Social Capital, Structural Holes, and Moving: Positions for Upward Mobility

In China, there’s a saying: “Right time, right place, right people.” In this lecture, we’ll talk about a more practical version of this traditional wisdom. Achieving success requires good opportunities, and good opportunities are often determined not by your ability—but by your position.

Raj Chetty, a young economist at Harvard University, has been mentioned many times in our Elite Daily Lesson column. He is exceptionally skilled at mining social patterns from ultra-large-scale data and is hailed as a genius. He hasn’t won the Nobel Prize in Economics yet, but he is highly favored to win one in the future.

One of Chetty’s findings is this: Imagine two children with exactly the same talent and diligence. Both are born into families with incomes in the bottom 20%. One is born in San Jose, California, the heart of Silicon Valley (comparable to Shenzhen in China); the other is born in Charlotte, North Carolina—a decent place, but lacking the vitality of Silicon Valley (comparable to Shenyang or Jinan in China).

Chetty asks: What is the probability that each of these two children will grow up to change their fate and achieve upward mobility?

This is called “Intergenerational Mobility.” A child doesn’t necessarily have to be in the same class as their parents; if you can improve your class, it’s called upward mobility. Of course, your upward mobility means someone else must move downward, but that’s okay—the higher the intergenerational mobility of a society, the more vibrant it is. If the poor have hope and the rich have motivation, life is more interesting.

Chetty analyzed tens of millions of US tax records, tracking the incomes of families and children, and found differences in intergenerational mobility across regions [1]. Specifically, by age 30, the probability of the child in San Jose entering the top 20% in income was 12.9%, while for the child in Charlotte, it was only 4.4%. Neither reached 20%, showing that being born into a poor family is an absolute disadvantage—but 12.9% is much larger than 4.4%.

Same country, same system, same era. If you must be born into a poor family, you’d better choose to be born in a place like Shenzhen, because your chances of turning your life around are two to three times higher.

The good news is that even if you weren’t born in Shenzhen, you can move there—but the earlier, the better. If you hide at home, opportunities won’t automatically come looking for you; upward mobility requires being very proactive.

Understanding the heavy-tail distribution tells you that positions in this world are absolutely unequal. But people are mobile! You should head toward a position where upward mobility is easy. You want to be closer to resources, information, opportunities, rule-makers, and high talent density.

Middle school teachers in Shenyang are unlikely to mobilize their students to move to Shenzhen, but we choose to respect reality. We’ll discuss three mental tools that can place you in a better position: “Social Capital,” “Structural Holes,” and “Moving.”

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Social capital refers to our various social relationships, which are crucial for life satisfaction. If you’re a poor person eager for upward mobility, what kind of social relationships are most useful?

Raj Chetty, in a 2022 study [2], analyzed 21 billion friendships among 72.2 million Facebook users in the US aged 25–44. The data covered 84% of that age group and was precise down to individual zip codes—essentially capturing the social relations of the American people. He quantified three types of social capital:

1. Economic Connectedness: Cross-class interaction, meaning low-income people forming friendships with high-income people.
2. Social Cohesion: The tightness of your friend circle—how likely your friends’ friends are also your friends.
3. Civic Engagement: Whether you frequently participate in community activities, such as volunteering.

Which type of social capital do you think is most conducive to upward mobility for the poor? The answer is Economic Connectedness. The other two indicators had almost no significant predictive power for an individual’s upward mobility.

Simply put, gathering with friends every day, turning your friends’ friends into your own friends, and enthusiastically participating in community affairs might make you feel good—but they don’t help much with upward mobility. To become rich, you’d better make friends with some rich people.

Chetty’s data analysis shows that if a child from a poor background grows up in a community with high economic connectedness, their adult income increases by an average of 20%. It’s not that rich friends directly give them money, but that they learn “common sense” from them—how to behave decently, how to apply to good universities, which industries are trending… the rich never intentionally kept this common sense a secret, but it simply doesn’t exist in poor circles.

However, Chetty’s data shows that poor people often huddle with their neighbors for warmth, while rich people’s friends are mostly university classmates—opportunities for social networking with economic connectedness are far too few.

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Some might understand immediately and say, “I should socialize upward, contact more rich people, and send my child to a private school…” That is one way; contact is the most basic step—friendships are impossible without it. But contact alone isn’t enough.

