Socioeconomic Status and Inequalities in Children’s IQ and Economic Preferences

Abstract

This paper explores inequalities in IQ and economic preferences between children from high and low socio-economic status (SES) families. We document that children from high SES families are more intelligent, patient and altruistic, as well as less likely to be risk-seeking. To understand the underlying causes and mechanisms, we propose a framework of how parental investments as well as maternal IQ and economic preferences influence a child's IQ and preferences. Within this framework, we allow SES to influence both the level of parental time and parenting style investments, as well as the productivity of the investment process. Our results indicate that disparities in the level of parental investments hold substantial importance for SES gaps in economic preferences and, to a lesser extent, IQ. The systematic variations in IQ and preferences by SES might offer an explanation for socio-economic disparities in economic decision-making and social immobility.

The influence of SES, cognitive, and non-cognitive abilities on grades: cross-sectional and longitudinal evidence from two Swedish cohorts

“…In the home environment, high-SES parents spend more time reading with and to their children which likely stimulates cognitive growth and learning (e.g., Myrberg & Rosén, 2009). Moreover, children whose parents have higher SES do generally develop higher cognitive ability levels which are then transmitted to their children through both genes and the environment (Engelhardt et al, 2018;Falk et al, 2021;Turkheimer et al, 2003). Conversely, the lower degree of nurture and support among lower-SES children can affect the cognitive ability levels, and hence outputs in for example school tests, negatively (Flynn, 2012;Sackett et al, 2009;Turkheimer et al, 2003).…”

“…There are strong theoretical and empirical reasons to assert that school achievement such as grades is influenced by SES, cognitive ability and non-cognitive abilities (e.g., Duckworth & Seligman, 2005;Falk et al, 2021). There are also strong reasons to believe that SES influences cognitive ability (Flynn, 2012;Myrberg & Rosén, 2009;Turkheimer et al, 2003), and that non-cognitive ability affects cognitive ability (Borghans et al, 2008;Heckman & Kautz, 2014).…”

“…Although measurement of SES may differ between countries and regions (e.g., Kim et al, 2019), parental education, home resources, or average (parental) income is typically used to indicate SES. These types of measures tend to be highly correlated and estimates do not differ substantially depending on the use of only one of these two forms of indicators (e.g., Falk et al, 2021). In the Programme for International Student Assessment (PISA) context, the estimated number of books at home is typically used as an indicator of SES (e.g., Reimer et al, 2018;Tan, 2015).…”

PISA Achievement in Sweden From the Perspective of Both Individual Data and Aggregated Cross-Country Data

“…In the PISA data set, this variable is coded as BOOKS. Because parents appear to play a pivotal role for their children's academic achievement (e.g., Falk et al, 2021), variables that only in part cover socioeconomic background but nonetheless reflect the possible influence of parents were included, specifically SUPPORT1-4 (e.g., 1 My parents support me). All these were measured on a Likert scale.…”

Grit increases strongly in early childhood and is related to parental background

“…Complementing children’s data with a survey among their parents allows studying the role of family background for the early development of grit. The family environment and parents’ characteristics have a large influence on various cognitive and non-cognitive skills 21 – 25 , but the relation of family background to the formation of grit in early childhood is still underexplored. So, in sum our paper is the first to present evidence on the development of grit in children as young as 3 to 6 years old, is able to present both a composite score of grit that captures many facets that are associated with grit, but at the same time can present evidence for the single components separately, and adds parental background and survey data to enrich our understanding of whether and to which extent grit develops in early age.…”