How much does a person’s wealth depend on how wealthy their parents are? How much of any link between the two is due to naturally inherited talent, and how much is due to direct transfers of wealth and the conditions in which a child is raised? These are important questions but can be quite difficult to answer. There is surprisingly little research on the transmission of wealth from one generation to the next. But a new study using data from Sweden suggests that not only is wealth strongly linked to parental wealth, but that genetics seems to play a very small role. At the same time a summary of new UK evidence on social mobility shows how these findings may apply to the UK as well.

Researchers have looked at the data from a group of Swedish[i] children who were adopted between the 1950s and 1970s. They analysed what link there was between these adopted children’s wealth when they were adults and the wealth of both their genetic and adopted parents. They found that the children’s wealth in their 40s is strongly linked to their adopted parent’s wealth and weakly linked to their genetic parents’ wealth. Wealthy parents who adopted raised children who then became wealthier than other children. This suggests that not only does wealth get passed on from parents to children, but that this is not mainly due to inheritance of skills or talents, but instead through environmental factors (e.g. how a child is raised) and direct transfers of wealth. Further analysis conducted by the researchers found that this was still true if both parents were alive when the children’s wealth is measured, meaning that this is not primarily due to them simply inheriting their parent’s wealth.

New research from the UK also suggests that coming from a deprived background can have a significant effect on children’s education and life chances. One study found that previously high attaining children from deprived backgrounds tend to fall behind during secondary school and that part of the explanation for their relative lack of performance is that they attended lower performing secondary schools. Meanwhile a different study found that less well performing children from higher income backgrounds are more likely to earn more in later life. This was partly explained by these parents being able to invest in improving their children’s skills through tutoring or by making sure that they attend a better secondary school (including private or Grammar schools). This study found that a child with average ability, but moderately low income parents and low levels of education, who goes to a comprehensive school, and leaves after their GCSEs, has an 8% chance of being in the top income group. A child from a high-income family who initially gets low grades, but who receives help from their parents, and later improves and gets a degree, has a 73% change of being in the top income group.

Taken together these research projects show that there is nothing natural about inequality. Differences in wealth, educational outcomes and income are highly linked to the differences in school quality and amount that parents can invest in their children (in terms of money, time and attention).

But this research also shows that we shouldn’t be fatalistic about inequality, or view it as something that cannot be changed or due to inevitable differences in inherited abilities. Inequality comes from social systems and can be resolved by reforming them.