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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And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

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