The Tradeoff of Affluence
How close do you live to your family? Is it close enough for your mum to babysit the kids if you want a date night, or does it require an airplane to reach her? After reading the Atlantic article titled How Affluence Pulls People Away From Their Families, we were curious about how class impacts your familial relationships. Oftentimes choosing to live further away from your family is the only option. How many top-tier universities are there in small towns? Or headquarters for large companies? Especially after graduating, many hope to return to family but have realized that the job prospects are dismal in their hometown. These are all the reasons why higher-income earners are settling further and further from their families.
Of course, not everybody desires to live close to family. Maybe you argue about parenting with your mother-in-law, or disagree on politics with your father. However, most Canadians value having relatives living close by - so what are the reasons we are seeing this less and less? Firstly, living near family is not only valuable for emotional reasons but for economic. Social networks (also known as social capital) provide emotional support and companionship, but statistically they are also linked to the accessibility and availability of resources. Economic resources shape almost everything in your life, and it is unfortunate that family time is one of those effects. If your relatives live next door, you can pool resources in a way that you cannot if you live further apart. Maybe you can split the cost of childcare or have dinners together. This phenomenon is so important that economists have named it.
The first type of social capital is called bonding social capital, and refers to the emotional support we receive in times of need, from those we trust and whose opinions we value. The second classification is bridging social capital, which describes weak connections with others that are solely based on mutual interests, instead of personal connection. This could be your neighbours you only see when you need to borrow sugar, or your colleague that you only talk with when you need help on an assignment. Humans need bonding social capital to live, but we are increasingly seeing these relationships being replaced by bridging social capital instead. In 2013 in Canada, only 41% of Canadians said that more than half of their close relatives lived in the same city or community as them (StatCan). Statistics Canada has also found that household income has a negligible impact on the number of close relatives or friends (bonding social capital), however higher-income earners report that a majority of their social network is formed of acquaintances (bridging social capital). Canadians in the highest income bracket ($220,000 or more) had a network of acquaintances that was double in size compared to those with a household income of $20,000 or less. Bridging social capital is good for career prospects, but the tradeoff is that you have fewer relationships with those who matter most.
Shouldn’t one of the benefits of being a higher-income earner be more freedom? Unfortunately, the freedom to live where you want, and near who you want is becoming a luxury in this day and age. At NYF we are dedicated to helping grow and manage your money so you can focus on what's important. Family is what matters most to us, so we want to ensure your money brings you closer together both physically and emotionally.