Increasing Family Income Not Enough to Lift Children from Poverty

Increasing parental income alone is not enough to break the cycle of poverty, according to a new study by Susan Mayer, Associate Professor in the Irving B. Harris Graduate School of Public Policy Studies at the University of Chicago.

Even if their incomes increase, parents who have experienced persistent periods of poverty often have such problems as chronic illness and low academic skills that make it difficult for them to help their children escape poverty, Mayer reports in her new book, What Money Can’t Buy: Family Income and Children’s Life Chances.

She cautioned that her findings do not endorse massive cuts in welfare. “My results do not show that we can cut income support programs with impunity,” Mayer said. “Indeed, they suggest that income support programs have been relatively successful in maintaining the material living standard of many poor children.”

The study shows that non-monetary factors play a bigger role than previously thought in determining how children are able to overcome disadvantage, Mayer explained. “Parent-child interactions appear to be important for children’s success, but the study shows little evidence that a parent’s income has a large influence on parenting practices.”

Mayer said that if money alone were responsible for overcoming such problems as unwed pregnancy, low educational achievement and male idleness, states with higher welfare benefits could expect to see reductions in these problems. In reality, “once we control all relevant state characteristics, the apparent effect of increasing Aid to Families with Dependent Children benefits is very small,” she said.

Many of the activities that improve children’s outcomes are more related to parenting choices than to income, Mayer said.

“They mainly reflect parents’ tastes and values. Books appear to benefit children because parents who buy a lot of books are likely to read to their children. Parents who do not buy books for their children are probably not likely to read to them even if the books are free, and parents who do not take their children on outings may be less likely to spend time with them in other ways.”

To determine what effect increasing income would have on children, Mayer studied the National Longitudinal Study of Youth, a study by the National Opinion Research Center that collects data on children, including children whose mothers are on welfare. She also used data from the Panel Study of Income Dynamics, a study by the University of Michigan Institute for Social Research.

By following the experiences of the mothers and children over several years, Mayer was able to determine changes in behavior among families whose income had increased. She then prepared a statistical model that would predict what would happen if those families’ incomes increased from $15,000 to $30,000.

Among her findings are:

• Higher parental income has little impact on reading and mathematics test scores.
• Higher income increases the number of years children attend school by only one-fifth of a year.
• Higher income does not reduce the amount of time sons are idle as young adults.
• Higher income reduces the probability of daughters growing up to be single mothers by 8 to 20 percent.

Mayer found that as parents have more money to spend, they usually spend the extra money on food, especially food eaten in restaurants; larger homes; and more automobiles. As a result, children are likely to be better housed and better fed, but not necessarily better educated or better prepared for high-income jobs.

In order to deal with the problems of poverty, more needs to be done to deal with the non-monetary problems that encourage poverty, such as low educational achievement, young motherhood, single parenting and racism, Mayer said.

“But because most government interventions are small compared with all the other things that influence parental behavior, policy makers who want to use economic incentives to change adult attitudes about work and family are usually disappointed,” she said.