Wondering How to Make Money? Economists Say Start Here
If there were an easy answer to the question of how to make money, we wouldn’t be in a constant state of panic about the stock market, the economy, and a possible Trump presidency. But there isn’t an easy answer, or even a clear and concise one. People have been trying to devise easy and effortless ways to make money for almost all of human history. And if they only knew that the answer to the question of how to make money was as simple as looking at the benefits of reading, society might be in a very different place.
Of course, business, industry, and innovation have brought us untold amounts of wealth and prosperity — especially considering that within the past century alone we’ve gone from the most primitive forms of flight to the outer reaches of the solar system. People have found ways to get rich and make money, but for the vast majority of people, we’re still trying to get our finances in order.
For those still looking to make their big break to the upper classes, economists have an idea: Crack open some books, and get reading.
A new study, published in The Economic Journal by researchers from the University of Padova in Italy, says that there is a strong connection between proximity to books at a young age, and higher earnings later in life. In other words, the more books you’re around as a kid, the more money you’re likely to make as an adult.
How to make money and the benefits of reading
According to the study, the benefits of reading and an additional year of education for more than 5,800 European males (and only males, in this case) led to a boost in incomes of as much as 21%.
“We estimate the effect of education on lifetime earnings by distinguishing between individuals who lived in rural or urban areas during childhood and between individuals with access to many or few books at home at age 10,” the study’s abstract reads. “We instrument years of education using compulsory school reforms and find that, whereas individuals in rural areas were most affected by the reforms, those with many books enjoyed substantially higher returns to their additional education. We show that books retain explanatory power even when we select relatively homogeneous groups in terms of the economic position of the household.”
Interestingly enough, it appears that the magic number of books is 10 — so, young males who grew up around at least that number of books reap the benefits. The study itself (also covered by Quartz) looked at Europeans from several different countries and the incomes of older men between the ages of 60 and 96. Looking at what types of environments these men grew up in, along with the number of books in their households and years in school, researchers were able to zero in on the variable they believed made a difference later in life.
Books, and the benefits of reading at a young age, they say, are the main factor that led to better outcomes.
Powerful (and rich) examples
Though most of us are past our elementary years (and have subsequently missed the proverbial boat), if you’re a parent or grandparent, this study should be yet another signal that having books and reading materials around the house is a giant positive for young, developing minds. If you need more convincing, we can look at some of the world’s most successful (and rich) people and see that they, too, gush about the benefits of reading.
Warren Buffett, for example, spends a huge amount of time reading. Some reports put it at 80% of his time — sifting through corporate reports, and tackling a number of newspapers. Bill Gates is another example of someone who spends considerable amounts of time reading, and he even publishes his recommendations for everyone else to indulge in.
If there are two people who know how to make money, it’s Buffett and Gates. Two guys who pull great value from, and take seriously, the benefits of reading. If you want to emulate them, or at least give your younger friends or family members a shot at better outcomes, it won’t hurt to have some books around the house.