Here is another interesting passage from the newly published Kaplan and Rauh paper “It’s the Market: The Broad-Based Rise in the Return to Top Talent“:
…the percent [of the Forbes 400] that grew up wealthy fell from 60 to 32 percent while the percent that grew up with some money in the family rose by a similar amount. The percent who grew up with little or no wealth remained about flat.
That is from 1982 to 2011, by the way. The overall tendency is this:
Overall, Figures 5 and 6 show a trend in the Forbes 400 list away from people who grew up wealthy and inherited businesses towards those who grew up with more modest wealth in the family and started their own businesses. These changes largely occurred between 1982 and 2001…
Access to education also appears to be of increasing importance. The share of the Forbes 400 who graduated from college rose from 77 to 87 percent between 1982 and 2011. The share of college dropouts (like Bill Gates and Mark Zuckerberg) also rose from 6 to 8 percent. At the same time, the share of those without any college dropped markedly from 17 to 5 percent.
I view it this way. Generational connections now matter less and starting with lots of working capital matters less. Smarts, drive, and education all matter more.