Does family income affect child achievement?
Does family income affect child achievement?
- October 22, 2015
- New CEPP study says that the jury’s still out, despite what current research suggests
Does family income affect child achievement? Economists have long struggled to answer this question.
“The difficulty is due to ‘confounders’ associated with both income and child outcomes — children in poor families are likely to face adverse home environments or experience other difficulties that would persist even if family income were to increase,” says Samuel Lundstrom, UCI economics graduate student.
To overcome this challenge, past research has proposed using variation in income that arises from sharp changes in government policy. A recent article in the American Economic Review exemplifies this approach by using expansions of the Earned Income Tax Credit (EITC) during the 1990s as a type of "natural experiment" to estimate the impact of family income on the achievement of poor children. The study finds that increased income greatly increases math and reading test scores for poor kids.
However, a new paper by Lundstrom, published by Center for Economics & Public Policy at UCI, reveals some problems with this study, raising questions about the validity of the results.
“The estimates in the American Economic Review study are highly sensitive to which time periods the policy variation comes from,” he says. When the sample is restricted to the early 1990s, the estimates suggest that increased EITC generosity greatly reduces the test scores of young kids. When the sample is restricted to the late 1990s, the estimates suggest that increased EITC generosity greatly increases the test scores of male children as well as blacks and Hispanics. When the sample includes years from both the early 1990s and the late 1990s, the estimates vary, depending on which years are included in the sample.
“The implication is that, rather than capturing the effect of family income on child achievement, the estimates merely reflect a coincidental relationship between changes in EITC generosity and changes in child achievement,” he says.
“Many studies suggest that the effect of family income on child achievement may be positive, and lots of policy recommendations are based on this evidence. The findings in this recent article have bolstered this belief by suggesting that the effect is large, and nearly instantaneous, for the children we are most concerned about — kids in poor families,” he says.
“My research suggests that this ‘natural experiment’ does not establish a causal effect of income on children's test scores. This does not mean that the effect isn't there — but it does mean that we are still looking for good evidence of it. "
The full study is available online at http://www.cepp.uci.edu/CEPP%2008-14-15%20Family%20Income%20and%20Child%20Achievement-Lundstrom-Paper.pdf.
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