Moving Beyond Correlations in Assessing the Consequences of Poverty

Abstract

In the United States, does growing up in a poor household cause negative developmental outcomes for children? Hundreds of studies have documented statistical associations between family income in childhood and a host of outcomes in childhood, adolescence, and adulthood. Many of these studies have used correlational evidence to draw policy conclusions regarding the benefits of added family income for children, in particular children in families with incomes below the poverty line. Are these conclusions warranted? After a review of possible mechanisms linking poverty to negative childhood outcomes, we summarize the evidence for income's effects on children, paying particular attention to the strength of the evidence and the timing of economic deprivation. We demonstrate that, in contrast to the nearly universal associations between poverty and children's outcomes in the correlational literature, impacts estimated from social experiments and quasi-experiments are more selective. In particular, these stronger studies have linked increases in family income to increased school achievement in middle childhood and to greater educational attainment in adolescence and early adulthood. There is no experimental or quasi-experimental evidence in the United States that links child outcomes to economic deprivation in the first several years of life. Understanding the nature of socioeconomic influences, as well as their potential use in evidence-based policy recommendations, requires greater attention to identifying causal effects.

Keywords: causal effects; family investments; family stress; poverty.

Figure 1

Rates of kindergarten proficiencies for poor, near-poor, and middle-class children, calculated by the authors from data collected by the Early Childhood Longitudinal Study, Kindergarten from 1998 to 1999. Poor children belong to a family with income below the official US poverty threshold. Near-poor children belong to a family with income between one and two times the poverty line. Middle-class children belong to a family with income greater than twice the poverty line.

Figure 2

Family enrichment expenditures on children. Calculations are based on data from the Consumer Expenditure Surveys (presented in Duncan & Murnane 2011a,b). Amounts are in 2012 dollars.