Wealth and Child Development: Differences in Associations by Family Income and Developmental Stage

Abstract

Accordingly, skills gaps have been the focus of considerable research and policy. Despite this attention, economic disparities in children's outcomes have grown over the past fifty years, even as racial-ethnic disparities have declined (Reardon 2011). Wealth and Child Development: Differences in Associations by Family Income and Developmental StageportI a mIller, ta m a r a podv ysotsk a , l aur a beta ncur, a nd elIz a beth votruba-dr z a lWealth inequality is at a historic high in the United States. Yet little is known about the implications of wealth on children's development because research has focused mainly on the role of wealth in shaping outcomes in adulthood. Using data from the National Longitudinal Survey of Youth (N = 8,095), we examine how family wealth relates to achievement and behavior problems during early childhood, middle childhood, and adolescence. Further, we explore whether links between wealth and children's development vary by level of income and income volatility. Results show that wealth, controlling for income level and volatility, is uniquely related to both academic and behavioral development in early childhood, middle childhood, and adolescence. Moreover, evidence suggests that wealth plays a buffering role when it comes to protecting children's development from the deleterious effects of low family income, especially as children grow older.

Childhood Wealth Inequality in the United States: Implications for Social Stratification and Well-Being

“…Given the role that wealth plays in family functioning, it is no surprise, then, that wealth is related to child outcomes ( Orr 2003 ; Yeung and Conley 2008 ; Friedline, Masa, and Chowa 2015 ). As demonstrated in this volume and elsewhere, lower levels of parental wealth are correlated with lower levels of academic performance, worse physical health, impaired social and behavioral outcomes, and fewer years of completed schooling ( Pfeffer 2018 ; Diemer, Marchand, and Mistry 2020 ; Boen, Keister, and Graetz 2021 , this issue; Miller et al 2021 , this issue; Nepomnyaschy et al 2021 , this issue). Wealth effects remain after accounting for income, and the association between wealth and child well-being may be larger in magnitude than the association between income and child well-being ( Miller et al 2021 , this issue).…”

“…As demonstrated in this volume and elsewhere, lower levels of parental wealth are correlated with lower levels of academic performance, worse physical health, impaired social and behavioral outcomes, and fewer years of completed schooling ( Pfeffer 2018 ; Diemer, Marchand, and Mistry 2020 ; Boen, Keister, and Graetz 2021 , this issue; Miller et al 2021 , this issue; Nepomnyaschy et al 2021 , this issue). Wealth effects remain after accounting for income, and the association between wealth and child well-being may be larger in magnitude than the association between income and child well-being ( Miller et al 2021 , this issue). Wealth appears to be beneficial for children across developmental stages and across racial-ethnic identities ( Diemer, Marchand, and Mistry 2020 ; Conwell and Ye 2021 , this issue; Miller et al 2021 , this issue), but equalizing wealth would not be enough to eliminate race- and ethnic-based gaps in achievement ( Conwell and Ye 2021 , this issue).…”

“…Enhancing this narrow research base is new work presented in this volume demonstrating the importance of wealth in buffering the adverse effects of low income on child achievement ( Miller et al 2021 ), the negative associations between wealth and child body mass index (BMI) ( Boen, Keister, and Graetz 2021 ), and the adverse repercussions of fathers’ child support arrears for children’s socio-behavioral outcomes ( Nepomnyaschy et al 2021 ). It also offers evidence that, despite wealth’s strong association with cognitive outcomes, black-white and Hispanic-white disparities in test scores remain even in same-wealth families, in part because of demographic and wealth composition differences ( Conwell and Ye 2021 ).…”

“…The few studies on wealth effects by child age have provided conflicting evidence as to whether effects vary by age ( Yeung and Conley 2008 ; Diemer, March- and, and Mistry 2020 ). In one of the first studies to use a developmental lens to examine changes in wealth and outcomes at different points in childhood, Portia Miller and colleagues (2021 , this issue) hypothesize that the effects would grow with age but find consistent beneficial effects of wealth on cognition and behavior regardless of age.…”

“…The work presented in this volume address some of the most pressing questions regarding wealth and child well-being, but many unknowns remain. We still know relatively little about how wealth varies across a child’s life course, and we are only beginning to understand whether the importance of wealth in determining child well-being varies by developmental stage ( Miller et al 2021 ; Nepomnyaschy et al 2021 ). Emerging evidence also suggests that assets and debts may operate differently in the lives of children ( Conwell and Ye 2021 ), but we do not yet understand the theoretical or mechanistic reasons why this is so.…”