It’s Not What You Know, It’s Who You Know. Seriously.

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You know the old saying, “It’s not what you know, it’s who you know”? Well, Kelly Shue of the University of Chicago has found an intriguing way to test this. At Harvard Business School, students are randomly assigned to sections, where they presumably build strong friendships. (Stronger than the average friendship from just being at Harvard, anyway.) So what effect does this have on success later in life?

I test whether executive and firm outcomes are more similar among section peers than among class peers. I find evidence of significant peer effects in firm investment, leverage, interest coverage, and firm size, with the strongest effects in executive compensation and acquisition activity. Section peers are 10% more similar than class peers in terms of compensation and acquisitions.

In other words, if you get randomly assigned to a section with successful peers, you’re more likely to go along for the ride. I don’t have access to the article itself, and there are several possible explanations for this effect, but the most likely one is that friends help friends, and it’s nice to have friends who are successful. I hope there’s some followup research along these lines. It has some pretty obvious implications for diversity in schools, neighborhoods, and workplaces.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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