drives...

  • Report this Comment On April 25, 2014, at 2:10 PM, mtprx wrote:

    This story has a definite link to investing... it's called data mining. Read fooled by randomness to better understand why.

  • Report this Comment On April 26, 2014, at 12:38 AM, dpjordan wrote:

    Excellent.

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