Another paper by Chetty [3] analyzed why social interactions with high economic connectedness are so rare. One reason is a lack of “exposure”—there are too few occasions where people from different classes can collide. But an equally important reason is “friending bias”: even when the rich and the poor are in the same environment, such as the same school, they tend to “stay in their own lanes.” They might nod to each other, but they don’t form real friendships.

You can’t really call this discrimination; it’s human nature to befriend those with similar backgrounds. So how can friending bias be broken?

Chetty found that the larger the group, the higher the friending bias. The smaller, more stable, and more densely interactive the group, the lower the friending bias. For example, some religious groups in the US have distinct income stratification, yet their friending bias is relatively low—because the group’s systems, rituals, and interactions facilitate real relationships across classes.

I previously heard a theory about why Israel, a small country, has such strong innovation capabilities. A key reason is its universal military service. Young people from all classes spend several years working closely together, forming deep friendships through real-world challenges. After discharge, it’s very convenient for them to start a company together [4].

The most useful social capital isn’t the “connections” of mercenary philosophy—it’s not about knowing many people or being smooth at dinner parties. The best way to reduce friending bias is to place relationships within common tasks: doing projects, training, preparing for competitions, or solving a difficult problem together. It’s not about small talk, but working together; not about “asking for a favor,” but filling a gap; not about taking, but supplying.

One of the strongest mechanisms for humans to build trust is seeing how someone acts under pressure.

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However, opportunities to “go through battle and school together” are too few. What can we do to enter better social positions? This brings us to “Structural Holes.” If Chetty’s social capital is a vertical connection, structural holes are horizontal connections.

“Structural holes” is a concept proposed by sociologist Ronald Burt [5]: it means there are “holes” between two social networks that are otherwise unconnected. Anyone who can stand at the edge of the hole and connect both sides gains a special advantage—Burt calls this “broker” status.

They can also be called “connectors” or “intermediaries.” By occupying a structural hole, you are no longer just a node in a network; you are the interface connecting two networks.

For example, if the programmers in your company are one network and the salespeople are another, these two groups often misunderstand each other’s intentions and have conflicts. If you understand both programming and sales logic and can talk to both sides, you occupy the structural hole connecting these two networks. You can help programmers understand what sales actually want and help salespeople understand why some requests are unrealistic. You become an indispensable person in the company.

Burt’s research found that people who occupy structural holes get promoted and receive raises much faster than others, get more positive performance reviews, and are especially good at coming up with creative ideas.

Isn’t this easy to understand? The cooperation between two fields depends on you, and information flows through you. Your professional knowledge might not be as strong, but you are the person who understands the company best.

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I find the concept of structural holes to be similar to the “strength of weak ties” proposed by sociologist Mark Granovetter in 1973 [6].

You’ve likely heard the principle: for things like job hunting, asking “strong ties”—close friends in your circle—is often of little use because they are in the same circle as you; if you don’t know something, they probably don’t either. The most effective source of information is often “weak ties”—outsiders you don’t contact regularly. Strong ties provide emotional support; weak ties provide new information.

Weak ties are outsiders; structural holes are the interface from the inside to the outside. If you can’t find a weak tie to solve a problem, perhaps the structural hole in your circle can introduce you to a few people.

More importantly, a structural hole does more than just pass information—it controls and creates.

The essential role of a structural hole is not just passing words, but translation. You translate the language of the tech circle into logic the sales circle can understand, or translate the aesthetics of the art circle into products engineers can build. Because there’s a huge cognitive gap between the two sides, every translation you make creates value.

Let me give an interesting example. During the Chinese revolutionary war, Communist Party cadres were divided into two very different groups. One was the “Red Area Party”—cadres who carried out land reform and guerrilla warfare in base areas; they had deep military backgrounds and a tough style. The other was the “White Area Party”—intellectual cadres who did underground work in Kuomintang-ruled areas; they were highly educated, understood the economy and cities, and were good at dealing with all walks of life, especially capitalists.

The styles of the Red Area and White Area Parties were very different, and historically there were conflicts. But there was one man who was a Red Area leader yet had excellent relationships with the White Area Party. Wouldn’t you say he was a structural hole?

That man was Deng Xiaoping. Deng was a unique figure among CCP cadres: he led the Baise Uprising and commanded the Huaihai Campaign, making him a bona fide Red Area leader with high military prestige. At the same time, he had studied in France and visited the Soviet Union, possessed a broad vision, understood global trends, and knew economy and management, earning the respect of White Area cadres and intellectuals.

