A Century Later: Two Family Trees and Two Vastly Different Family Fortunes

This contrast between college-educated and non-college educated women is stark and oddly fascinating. 

Four forces at play here.

1. Women with a college degree have fewer children.

2. Women who get a college degree are older when they have their first child.

3. Women with a college degree have more wealth.

4. The difference in levels of wealth compounds over time, as does the difference in the number of heirs, or descendants. 

Assumptions:

• Initial Wealth: $1,000,000 (college) vs. $200,000 (non-college) (based on current data contrasting households with and without a college education)

• Children per woman: 1.28 (college) vs. 2.8 (non-college) (these are the current rates)

• Generations: every 30 years (college) vs. 24 years (non-college) (again, these are the current average ages for a first child for women with and without a degree) 

• Annual wealth growth: 4% (real, after inflation, applied to both the initial $1,000,000 and the initial $200,000)

• Time horizon: 100 years

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Results after 100 years:

Metric	College Degree Lineage	Non-College Lineage
Total Compounded Wealth	$50.5 million	$10.1 million
Total Number of Descendants	~2.1 people	~61.5 people
Wealth Per Descendant (on average)	~$24.1 million	~$164,300

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In simple language, the one million dollars the college-educated household starts with compounded at 4% a year over a century will result in about $50 million. The $200,000 the non-college educated household starts with compounded at 4% a year over a century will result in $10 million. But given the big difference in the number of descendants, the $10 million will be divided over 61 people, whereas the $50 million is divided among only 2 people. So, the heirs of the college educated are vastly outnumbered but have vastly more resources. 

Summary Insight:
College-educated women have fewer descendants who will potentially inherit more wealth. Compounding over time results in her descendants ending up vastly wealthier—about 146× richer per person after 100 years. This curious dynamic is just one more way that differences in wealth can compound over time.