How Multiple Dimensions of Family Wealth Interface with Income to Shape Children’s Academic and Behavioral Outcomes

• In Event: More than Money: The Roles of Wealth, Income and Other Economic Circumstances in Child Development

Abstract

Wealth inequality is at a historic high in the U.S. (Gibson-Davis and Hill 2020; Yellen 2016). This has implications for disparities in children’s academic and behavioral functioning, as several studies have linked wealth to children’s development (see Diemer, Marchand, and Mistry 2019; Elliott, Destin, and Friedline 2011; Ream and Gottfried 2019; Shanks 2007; Yeung and Conley 2008). Yet, only recently has research began to focus on decomposing wealth into its components (e.g. assets and debts) and exploring how wealth interacts with other dimensions of family economic circumstances, like annual income and income volatility to shape children’s development. Theory suggests that dimensions of economic circumstances may interact to shape family processes and children’s development. For example, in times of economic turbulence, holding assets and access to credit can provide stability that may be beneficial to children. In contrast, owing debts may magnify the implications of income loss and income instability for families, thereby increasing family stress, interfamilial conflict, resources losses, all of which negatively impact child development (McKernan & Sherraden, 2008).

The current study aims to strengthen knowledge of how individual wealth components and their interactions with other economic circumstances shape children’s development. We are using data from the National Longitudinal Study of Youth and its Child Supplement (NLSY79 and NLSY-CS) that include detailed information about assets, debts, and family income as well as measures of children’s development from birth through adulthood. Parents reported on income and wealth from various sources every year (or every other year after 1993). Parents also reported biennially on children’s problem behaviors (Behavior Problem Index, Peterson and Zill 1986), and children were administered direct achievement assessments (Peabody Individual Achievement Tests, Markwardt 1997). This study utilizes data from 11 birth cohorts of children (N=6065) with valid achievement and behavioral data in early childhood (5-6 years), middle childhood (9-10 years), and early adolescence (13-14 years). Preliminary regression models tested links between wealth, annual income, and the number of negative income shocks (wave-to-wave income losses of 25% or more experienced during the period) and child’s academic and behavioral development. We also tested whether income and volatility links varied by level of family wealth.

Results of preliminary models including interactions between wealth and both income and income volatility show that wealth attenuates links between income and volatility and children behavioral problems (Table 1). In particular, children whose families had greater access to wealth exhibited lower internalizing and externalizing problems in early childhood when their families had fewer economic resources or higher income volatility. Some of these benefits endured into middle childhood. Wealth was protective against economic disadvantage for reading and math skills in middle childhood, but not at other developmental stages. Our next step will be to analyze associations between children’s outcomes and individual components of wealth, including assets and debts.

Authors

• Tamara Podvysotska, University of Pittsburgh
  Presenting Author

• Portia Miller, University of Pittsburgh
  Non-Presenting Author

• Laura Betancur, Iowa State University
  Non-Presenting Author

• Elizabeth Votruba-Drzal, University of Pittsburgh
  Non-Presenting Author