The role of parental circumstances and luck in shaping socioeconomic success: A simulation-based analysis of talent

Abstract

This study investigates the interplay between parental circumstances, talent, and luck in shaping long-term socioeconomic success through an agent-based simulation model. Building on prior research on the influence of socioeconomic status (SES) and parental circumstances on educational outcomes, the model simulates how parental circumstances enhance innate talent through education and examines how this talent interacts with luck throughout an individual’s life. The simulation is divided into two phases: an educational phase and a working phase. Our results reveal that while parental circumstances and education amplify talent and increase the potential for success, cumulative luck plays the most decisive role in determining savings at age 60. A strong positive correlation is observed between cumulative luck and lifetime savings, whereas the direct influence of talent, even when enhanced through education, remains limited. Additionally, favorable parental circumstances elevate baseline savings, even for individuals experiencing misfortune, underscoring the importance of early educational advantages. These findings highlight that although talent and parental support are essential for fostering success, luck ultimately dominates in shaping financial outcomes. The study offers critical policy insights, advocating for equitable access to education and strategic investments to mitigate the disproportionate impact of luck, promote social mobility, and reduce structural inequalities across generations.