Some cadres only knew how to shout slogans, while others only knew how to keep accounts. Only Deng Xiaoping could translate for both sides: he translated revolutionary narratives into development narratives, political language into economic language, and “struggle” into “construction”… No wonder it was Deng Xiaoping who pushed for Reform and Opening-up.

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Finally, let’s talk about moving. “A tree moved dies, a person moved lives.” If your current position doesn’t offer good opportunities, you have the right to move to a better place.

We mentioned at the beginning that a poor person moving to a city with many opportunities can significantly increase the possibility of upward mobility. A 2025 UK study [7] directly linked moving with economic connectedness. Researchers analyzed Facebook relationship data and income information for 20 million UK residents and found that children from low-income families grew up in areas with more cross-class friendships had significantly higher adult incomes.

And the earlier the move, the better. A 2018 study by Chetty [8] found that for every additional year a child from a poor family spent in a “good neighborhood” during their upbringing, their overall adult outcomes improved by 4%.

My guess is that the three most important factors parents can influence in their children are IQ, direct financial support, and the neighborhood they live in. Moving to a better neighborhood might be more effective than any advanced parenting method. One of Chetty’s major findings was that children tend to model themselves after the adults around them rather than their own parents [9].

There is a saying online: “If the mother is weak, the child becomes a merchant; if the father is strong, the child becomes an official; if the clan is prosperous, stay in the hometown; if the family is poor, go to distant lands.” Conservation is the privilege of the rich; leaving is the struggle of the poor.

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In summary, the more disadvantaged your socio-economic status, the more you should find a way to change your position. Changing your fate isn’t just about studying hard and solving problems; sometimes you simply must leave your home.

The concept of “steady-state survival” emphasizes “attachment to one’s native land” because all land had owners, and you’d lose your means of production if you left. But opportunities in modern society are mobile. If you find your city’s industries declining and lifeless, or your company’s hierarchy solidified with no cross-boundary communication, why stay and be a beast of burden?

Go to places with high economic connectedness, to higher-level networks, and ideally, become a structural hole between two networks.

This is not opportunism, let alone seeking charity. You need that good position, and that good position needs you! The secret is that if the rich circle only contains rich people, it won’t work—it will eventually become corrupt and decadent. Class mobility benefits everyone, and high-level networks that last must actively absorb outsiders.

As long as you have a “supply-side mindset,” squeezing into a rich circle is about providing a unique perspective; standing at a structural hole is about providing translation services; moving to a new city is about injecting new vitality. The socializing of the weak is seeking protection; the socializing of the strong is providing an interface.

A domestic worker in a wealthy area is just labor if she only does the work. But if she can take the educational concepts and information gaps of the wealthy area back to her own community, and connect her hometown’s specialties and labor resources to the rich with high standards, she becomes a structural hole.

Position is also a type of capital; coordinates are part of destiny. Sometimes appearing in the right place is far more important than having the right knowledge. Heroes and great people shouldn’t be limited by their environment; there are better places in the world waiting for you.

Notes [1] Chetty, Raj, et al. “Where is the land of opportunity? The geography of intergenerational mobility in the United States.” The Quarterly Journal of Economics 129.4 (2014): 1553-1623. [2] Chetty, Raj, Matthew O. Jackson, Theresa Kuchler, Johannes Stroebel, et al. 2022. “Social Capital I: Measurement and Associations with Economic Mobility.” Nature 608(7921): 108–121. [3] Chetty, Raj, Matthew O. Jackson, Theresa Kuchler, Johannes Stroebel, et al. 2022. “Social Capital II: Determinants of Economic Connectedness.” Nature 608(7921): 122–134. [4] Senor, Dan, and Saul Singer. Start-up Nation: The Story of Israel’s Economic Miracle. New York: Twelve, 2009. [5] Burt, Ronald S. 2004. “Structural Holes and Good Ideas.” American Journal of Sociology 110(2): 349–399. [6] Granovetter, Mark S. 1973. “The Strength of Weak Ties.” American Journal of Sociology 78(6): 1360–1380. [7] Meta Newsroom & Behavioural Insights Team (BIT). 2025. “New Research on the Relationship Between Friendships and Economic Opportunity in the UK” & “Social Capital in the United Kingdom: Research Summary.” [8] Chetty, Raj, and Nathaniel Hendren. 2018. “The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects.” The Quarterly Journal of Economics 133(3): 1107–1162. [9] Elite Daily Lesson Season 5, Don’t Believe Intuition 2: Parenting methods don’t matter, role models matter.